Meet the investors: 8 more readers' lessons, and all their top 5 holdings

Name: Robert
Age: 67
Employment status: Retired
Years investing: 40+ years
Investment goals: Generating income and capital growth well in excess of inflation throughout the market cycle, while also protecting the portfolio from market downturns
Products used: Unlisted managed and property funds, LICs, ETFs, and direct shares
Biggest portfolio holding: Clime International Fund
Date published: October 15 2021

Employment Status: Retired
Years Investing: More than 40 years
Investment goals: Live as well as we can for as long as we are fit and healthy, and leave enough in our trust to fund the advanced education of outstanding students from underprivileged backgrounds
Products used: Fund manager, direct ASX holdings, direct property development
Biggest portfolio holding: ASX-listed companies exposed to lithium and copper

• Don't borrow to invest.
• Don't get attached to your investments.
• Watch the macro environment, as there are usually signals that tides may be changing.
• Study investments for a few weeks before buying or selling. Be patient.
• Have clear goals and targets.
• Be patient and wait for opportunities.
• FOMO will cause poor decisions that will usually cost you.
• Seek quality information on your potential investments.
• Keep a good spread across a number of market sectors.
• Use a mixture of fundamental analysis and technical analysis in buy or sell decisions.

Barry's Top 5 Holdings:

"My research has identified Pilbara Minerals (ASX: PLS), Orocobre (ASX: ORE) and Mineral Resources (ASX: MIN) for their lithium holdings, quality management and balance sheets and Aeris Resources (ASX: AIS) for its copper holdings.

Meet James: He's only 20 but has a decade of stock market experience under his belt

At the age of 10, I set up my modest stock market portfolio, and I started a tropical fish breeding business to fund my ongoing equity investments, so I guess you could call me entrepreneurial by nature.

Name: James
Age: 20
Employment Status: University student
Years Investing: 10 years
Investment goals: Profit and self-education; asset management is a career goal
Products used: Direct domestic equities investment
Biggest portfolio holding: Hazer 24

What lessons have you learnt you can share with Livewire readers? 
I look for companies that are in a strong and sustainable position. I analyse factors including:

• Customer loyalty
• Bargaining power
• Pricing power
• economies of scale
• cost curve positioning 
• Expansion opportunities
• Strength of intellectual property
• The threat of potential obsolescence through innovation
• Availability of substitute products
• The threat of new entrants
• industry positioning
• Impact of possible structural changes 

Through applying these filters I believe I have avoided value traps, including A2 Milk (ASX: A2M)

James's Top 5 Holdings

1. Hazer Group (ASX: HZR): 24.7%
   
2. Origin Energy (ASX: ORG): 24.6%
   
3. Resolute Mining (ASX: RSG): 7.4%
   
4. Rio Tinto (ASX: RIO): 18.9%
   
5. Tassal Group (ASX: TGR): 11.09%
   

   Hazer: Hazer is the ultimate speculative play, offering significant upside through their carbon-negative biomethane-cracking hydrogen production process. The process provides substantial advantages over steam methane reforming, which emits 10-12kg of CO2 emissions per kg of hydrogen produced.

   Hazer can easily obtain a multi-billion-dollar (currently $250 million) market cap if successful in scaling up and licencing their technology.

   I am quietly confident that this can be achieved. However, I’m concerned that their technology may be reversed engineered if successful.

   Origin Energy: I purchased Origin in April as their 37.5% stake in APLNG and their 20% stake in Octopus justified their $7 billion market capitalisation and potentially their $11.5 billion enterprise value. I calculated the value of Origin’s APLNG stake at $8.9 billion, assuming a 9% weighted average cost of capital and conservative annual cash distributions of $800 million.

   I’m incredibly bullish on the LNG outlook over the short term as LNG prices should continue to rally as the Northern Hemisphere enters winter.

   Origin’s robust generation portfolio remains attractive, primarily incorporating modern gas-fired power stations.

