Paul Scott - my personal portfolio performance in 2021

Paul, no need to apologies for Boohoo, I lost money, but my decisions are my own.  You're kind of like my local weatherman, you know your stuff, present the facts well and try to predict the weather. But I am definitely not going out without my coat before checking a few other forecasts and looking out the window myself for black clouds.

I tend to use Stockopedia for some of it's other functions and don't generally read commentary (lack of time...until recently), but I very much enjoyed the excellent (and candid) personal portfolio review.

I sympathise with you on the Boohoo debacle. As a stockbroker of 40 years, now recently retired, and very much a proactive momentum investor exclusively focused on small caps both here and in the US, I held both Boohoo and, long ago (in at the beginning), ASOS, and the one thing I think is absolutely essential in these phenomenally successful situations is some form of mechanical sell signal - so designed to keep you on the 'bucking bronco' as long as possible, but ultimately to force you out (when you really, really, really don't want to) when momentum is clearly turning negative. 

As you said, you can always buy them back (and should - sometimes lower, sometimes higher - it's swings and roundabouts and irrelevant) if and when it turns again.

Thanks again....and I hope you were able to get the tea stain out of your pullover!

Boohoo- madness is continuing to do the same thing while expecting a different result…..

Hi Paul, a  really good vidio thanks. Like most of us it covers the good, the bad and the ugley.

Having done some number crunching on my portfolio this year, the income from it has increased our pensions by 32.7% , so it was worth it. Searching for dividends paying over 10% + pa is not that easy but they are out there. These are mainly from the US market. The bad thing is the high charges from Hargreaves in dealing costs. I know there are cheaper brokers about with cheaper charges but perhaps room for improvement.

My holdings in PLUS 500 were sold after receaving good dividend payments over a number of years and all the hastle of claiming the extra tax back. I also top sliced MRNA too late when Iwas up over 200% at one point. CMCX took a hit too, as well. The latest share purchased is SSSS, picking up the last two dividend payments of $2.00 and $0.75. Stock Rank 84.

Then in July an eye test revealed I needed glasses to drive and cateracts were dectected. Within 2 months of wearing  the glasses I was again struggling to see numberl plates at the legal distance of 20 meters because of my catreacts, not the 20 yards it used to be, which means about a extra 6 feet more in able to read the number plates. Fortunately the operation on 13th November sorted my left eye out ,so I can drive again  The right eye has been put on a waiting list for about 3 months time. The thing is, you do not realise your sight is getting worse because it happens slowly & then eventually you have a problem.

So thanks to Ed and Stockopedia's team, the search for dividends are now so much easier and there are 10 shares set to pay out more dividends again in January.

Wishing everybody at Stocopedia a happy prosperious & safe New Year.

Really enjoyed the video, many thanks for sharing your views, learning and thoughts. 

Thank you for a great video.

Thanks Paul for your interesting summary of the year. When there are problems it is usually down to gearing. I have used it to a limited extent with investment trust warrants. Generally positive results but some have expired worthless.

My winners for the years have been Vertu Motors (VTU), River & Mercantile (RIV) and UP Global Sourcing Holdings (UPGS), the worst result Esken (ESKN) formerly Stobart.

Private Equity Investment Trusts have done very well including BMO PE (BPET) and Oakley Capital (OCI), the loser was Golden Prospect Precious Metals (GPM) down 18.8%.

Happy New Year

Hi Paul, thanks for doing the video it was a good watch. Looking at your breakdown of 2021 performance I see you have SIPP and geared accounts. By geared does that mean all those holdings are Spreadbet transactions? 

