Brian Terry has been investing for over 30 years, and prefers to pick stocks himself – rather than paying a fund manager to do so.
He says: “I took out a self-select PEP when they were launched, in the late 1980s, which I later converted this into an ISA. I also invest in a SIPP alongside my company pensions.”
Terry has a final salary pension, but also invested in an Additional Voluntary Contribution pension in the early Nineties. He says that this pension performed badly, so he converted it to a SIPP, which gave him more control about the shares and funds it was invested in.
Both his ISA and SIPP are invested through the AJ Bell platform. Both portfolios are mostly made up of shares, but he also has a smattering of ETFs and funds, which help diversify his holdings.
Terry says he currently has around 21 different stocks in his SIPP and 18 in his ISA, with some duplicated between these accounts.
He explains: “I am good at buying, but bad at selling. Some of these stocks I have held for many years. I tend to buy and hold – even if the share price has fallen in value.
“I review the holdings about once a year. Even if shares have fallen in value I often keep them for the favourable yield.”
Some of his largest holdings are blue chip companies in the utility and energy sectors. These include National Grid (NG.), Exxon Mobil (XOM) and SSE (SSE). He also has substantial holdings in British American Tobacco (BATS) and Autodesk (ADSK), a Nasdaq-based tech company.
Income Paying Utility Giant
National Grid – one of the largest utility companies in the world, has a three-star rating from Morningstar, meaning stock analysts consider it to be trading at fair value. Analysts point out that National Grid now earns about 30% of its profits from the United States, but that will rise as the US dollar strengthens, US regulation improves, and National Grid pursues large investment opportunities in the US. More recently it has also benefited from the weakness in the pound, as this has boosted the value of its overseas earnings.
Analysts conclude National Grid has a narrow moat; meaning its services and products are reasonably well defended from rival firms.
Exxon Mobil, the US-based oil and gas producer, has a two-star rating from Morningstar analysts, meaning it is currently trading at a slightly more than their fair estimate for the shares. Analyst Allen Good says: “[Exxon] has historically set itself apart from the other majors as a superior capital allocator and operator, delivering higher returns on capital relative to peers as a result. We expect it to maintain its lead in returns, but forecast a decline from historical levels, owing to reliance on higher-cost projects to replace reserves.” Again it is listed as having a narrow moat rating.
Tech Stocks Prove Most Profitable
Terry says that when it comes to looking at his most profitable holdings, Autodesk has proved to be an excellent investment; “I’ve held this share in my SIPP, and have made a 146% return on my money. It’s one of my best holdings.”
Morningstar analysts agree that this continues to look like a promising stock. Analyst Andrew Lange says: “Autodesk is positioning itself to protect and extend its market leadership in computer-aided design.
“We believe the firm will remain a market leader over the long term, given its commitment to evolve to changing market trends, and its recent investments in mobile platforms, social content, industry collections, and cloud technology exemplify this.” However, while it has a wide moat value, Morningstar notes that its current share price of $76 is above its fair value estimate of $60 a share.
Terry says that while he has made decent returns from this tech stock his most profitable share has been Paddy Power Betfair (PPB). This betting company has increasingly offering online and telephone services, alongside its more traditional high street licensed betting shops.
He says: “A colleague of mine had used Betfair for many years, and said he thought it was the best platform around. I read up on it and thought it was worth a punt, in both my ISA and SIPP. Now it is up by about 190%.”
Taking Stock Tips
However, as he points out taking a tip from colleagues is not always guaranteed to get positive returns. He says he also invested in Quindell, the controversial AIM-listed insurance claims outsourcer – now known as the Watchstone Group (WTG).
Shares in Quindell collapsed in 2014 and although part of its assets were bought by an Australian company this deal became embroiled in accusations of accounting irregularities.
Terry says he is now semi-retired and living near Winchester. He is divorced and says his main investments are in the stock market. He says he will continue to invest to help fund his retirement.