   Resolute Mining: Resolute mining serves as a levered bet on rising gold prices, having the lowest market capitalisation to production rate of 1,471 and the highest all-in sustaining costs. This goes against my typical strategy of investing in companies at the bottom of the cost curve. I did this as I wanted to gain significant leverage to the price of gold while lowering my opportunity cost of investing in historically lower-yielding gold stocks.

   I made this investment as gold could potentially enter an extended bull market if inflation persists.

   Rio Tinto: Rio Tinto is an attractive value proposition given its fully vertically integrated low-cost aluminium business and its growing copper portfolio. Rio Tinto’s shares-outstanding and net debt has steadily decreased, justifying their increased price.

   Aluminium and copper demand remains robust from increased demand from the construction, electronics, electric vehicles, and renewable energy sectors.

   Tassal: I invested in Tassal as a reopening play at the start of this year, expecting that salmon prices would rebound from increased restaurant demand. Salmon prices are currently 50% off their pre-COVID peaks compared to other meat prices, providing considerable upside.
   
   

   Meet Jeff: The musical master with a penchant for picking stocks

My father's aim was to get me interested in the mechanisms that companies go through with regards to shareholders and reading annual reports. It worked

Name: jeff
Age: 53
Employment status: Retired
Years investing: 41 years
Investment goals: To fund our income in retirement
Products used: Industry super fund, Australian share portfolio, rental property, bullion
Biggest portfolio holding: Afterpay (ASX: APT)

Is there a lesson you’ve learned as an investor that could help others?

Yes — manage your own finances. Learn about tax, investing, risks and opportunities. Only invest what you are willing to lose.

My biggest thesis though is “Don’t pay someone to do something you can (and should) do yourself!” On that matter, the one book that changed my life in financial matters was Making Money Made Simple by Noel Whittaker.

I think too many people invest money that they are not willing to lose. Then they go, "Ah, my Bitcoin portfolio went up 15% overnight." And the next day, "It's down 15%." You're better off putting that money into some shares, getting some dividends, and learning a little bit more.

I am not investing in cryptocurrencies at this stage. One of the first lessons my father taught me is that when the taxi drivers start talking about a stock or an investment, that's the time to get out.

Jeff's Top 5 Holdings

Tipped by Wilson Asset Management at a shareholder meeting five years ago pre-merger with Touch Group, it was clear it was a first mover in the buy now, pay later sector and was gaining traction, and the WAM Team started using the word Afterpay as a verb — it had all the hallmarks of a success story appealing to millennials. I accumulated shares up to $23 per share, including parcels for my wife. I have been selling down since $150 to put the money to use in other securities, but it remains my largest single holding.

Dicker Data (ASX: DDR) — 11.5%

Originally mentioned by Motley Fool in a general article, and paying quarterly dividends, and being founder-led, I was sure a few thousand dollar investments at $1.60 would be worth the risk. Accumulating along the way and including capital raisings post-COVID crash 2020, there is a nice stream of dividends coming in to put to use on other opportunities that are presently arising.

Macquarie Group (ASX: MQG) — 8.8%

Only recently pipping one of the "Big Four" out of their spot, Macquarie has been a stalwart, and when market dips have created a buying opportunity, I have taken that chance to build up my holding as MQG will become one of my dividend providers throughout my retirement. $200+ per share sounds a lot to pay, but I thought $60 was a lot in 2016.

Orocobre (ASX: ORE) — 4.29%

With a head office in Brisbane, Orocobre gave me the opportunity to buy into a company that seemed to have all its ducks lined up. I go to the AGMs, talk to the directors and staff, which has to date confirmed that my money has been in the right place. Again I took advantage during the COVID crash to participate in the capital raising in October 2020 at $2.52, which proved to be a great decision and it is onwards and upwards for this company — because lithium will be a critical component for batteries long after I have left this earth.

WAM Microcap (ASX: WMI) — 3.55%
Much of my portfolio was what would be considered micro cap at one stage or another, so why not give one of my favourite fund managers some of my money to find the next ones that I have never heard of? Oh, and they pay a steady (and growing) stream of dividends!