Paul, really enjoyed your video and thoughts. Thankyou. I really appreciate your transparency and honesty and believe that a little bit more of both would make todays world a much better place. As for me it was a pretty sub par year. I was doing well and then I wasn't. I run three accounts and returned 11.5%, 5.6% and 4.3%. Late additions to my portfolio which are a little different and performed well against my small co holdings are 10 year 3 times Daily Short Gilts and 10 year 3 times daily short Treasuries funds run by Wisdom Tree. I only mention them because I spent the last half 2020 trying to find something which might work against inflation and be lowly correlated to other assets. I hold commodities which performed well and Gold which has been luke warm. Cannot get excited about crypto. Poor performers were Avacta, Botb and Simec Atlantic. Hostmore gave me a late run. My style is to hold a concentrated but focussed portfolio with a max of 3 themes.  Anyway I hope these short comments raise something of interest for someone out there. Happy New Year.

Paul, really enjoyed your video and thoughts. Thankyou. I really appreciate your transparency and honesty and believe that a little bit more of both would make todays world a much better place. As for me it was a pretty sub par year. I was doing well and then I wasn't. I run three accounts and returned 11.5%, 5.6% and 4.3%. Late additions to my portfolio which are a little different and performed well against my small co holdings are 10 year 3 times Daily Short Gilts and 10 year 3 times daily short Treasuries funds run by Wisdom Tree. I only mention them because I spent the last half 2020 trying to find something which might work against inflation and be lowly correlated to other assets. I hold commodities which performed well and Gold which has been luke warm. Cannot get excited about crypto. Poor performers were Avacta, Botb and Simec Atlantic. Hostmore gave me a late run. My style is to hold a concentrated but focussed portfolio with a max of 3 themes.  Anyway I hope these short comments raise something of interest for someone out there. Happy New Year.

Thanks Paul for being so open, not usual with people who have an image to protect. 

Regards

Ken

Brilliant video & analysis Paul. Love the honesty too and lots of the same lessons I need to adhere to in 2022 & beyond, particularly selling! Let’s hope we all have the best year for investing we’ve ever had! HNY all 

Thank you Paul for your review, like you crucified by Boohoo (LON:BOO) but have not sold and will probably top up.  Also Best Of The Best (LON:BOTB) and the general sell of in small caps.  

For various personal reasons I have not looked at my portfolio since mid October (came off Twitter at the same time and went to about 25% cash) but when I put my toe back in the water I am looking to work out what lessons I have learnt from the past to years.  And at some point I will put it into a blog post.

Thank you for all you and Jack do on the SCVR.  Looking forward to a better, in many ways 2022.

Happy New Year.

Regards

Michael

Thankyou Paul for such an honest down to earth video ..I need to learn more about investing sensibly and will now look up what gearing is all about..My pension income is seriously mediocre and I would love my ISA to double of preferably quadruple (at least) so I will be certainly trying and reading Stockopedia comments daily….Must admit I particularly smiled at the ‘ attention span of a fruit fly ‘ comparison :)) …That appeals to my humour….Thanks again 

Best wishes for 2022 

Pennyledges 

Paul, you share the same voice as Josh Widdicombe :-)

Pension Mortgage - I had one of those, a long time since I have ever heard pension mortgage mentioned. Effectively it was an interest only mortgage with a vague commitment to pay off the mortgage several decades down the line with the pension lump sum. My interest only mortgage was from Northern Rock, who were they again!

This year has been marginally up for me, well below the global markets or even the FTSE 250 gains, I am probably up about by the value of my dividends. My stocks are very UK facing. Long term, since 1 May 2009, my SIPP is now up between 18x and 19x - i.e. between 1,700% and 1,800%. My SIPP returns were formally verified by the DT last Spring.

Why am I behind the market this year? Who knows it often happens. 1 year is short term, short term the market is a voting machine - i.e. a shallow popularity contest. Long term the market is a weighing machine - i.e. far more likely to see the true value of a stock. Short term I often lose out, long term I annihilate the market, as verified.

Current holdings in order of size: LGEN, BWY, FORT, ScS, Boot, CAML and Plus500. I value based on the tangible surplus (TS) built by a business - annual tangible equity gains and dividends, the sum expressed as a % of current MCap. Huge for all my holdings, not my only selection criteria but always both the starting point and the key ingredient.

