How I Turned £4.6k Into £15k In Just 12 Months

Published in Investing on 31 August 2012

A small series of winning trades have transformed this Fool's portfolio.

Twelve months ago, the market was a very different place. There were huge fears among investors that a disorderly breakup of the eurozone was imminent. Shares, from across a number of sectors were on sale, offering great yields. The FTSE 100 (UKX) was 12% lower than it is today.

With interest rates on cash deposits so low, I decided to move £4,600 from a cash ISA into my broker's Self-Select ISA. I expected to make a return on shares that beat what I was getting on cash. I never expected this would be the start of a run of investments that would see the original £4,600 turn into more than £15,000.

Here is how I did it.

BP

One year ago, BP (LSE: BP) was still dusting itself down following the Gulf of Mexico crisis. The company was paying its shareholders a dividend again. Altough the payout was small, it was expected to quickly increase.

I spent all of the proceeds from my cash ISA to buy shares in BP at 381p in August 2011.

I expected that I would hold the shares for a long period, collecting a respectable dividend along the way. However, volatility in the markets presented an opportunity for me to sell BP shares in late November for 431p each. That equated to a 13.1% return in just three months. Even better, the period I held for qualified me to receive a dividend on the BP shares that I had purchased in August.

Robert Wiseman Dairies

Within a week of the BP sale, while running some investment filters, I came across shares in Robert Wiseman Dairies.

To some investors, this was just the type of company that should be avoided. Profits had been falling in recent years. Margins were thin and had also been falling. However, a large dividend was promised and people always need milk, right?

I telephoned the company to get a copy of their annual report in hard copy to help me better understand Robert Wiseman's prospects. I was convinced that although margins were low, milk processing was a cyclical business. Provided milk was still required, a margin improvement could more likely be secured if your customers really believe you might walk away from negotiations.

Robert Wiseman Dairies was a contrarian investment opportunity. In the first week of December, I bought 2,046 shares at 253p each. Six weeks later the company received a takeover offer at 390p. I took profits immediately, selling in the market for 388p.

T Clarke

Just two days after selling my Robert Wiseman Dairies shares, a fellow Fool suggested I take a look at shares in electrical contractor T Clarke. The shares promised a big yield and looked an excellent play on broader economic recovery.

Fortunately, one day in mid-January the shares fell 5%. This gave me an opportunity to buy 20,000 shares at 39p a share. Shares in T Clarke recovered and I sold in May for 50.85p per share, qualifying for a 2p per share dividend along the way.

SOCO International

Taking the proceeds from the T Clarke sale and a dividend from Robert Wiseman Dairies, I bought shares in SOCO International (LSE: SIA) in May. I was a little disappointed with the progress the company reported in their trading statement and sold just four days later on 18 May for a 4% profit.

Sportingbet

At this time, I already owned shares in bookmaker Sportingbet (LSE: SBT). However, one night in May I was up past midnight researching shares. I came across a story in the Australian Telegraph that their government was expected to legalise in-play betting. I knew that this development would significantly increase the profitability of Sportingbet. Better still, the shares were already cheap.

The next day, Sportingbet shares opened lower. Either the market had not digested the news, or my analysis was wrong. During the day the price of Sportingbet shares began to tick upwards. I decided to steel myself and buy as many shares as I could. I took the proceeds from the SOCO International sale, added the £400 dividend received from T Clarke and bought 37,770 shares in Sportingbet at 29.18p.

Positive trading news, followed by persistent bid speculation pushed Sportingbet shares past 40p -- valuing my recently purchased stake at over £15k. I believe that there is scope for the shares to be priced significantly higher still. The consensus is for Sportingbet to make 4.4p in earnings per share in 2013. If the mooted Australian changes come about I expect that this would be closer to 5p. By my logic, that puts a fair value for Sportingbet shares at around 75p.

If I can maintain this rate of return on my investments, that £4,600 will have been transformed into £1 million in another four years time. If you want to learn more about how returns like this can be made then check out the free Motley Fool report "10 Steps To Making A Million In The Market". This report will be delivered immediately to your inbox and is 100% free.

He avoided techs in the dotcom bubble and banks in the credit boom. But just where is dividend expert Neil Woodford investing today? All is revealed in this free Motley Fool report -- "8 Shares Held By Britain's Super Investor".

Further investment opportunities:

> David owns shares in Sportingbet and SOCO International.

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

AleisterCrowley 31 Aug 2012 , 11:04am

Well done, but beware Survivorship Bias

You could have made a series of equally 'risky' investments and ended up turning £4.6k into not much at all--and those losing investments would have been equally justifiable with hindsight, should they have come good.

