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Diary of a Private Investor

Investment Process

“When it comes to long-term investing, doing less is often more” – Joel Greenblatt

Generally speaking, my approach to investing is one of buy, hold and verify. That is, I try to find good companies and buy them when they are trading at a reasonable valuation. I then hold them for as long as my investment thesis remains valid or until I find a better opportunity. I have laid out below my process for doing this, although readers should note that I do not claim this process to be the gold standard but rather, it is what works for me based on my objectives, my personality, my ability and the time that I have available.

For example, I have little interest in meeting management or engaging in scuttlebutt even though such activities form an important part of the process for many investors. Personally, I have not found either activity particularly productive and instead, prefer to focus on the numbers (and I say that as a non-accountant) vis-à-vis the company’s strategy and business model – all of which I can generally get from the annual report, along with broker notes and online company presentations, when they are available.

Generating Ideas

I am always on the lookout for new investment ideas, including companies I have previously owned. I cast my net fairly wide but dismiss a high proportion of ideas early in the process – for example, if they are loss making or carry a high debt load.

Stock Screens – these are my main source of ideas. I have around 10 screens that I review on a weekly basis.

Twitter – this place can be a little crazy but from time to time, it throws out a gem that I have overlooked, often via the daily RNS commentaries and portfolio reviews.

Other Media – this includes a weekly read of Shares Magazine, a daily skim of Stockopedia’s SCVR (and reader comments) and regularly reviewing new content on Research Tree, PI World, Investor Meet Company and a variety of podcasts that I follow.

Stock Report Overview

As I said above, most ideas are discarded very quickly, often by a quick look at the Stockopedia stock report. I avoid loss making companies, low margin businesses and high debt loads. I am attracted to companies that are profitable, growing, paying a dividend, generate high returns on capital and have a strong balance sheet.

The Stock Report provides a snapshot overview that enables me to quickly assess these factors.

Checklist Analysis

If a company piques my interest at the Stock Report stage I will run it through my QARP Checklist. Rarely, a company will pass all 12 metrics (and if so, I would have found them via my own screen). More commonly, a company will fail on one or more checklist item. In turn, this informs areas I will pay particular attention to when I read the company’s annual report.  

Company Analysis

I always read the company’s last annual report, accessed via the company website (so that I can review that at the same time). I pay particular attention to the business model, strategy, outlook and risk factors. I also try to assess if the company narrative matches the numbers – for example, many companies will claim to have a strong balance sheet when the numbers might suggest otherwise. In addition, I will read the past 6-12 months news flow, including M&A activity, trading updates and the last interim report.   

One area that I need to improve on is to conduct a market and competitor analysis at this stage.

Watchlist Management

Unless there is a compelling reason to buy the stock right now, I generally prefer to monitor a company on my watchlist for a few months before making the commitment to buy. This enables me to see how the share price moves and absorb news flow before jumping in. Generally, my watchlist is quite small, e.g. 4-6 companies.


When funds become available to buy, I do so in 3-5 tranches. The latter purchase(s) will be after a positive trading update or results publication whereas the earlier 2 or 3 simply enable me to pound cost average into the position (because I am notoriously poor at timing the market).


Mainly, I monitor a company via their RNS announcements (I have news alerts set up on all my holdings and watchlist) and results publications. I also monitor price movements on a weekly timeframe and portfolio weightings and other portfolio metrics on a quarterly timeframe.


Each time there is a results announcement or trading update, I have an opportunity to verify my investment thesis. I am a compound growth and income investor and the balance between these factors essentially provides me with my thesis. Is the company growing its top line? Is the company growing its bottom line? Is the company growing its dividend? Is the outlook favourable?

I will mostly sell on a profit warning, although I will give a company some leeway if they are managing guidance conservatively (e.g. early notification of headwinds).


My main reason for selling a holding is if the investment thesis becomes derailed (e.g. a profit warning). The other reason to exit a holding is to make space for something more compelling or to make structural asset allocation changes. Additionally, I will top slice holdings to trim portfolio weightings and to take advantage of short-term volatility.   

The best visual depiction of this process is to view it as a funnel where a lot of ideas enter the top of the funnel but as the steps become more considered and time consuming, fewer and fewer companies are involved, hopefully meaning only a small number of decisions at the bottom of the process.

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