ScS - clearly equity gains won't be quite as for last year, due to the Covid bounce last year and the supply chain issues this year. In carlisle, one of our largest sofa suppliers is an single shop independent. I spoke to them a couple of months ago re the supply chains. Problems for sure, they said even UK makers were struggling as they buy things like foams for padding and other ingredients from abroad, which are being held up.

Last year's equity gains for ScS were c30% of the current MCap, which is quite mind blowing actually. Even of this years gains are less than half that figure, that will be a very strong result. Let is not forget that ScS took the hit to July 2020, avoided issuing any shares, invested heavily in its online offering and made big forward strides with the business. Ultimately this is not a Covid bounce based success story, it is a business which has restuctrured to great effect.

I am not backing off from ScS at all, not yet one of my largest two holdings, but I am still buying in steadily, close to £1/4m now.

Happy New Year to you Paul,

Thank you very much for making your very honest and extremely helpful video (I will let dad see it later as he always interested in your investing work, and still keen at 87 reading Money Week etc )

I agree with you that Boohoo should be a much larger company in 5 years time.

Maybe all us PI's who (after doing DYOR) and then made it a high conviction holding with a large % size, obviously got our timing wrong.  Similar to Sosander in that they need more time.

So I am also giving my current strategy a good  deal of thought to.  I keep half my portfolio in excellent funds run by Terry Smith, Mark Slater, Keith Ashford-Lord , Paul Jourdan.

The other half I put into no more the 12 very carefully chosen AIM small caps. But my mistake was to allow two of the small caps to get to position sizes of 12% each (BOO is one of them).

I now think it a better idea maybe to keep the position sizes more in line to start off with, but add to the positions that start to show signs of moving into a positive uptrend.  This worked well for me with BOO first time round at 26p and I kept adding until 45p,  and when I held Bioventix at £6 and kept adding up to about £12.  So I am thinking that this is a better idea than starting them off as a large position ?

Anyway, I very much appreciate all the hard work and skills that you, Jack, Ed and the whole team share with us.

Very best regards Neville

Paul. Thank you for another thought provoking & enjoyable post!  Do you have any difficulty in mentally compartmentalising the two different portfolios above? I guess you have separate strategies/processes/accounts for them. But perhaps you have a favourite approach and maybe this means that you find it difficult to follow the rules that you have set for the other portfolio?

The reason why I ask is that I have tried to follow two strategies, and kept them as separate as I could in terms of processes etc.  I did put in quite a lot of work into trying to make my new approach work. But, in the end, I couldn't make it work, and so decided to only use my favourite approach.  How did it go for anybody else that has tried to run two different approaches at once?

Thanks for your very honest review, Paul. I was really interested in your observation about coffee can stocks, and your waning confidence in the strategy. Could your poor experience be attributable to the nature of your stock selection process? It’s one thing to have bought a high ROIC compounder like Ashtead, Halma or Spirax and hold for decades, quite another to seize upon the sort of special situation that your keen financial eye picks out. Surely the latter category is better populated by potentially lucrative, but less durable, value trading opportunities than by set and forget investments?

I think there’s room for both in a portfolio but they each take a very different mindset and it might be better to focus on one, outsourcing the other to a managed instrument, or simply ignore the alternative and follow Buffet’s wisdom that you don’t have to swing at every toss.

I guess these thoughts could be expanded to question the utility of investment books in general. I enjoy all of them but take very little practical benefit. Perhaps that’s just me being pig-headed, but the well-loved Art of Execution’s valuable advice to cut losers is neutralised by its championing of severely cutting multibaggers far too early. The Zulu Principle’s simple advice to buy cheap fast-growing companies is pretty much impossible for a PI to follow today since hardly any stocks screen for it in the modern market. Richer, Wiser, Happier is a great read but in the end it’s just a hagiography of multiple value investors with an information advantage that the PI cannot share. The only book that really taught me a lot was Ben Graham’s Intelligent Investor and even the master’s biggest winner was a growth stock not a value one!!