ANuvver 31 Aug 2012 , 3:13pm

I'm extremely pleased for you. A terrific run.
Now do it again!

AleisterCrowley 31 Aug 2012 , 3:47pm

Yep, let us know what you've bought (and how many) as soon as each trade goes through, then we'll discuss next August :-)

15551 31 Aug 2012 , 6:22pm

Nice one, you got really lucky!

JonahR 01 Sep 2012 , 4:07pm

Over the years - particularly during the boom times - I have seen a lot of articles like this, along the lines of 'how I made a killing on the market' and I've always wondered what is the point of writing such stuff, beyind the obvious opportunity for a bit of gloating. Sorry, Mr O'Hara, but you might just as well have said that you've had a bumper win on the horses ... and why would that be of interest to anyone but you and yours?

goodlifer 01 Sep 2012 , 9:22pm

I suppose I can't help feeling jealous, but...

Ever watch people playing fruit machines?
They keep ploughing it all back, "to try and get a decent win."

liesarenocomfort 02 Sep 2012 , 6:10pm


You can tell this is a UK site -all the praise is qualified!

AdamB1978 03 Sep 2012 , 9:56am


Congratulations to Mr O'Hara. Firstly for having the guts (I went for the polite word) to put all your eggs in one basket on a number of occasions but also have having that mixture of luck/skill to achieve this increadible return.

As others have said however with less luck on timing you could have made investments which appeared equally justified and, because the timing was wrong, lost hte majority of the £4600.

Sounds a bit odd however had this return been achieved over 5 years rather than 1 year it would have appeared more of an achievement. Making half a dozens trades over a year and moving all your funds from one investment to another relies on a lot of luck from market timing (particularly when markets are jumping around as they have been for the past couple years). Had they been made over 5 years then the timing influence becomes lower and it becomes more apparent that its a higher proportion of skill and a lower proportion of luck

Would be great to see whether Mr O'Hara can repeat this. I have my doubts!!!

DirtyDollie 03 Sep 2012 , 3:03pm

Technically, this article should be entitled: "How I Turned £4.6k Into SportingBet Shares In Just 12 Months." If you haven't sold them you don't have £15k yet!

goodlifer 03 Sep 2012 , 3:24pm

liesarenocomfort

Have you seen any "qualified" praise of Neil Woodford from any of our experts?

liesarenocomfort 03 Sep 2012 , 6:30pm

Goodlifer,

Fair point.

I was just reflecting if this was on a US site there would lots of “Awesome” and “Good job!” and possibly some clapping involved.

Reminds me of those lines in 4 weddings:

Charles :Do you think there really are people who can just go up and say, "Hi, babe. Name's Charles. This is your lucky night?"

Matthew: Well, if there are, they're not English.

ANuvver 03 Sep 2012 , 7:45pm

Awesome! You rock!
Whoot whoot!
Arrooga, arrooga. Etc - plus, video of O'Hara doing a muppet dance with his mini-me...

I reckon the reason for the qualified response isn't specifically a Brit response.

There's something in it, to be sure. My background is dour Lancs and I recall an old gag about someone in a St Helens club being asked what they thought of the comedian and replying: "It were alright, I suppose. If you like laughing."

More, I think, to do with the fact that MF attracts the slow'n'steady and the author appears to have run a sort of pseudo-martingale bet which paid off.

It's interesting, heartening and lovely to see that such returns are possible. But I don't think it's a very Foolish approach. Hence the qualified response.

Now then - how many Fools play the Lottery?

ANuvver 03 Sep 2012 , 7:46pm

Whoops. Sorry. More of an accumulator than a martingale.

goodlifer 03 Sep 2012 , 10:20pm

""It were alright, I suppose. If you like laughing."

Reminds me of good old Bob Monkhouse..

They laughed when I said I wanted to be a comedian.
They're not laughing now.

YeeWo 20 May 2013 , 8:28pm

Good for you! Ignore the cynics........

I tend to divide shares into "Wives" and "Mistresses". If and when I trade, which is very rarely, it is usually with stocks I consider in the Mistress category. Once I have made my ISA sheltered gain I then tend to sell the Mistress and reinvest the proceeds into one of my six Wife stocks. BAT, DGE, HSBC, INCH, STAN & ULVR are my "wives", Bank of Ireland has been quite a nice "mistress" over the last year though! At the moment the market feels so 'toppy' everything is held with my core six and I have no appetite at all for trades........I, personally, wouldn't want to be holding an investment in Sportingbet for a long time. Hardly guilt edged is it?!

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