Where is a professional Fool investing his own cash today?
We're in the Fool zone, so it makes sense to look at a Fool's own portfolio. And who better than Maynard Paton, a.k.a. TMFMayn?
Maynard has spent 12 years sniffing out investment opportunities for The Fool, initially running the highly successful Qualiport. He then ran the Champion Shares and Champion Shares PRO stock-picking services from 2005 to 2011. For the last six months, he's been Deputy Editor.
He started in investing in the early 1990s and soon discovered the writings of Warren Buffett and the attractions of buy and hold investing. His own portfolio generally mirrored the Qualiport, which consistently beat the market.
A major success came with his investment in the London Stock Exchange (LSE: LSE) during the early Noughties. Maynard recognised the company had a very strong monopoly, net cash, high margins, but a modest valuation. The shares duly multi-bagged, rewarding Maynard's initial investment at 350p with an average selling price of £15 in 2007.
He shrewdly sold all of his individual shares, including his exchange-traded fund index trackers, with the FTSE above 6,000, when Northern Rock went bust in 2007. These days, he seeks out trustworthy management and doesn't try to make macro predictions. He believes that good companies bought at reasonably cheap prices and held for the long term should do well over time.
Thus investing is important to Maynard from a professional perspective. But it's also very important for his personal finances of course. So it's interesting for others to see where he's investing today and why, as part of the Foolish personal portfolio mini-series.
But first, we'll have a look at his overall investing approach. Helpfully, Maynard has summed this up in eight succinct points:
3. Trustworthy management with high insider ownership
4. Asset-flush balance sheet with conservative financing
5. Decent track record
6. Single-digit P/E, useful income
7. Reasonable prospects
8. The right nomenclature
This looks an excellent summation of a strategy designed to fulfil Warren Buffett's famous first two rules of investing (rule one never lose money, rule two: never forget rule number one!). I wish someone had drummed Maynard's approach into my head 20 years ago.
With points 5 and 7, Maynard is prepared to accept more of a haphazard or shorter track record if the value is very low and/or the upside potential is much greater. He has no interest in businesses undergoing structural change whatever the seeming value may be, and cites Johnston Press (LSE: JPR) in this regard as having taught him a hard lesson. I'm sure we all have a few similar lessons rotting away in forgotten corners of our portfolios.
He also has an understandable aversion to companies employing hired professional managers who don't truly have shareholders' interests at heart as they aren't significant shareholders themselves. Nor does he like natural resources companies in general, which are difficult to value accurately and where the potential for general shenanigans is therefore higher.
Maynard looks for a combination of income and capital growth, but dividends aren't essential at this stage of his life.
When it comes down to share selection, he has his feet planted firmly on the ground: "I run a 'best ideas' portfolio, whereby I just want about 10 individual shares to own. I don't have the brain capacity to manage any more, preferring instead to be obsessed with just a few names. There have been times when I've held as few as five shares for long periods."
He holds a few more than that at the moment though, so without further ado…
1. All-Share tracker 34%
Like our previously featured investor, Maynard's main holding is a tracker. His All-Share tracker is his main SIPP investment about which he says: "It's not part of my active investing portfolio, but after looking at these percentage figures I'm now debating transferring some of it into individual shares".
This demonstrates the value of a little self-analysis when it comes to the big financial picture perhaps?
2. Cash 26%
Next on the list is cash, currently making up over a quarter of Maynard's investing pot. But this doesn't reflect a bearish view. Instead, it's mainly there as a result of a tender offer for a previous holding (Dealogic), which was received a month ago.
He's metaphorically rubbing his chin as he weighs up where to re-invest this 72% gain. The market is certainly presenting opportunities. No doubt Maynard will let us know where it's going when he's made his mind up.
3. Abbey Protection 13%
At number three, we have what we're looking for; a share idea. Abbey Protection (LSE: ABB) makes up a huge chunk of Maynard's investments. He likes the legal and professional fees insurance provider's conservative board, decent track record, solid balance sheet and modest valuation.
Our Foolish colleague G.A. Chester recently explained Abbey's attractions in depth. Maynard sees Abbey as benefitting from niche selling policies that cover tax investigations.
At 81p, the brokers' expectations for 2012 place Abbey's shares on a forward P/E of 9.6, with a yield of almost 6%.
4. Record 7%
Next on the list is specialist currency manager, Record (LSE: REC). The company specialises in providing services for institutions such as pension funds, charities and corporate clients.
At 14.75p, Record is valued at £32.6m, but is fully-listed. The company was discussed in depth as a potential value share in April when the price was 22p.
The shares went over 35p over the next couple of months, before slumping along with almost everything else (though 2.59p has also been paid in dividends).
With the recent half-year results, Record made earnings per share of 1.26p. Perhaps more importantly for safety-minded investors, though; the company also had 8.9p per share in cash, and 11.9p per share in net tangible assets. Also, the chairman and founder owns a comforting third of the company.
5. FW Thorpe 5%
Maynard has industrial lighting group FW Thorpe (LSE: TFW) in his top five in common with previously featured investor "Carmensfella".
At 770p, the shares are on a P/E for the year to the end of last June of 10.7, and are yielding 2.3%. The balance sheet is also healthy as you might expect from a company where the founding family owns half the shares.
6. Odds and ends…
Then sitting just outside Maynard's top five are asset manager City of London Investment Group (LSE: CLIG) at 4% of the portfolio, estate agent M. Winkworth (LSE: WINK) at 4%, clothier French Connection (LSE: FCCN) at 3%, property trader Mountview Estates (LSE: MTVW) at 2% and milkman Robert Wiseman Dairies (LSE: RWD) also at 2%.
So there we have it. Will Maynard's portfolio mean that turning up at Fool Towers each day becomes an option rather than a necessity any time soon? Let us know what you think below.
> Read more articles in this series. If you would like to take part, please send an email to the Foolish Editors at firstname.lastname@example.org
> David owns shares in Robert Wiseman. The Motley Fool owns shares in City of London, Mountview, Robert Wiseman, Thorpe and Abbey.