Meet Tom: The farmer reaping the rewards of investing

Name: Tom

Is there a lesson you’ve learned as an investor that could help others?

The market goes up and down. Don't panic. You can't be in and out of the market; you can't time it.

Some people might disagree, but I think the electric car market, lithium and decarbonisation have a fair bit behind them going forward. But then again, you need to be careful about the ones that you invest in. Start small.

Also, I know a lot of fund managers probably would say I need to diversify and invest in global companies like Alphabet, Facebook and Amazon. But I don't want to take on the currency risk. Once you go overseas, you have currency risk as well as share price risk. We have done well in Aussie shares, so we are happy to stick with that. 

Tom's Top 5 Holdings

CSL (ASX: CSL) - One of the first shares I bought, I have owned it since 2014. Got in at $85. CSL is a great Aussie company and a world leader in blood and plasma. I have taken profits a few times.

Novonix (ASX: NVX) - Currently my best performing share. I have owned it since January 2021. I got in at $3.09. Novonix operates in the electric vehicle battery space. Electric vehicles are coming, investors need to be in this area. It's very volatile though.

Altium (ASX: ALU) - I first purchased Altium in January 2016 for $4.80. I have added to my position and taken profits along the way. Altium is a software company with global scale. I will stay with this one.

Australian Ethical Investment (ASX: AEF) - I have held AEF since January 2020. I first purchased it at $4.69. AEF only invests in companies that have a positive impact on climate and health. Younger generations are going to be more and more aware of where their money is going.

Wesfarmers (ASX: WES) - I first purchased Wesfarmers in March 2020 for $34. It has a well-diversified business and a good management team. Will be a long-term hold for me.

Meet Paul: The investor whose journey has been a "string of near misses and extraordinary luck"

Name: Paul

Age: 61
Employment status: Retired
Years investing: 30
Investment goals: To provide for children and grandchildren and future generations
Products used: Managed funds
Biggest portfolio holding: Magellan Global Fund

Is there a lesson you’ve learned as an investor that could help others?

Don’t buy a residential investment property. It’s too much trouble.

All the investment advice books assume a steady progression through life where you must create a budget and save x% of your income, which will then steadily grow and compound to an impressively large amount at retirement. Aside from super, it’s utter nonsense because life is lumpy, so budgets are useless. Just try really hard to spend less than you earn.

Pick your spouse carefully. It’s probably the most important thing of all. You’ve got to be on the same wavelength.

I believe that money only buys you options in life. It’s how you exercise those options that finally determines whether or not money can indeed buy happiness.

Magellan Global Fund (DPM) – 8.3%

I’ve held this fund in one form or another since 2010, and it’s been an excellent investment, notwithstanding their recent underperformance against the benchmark. I like it because it holds a good mix of growth and defensive stocks, so does well throughout the cycle. This is a long-term hold.

Partners Group Global Value Fund – 5.2%

This is a private equity fund that I’ve held for the past three years. It just grows steadily month after month and is one of my best performers over that time. I’ll keep adding to this.

Bennelong Concentrated Australian Equities – 4.9%

I’ve owned this for many years. It’s regularly in the top three performers for Australian funds although it can be a little volatile. Another long-term hold.

Hamilton Lane Global Private Assets – 4.4%

This is similar to the Partners Group Global Value Fund, and grows like clockwork, but doesn’t pay a dividend.

Firetrail Australian High Conviction Fund (DPM) – 4.2%

I’ve owned this for three years or so. I quite like it because it’s been a steady performer, without being too volatile.

Meet Ann: And the small-cap stocks funding her retirement

Name: Ann
Age: 65
Employment status: Retired
Years investing: More than 30 years
Investment goals: To provide for my grandchildren and fund retirement
Products used: ASX listed shares
Biggest portfolio holding: National Australia Bank (ASX: NAB)

Is there a lesson you’ve learned as an investor that could help others?

For example, Calix, one of my largest holdings, is a company that seeks to improve carbon sequestration in cement production – not sexy stuff – but important in a decreasing carbon economy.