My end of year focus, encouraged by a brutal, inflation-fleeing sell-off in US growth stocks, many of which had previously been very profitable for me, has been to ruthlessly weed out fallen companies where I had placed too much emphasis on the story and too little on the fundamentals. I then recycled the proceeds back into existing holdings with better long term share price performance, cashflows, margins and other metrics, but which had been caught up in the sell-off. A variant of “cut your losers and run your winners” and with the benefits of producing some tax losses and reducing complexity in the portfolio. My growth bias still leaves me a hostage to inflation prints, however.

Cheers Paul, this was brilliant. I found the origin story of your SIPP very interesting! (this is a sentence one is unlikely to encounter outside of an investing forum.. or perhaps even in one).  It seems both initial inactivity, and subsequent activity have grown that pot nicely.

And great takeaway points / lessons for the year. It's so important to reflect on not just the investments, but the ideas that informed the strategy.

I do enjoy the video format, even treating us to a Bob Fleming impersonation at the end :-)

All the best for 2022!

Paul, I read the book, set up a Coffee Can virtual Stocko portfolio to monitor the most likely candidates in my 6 real portfolios.  A t 77 there's not a lot of future in a keeping a Coffee Can anyway but the Coffee Can portfolio is underwater while 5 out of 6 real portfolios are above. Says a lot for Diversification in my opinion, and I wish you Happy Investing this year.

Silver

why the obsession with on line clothing retailers when the likes of Marks G4M Focusrite perhaps have better growth prospects and fewer returns to worry about

Excellent Paul, thank you, but do you argue both sides of the coin? Long term investing ie 15 years is not good, whereas short term, also not good? Maybe I’m confused, but that’s when I generally make money, haha

Happy New year Paul. Thank you for this 'warts and all ' review. It's very refreshing and educational to hear of the mistakes as well as the gains and to hear the rationale behind your decisions.  All the best for.2022

Post deleted - duplicate of above. I pressed the button and Stocko came up with error cannot load message. I pressed the button again to find two!

Paul - many thanks for your video. One puzzle was Intercede (LON:IGP) that you list as a winner. It was down 16.2% over the year (89.5p to 75p). It peaked at 117.5p on July 7th. Perhaps you top sliced sufficient quantity at a price above that at the beginning of the year to outweigh the losses on those you still hold?

Thanks for your thoughts. The biggest thing I think I took from your video is when you said that at your age (I am only a couple of years younger) you don't need to have all the stress from gearing etc.

I am still working full time and so I don't have the stresses of requiring money out of my stock but my plan is to retired in the next 5 years. My goal is to make 5-10% a year (I don't need more) and so I am trying to not take the risks to make more.

I think there's an element where we all want to try and get the highest percentage return but obviously that makes us take bigger risks.  I keep 30-40 stocks to diversify and have some rules of not letting anything get bigger than 8% (I dropped that on BOTB and look what happened.)

Every time I take a big risk (for me) I lose money on it.

Happy New Year all. Thanks so much for the video - very enlightening and lots of things to take away. Must have been exasperating to see a 100% return disappear in a matter of weeks, but I guess if someone said at the start of the year you'd return 13% then that wouldn't have sounded too bad. 

Interesting hear you talk about how better to manage risk. My approach is to split portfolio into two - a core, low risk portfolio (mainly investment trusts and solid large caps) and then a higher risk portfolio which I can have a bit of fun with, mainly invested in small caps. Even if this blows up I still have the core portfolio to fall back on. I personally avoid gearing altogether, but I can see the attractions as its probably the only way to get really massive returns (100% plus) in a short space of time. 

Thsnk you for the video, Paul, really appreciate your honesty. I agree with you that gearing an equity portfolio is not a good idea, nor is taken on hedges. Also, have you should looked at your sector concentration? It seems to me to be to be heavily skewed towards retail/B2C.