I have also invested in a clean lithium company, a company focusing on regenerative farming, a green hydrogen company, and many more. I hope these companies will be successful in the future, in a world that is taking climate change seriously. I think this explains my passion for the share market – it is about the future and I really like that.  

Ann's top 5 holdings

1. National Australia Bank (ASX: NAB) - 15% - this is a leftover from when I had most of my portfolio in bank shares.

2. Macquarie Bank (ASX: MQG) - 10% - I switched a proportion of my NAB shares for Macquarie Bank during the 2020 downturn, which proved to be a good decision.

3. Calix (ASX: CXL) - 8% - this was initially a small holding, but my 87 cent shares have since grown to $6.65. I like the management of this company and I think it will continue to perform well.

4. BHP Group (ASX: BHP) - 8% - I have continued to hold BHP through thick and thin. For an extremely large company, it is able to change focus and look to the future. I like that.

5. Wesfarmers (ASX: WES) - 6% - I bought more Wesfarmers at a time when I thought the market might have been overheated and the company held a fair proportion of its funds in cash. Although the market didn’t really take a step back, the company has still done well for me.

Meet Eddie: He's humble and generous with a streak of courage

Name: Eddie

Age: 66
Employment status: Retired
Years investing: 38 years
Investment goals: To fund retirement, assist his children and help those less fortunate
Products used: ASX listed shares, LICs and managed funds
Biggest portfolio holding: WCM Quality Global Growth fund

Is there a lesson you’ve learned as an investor that could potentially help others?

I’ve learned many lessons learned over the years:

1. You cannot time the market. I held my breath and nerve in 2020 as COVID saw our portfolio decline by over 30%. I had to remind myself that even if it did not recover, I was still wealthy by world standards, in the top 10% of the world’s wealthiest, so it was a paper loss but … (VIEW LINK). We forget in Australia and the rest of the developed world, how wealthy and blessed we really are.
2. Paying tax means you are making money (which is why negative gearing makes no sense).
3. Don’t be greedy - sell and take profits. During the dotcom period I had an amazing stock that had increased tenfold, only to fall back very quickly to the price I bought it at.
4. Money will give you a better life but remember to use your good fortune to be generous and support others - family, neighbours and charities.
5. There is more to learn than the ability to learn everything. Don’t invest in something that you don’t understand.
   
   

   Eddie's top 5 Holdings

   • WCM Quality Global Growth fund (WCMQ) 10.8
   • L1 Long Short Fund (ASX: LSF) 9.25%
   • Telstra (ASX: TLS) 8.8%
   • Metrics Income Opportunity Trust (ASX: MOT) 7%
   • Washington H. Soul Pattinson (ASX: SOL) 5.3%

   WCMQ is an international fund, so increases my exposure to investments outside Australia without owning stocks in the US. It was recommended by Switzer, and I really liked their approach to looking at company culture. I realised from my own work culture that it’s probably the most important asset a company owns. The return from the initial investment has been exceptional.

   LSF was recommended by my son, as was MOT, after having to invest with funds from my wife’s retail fund. MOT is a cash option as we hold only 5% in cash. They can be sold when cash is needed. I realise and am comfortable with the risk entailed but the team at Metrics managing this and the Metrics Master Income Trust (ASX: MXT) know what they are doing. Andrew Lockhart, the managing partner of Metrics, was recently interviewed on Livewire, where I have also heard him previously.

   LSF is also an international fund and while it was down for a while, it has been phenomenal in the last two years.

   TLS is a long-term holding for dividends.

   And I hold SOL as a result of Milton, a company known to me since the 1980s when the founder suggested they were a good investment. He has long since passed away and I only invested in recent years, but they pay reasonable dividends.

   I realise having 42% of a portfolio in five stocks (plus 17% in three managed funds) concentrates the portfolio and the risk, but the growth and dividends are spread against 28 other listed shares, some of which are speculative. My hope is eventually to reduce to about 20 or fewer stocks and essentially not be as active in reviewing them.

   
   

   

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   Meet the Investors: 8 readers' lessons, and all the Top 5 Holdings

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