Perhaps Paul's biggest insight was around (personal) risk and reward: aged 53 he is comfortable, why take the risk of another wipe out with leverage?

At 35, I always believed I would move forward and up eventually and so could ride out any downs. I chased high earnings and lived in exotic/difficult places.

Aged 55 , I now live a frugal life in a nice flat by the sea. I invest for income and intellectual stimulation but never risk my overall position. It limits my upside but crucially protects the downside. I am no longer sure I have the energy to start again and win if required. I also have now have new interests in my life.

You need a strategy that fits your age and lifestyle - and that changes over time. Anyway, philosophy over - back to the spreadsheets.

HNY Paul. Thank you for the video update. 

I’ve found that reading a new book can lead to being caught between different investment/trading styles. 

I love reading good books, educating us on investment styles, but noted that many of the styles contradict each other. All of the books can give many examples of investors making “market beating returns” and long lasting reputations based on the promoted techniques. So it raises the obvious question, “how can they all be offering good advice?”

I pondered how can it be that “100 baggers” and “The Art of Execution” call for different (almost opposite) actions when the market moves significantly. 

The art of execution would have sold monster beverages long before it reached 100 bagger (poor advice) and yet if an investor sold BooHoo at -20% drop from the peak (like an assassin) it would have saved investors from losing profits. I’m sure there are many more examples  

I too have made mistakes this year because I followed the wrong style at the wrong time. Holding when I should have traded and vice versa. 

When buying stocks, the stocks we pick would be very different depending on whether we subscribe to “The little book that beats the market” or “The Zulu Principle”. Can they both be giving good advice?

I’ve come to the conclusion that the style I employ depends on my conviction and reason for owning a stock. (Whilst trying to avoid the natural tendency to be biased towards past decisions). Some stocks that I own appear to be riding very strong trends whilst others are making the most of short term opportunities. It helps me decide whether to act like a trader or long(er) term investor.

WRT gearing  and hedging. My biggest single losses have come from trying to bet on which way the market is going to move particularly in the US. My advice would be to visit me in Cheltenham and we’ll go to the races. It’s a more pleasurable way to invest your money. 

Paul,

Your video is very frank and enjoyable. 

I find it interesting that you invest for the long term and you say you look beyond short term issues such as supply shortages or Covid but this is in direct opposition to trading using leverage. You said you find it hard to resist but it appears to hit you very hard. Leverage is very short term and works well until it doesn't.

I think your stock picks are often exciting and can provide enormous gains without leverage.

I was also wondering why you haven't added to your SIPP and you don't mention an ISA. Do you have one?

HNY

Michael

Great video thanks Paul.  As others have said - refreshingly honest.  best wishes for 2022.

The last bear market in March 2010 lasted for only a month, interrupting a decade long bull market. Who knows how long the bull market market will last for. But one thing is for sure, without good risk management, leverage is increased risk, the house that took years and years to build will always come crashing down, in a never ending cycle happening across decades even. It took me ages to correctly use position sizing, but I get it now. No matter how good your offense is, without good defense, I don't think it's possible to win in the long run, especially over many bull and bear markets.

I'm hoping 2022 will be the year that everything clicks for me. I'm strong on technicals but was weak on the fundamentals. With the help of Stockopedia which I recently subscribed to, I'm confident of a good years ahead, by combining both technicals and fundamentals, and with good risk management. 

Also I tested the waters with Cryptos for the first time in the last few months, and this is the year I am taking it deadly seriously. A 63 milllion percent increase on Shib, is simply impossible to pass over. I wish that there was a stockopedia for cryptos- big hint there! Cryptos are a once in a lifetime opportunity, but the risk will scare many off, which is understandable. 

Enjoyed the video. Not many talk about their losses, but as you said, one can often learn more from them than one's profits. HNY. 

Brilliant video Paul, and a very useful new macro sell signal - just tell us when you buy a new car/house/private jet, and we can all sell up and await the market’s crash.

Happy 2022

Chris

Thanks for the update Paul .. wondering if you’d ever consider dropping the leveraged approach? It introduces the problem of not only having to get the business right but also the path of the share price which is a virtually impossible task… I used to be a market maker and now that I invest the lack of mark to market sensitivity makes for a much more enjoyable experience 

Great video Paul, appreciate the honesty.

Curious as to why you don't just limit the amount of leverage you use in your spreadbet account. lever up (say) 20-30% in normal times and raise this in a crash maybe, or some other strategy, not running near capacity on margin. No reason to not long term hold in a SB - as long as sensibly levered, CGT advantages substantial..

I hear of many investors who go max out leverage on spreadbet accounts then wonder why they get erratic results. Not sure why spreadbetting inspires this sort of  trading / investing but its a common thing. Not saying Paul does this neccessarily by the way.

To echo the comments of the others, fantastic video and general commentary, Paul.

For your follow up video re 2022 that you mention, would be very interested to hear your thoughts re inflation / rate rise expectations, and views on portfolio positioning accordingly.

Excellent video Paul - open and honest which is so refreshing to see. Many other financial commentators could learn from you on this. 
Really appreciate all the hard work you've done this last year. I particularly rely on you to analysis the balance sheets on some companies I like in case I miss something. 

Keep up the great work! 

paul

i have sent you  a baby"s bib for when you drink your tea.... thanks for the video

Great video Paul and I love this format . I share your views on Boohoo (LON:BOO) and Saga (LON:SAGA) and am not worried about what I consider mis-pricing, as I don’t intend to sell either large position for a few years . In fact, have continued to buy both on weakness .
Hope you had a great Xmas and that 2022 is both a profitable and healthy one for you .

Love the video Paul, your honesty is so refreshing, warts and all.

Happy New Year!

Excellent as always

Thanks Paul for a great video and candid comments.  Happy New Year!

I’m wondering whether a problem we need to be aware of is taking too large a position in our highest conviction stocks without applying a stop loss?

It’s so tempting when we find a stock we really like to take a position that is very large compared to the rest of the portfolio.  If it works out then we pat ourselves on the back for our genius.  But if it doesn’t it trashes the performance of the portfolio overall completely.

My nemesis was Iqe (LON:IQE) a few years ago.  I felt the Muddy Waters attack was completely unfounded so just held on through the decline, which then of course continued with the Huawei issues and so on.  So perhaps oversized positions should only be used with stop losses.

The point about liquidity is also one I’ve taken on board to a greater extent more recently.  I hold a thinly traded mid-cap that’s done very well over several years. It’s been on a great run recently but if sentiment turned against it, it could fall back very rapidly due to low liquidity so I recently substantially reduced my position there.

By  the way, you’ve mentioned your problems with illiquid small caps several times in the past so I was surprised that you were so keen on Best Of The Best (LON:BOTB) at times despite it being relatively illiquid.  With hindsight, would your view on it be different now based on liquidity?

Thanks Paul for the video and for all the useful information over the year given by you , Jack and the team.  Happy New Year !

Thoroughly enjoyed listening to your very honest overview. Hope you can get the tea stain out of the shirt :-)

What a superb video Paul - your openness and honesty is great to hear.  It is fantastic to see someone be so brutally honest about their weaknesses, which to be honest just go to show what a superb person you are.  We all have our own investing errors/mistakes/weaknesses and I get a lot of encouragement through your honesty from seeing that even the greatest can make errors.

I loved the fact that you also spilled your tea down your jumper and just carried on....brilliant and made me laugh out loud.

Great video (as usual) and I look forward to your next one.

Best wishes and Happy New Year - keep up the great work.

Happy New Year Paul. I look forward to watching your video this evening after I've had my afternoon snooze. Thank you for the great share analysis in 2021. Cheese!