Roger Leighton has focused on individual shares over the 30 years he has been investing. Now in his mid-50s, he admits the process hasn't been "an unalloyed success".
Nevertheless, Roger continues to focus on direct shareholdings and is prepared to take a bit more risk with these investments. He explains: “I left it a bit late with my pension, so I am trying to leverage what I do have to build a decent fund.
“I’ve been trading shares since my mid-20s. It hasn’t always been successful but like golfers, you tend to remember the good shots and forget the ones that got stuck in the bunker or lost in the rough!”
Among these "good shots", oil and gas shares have proved to be successful holdings in the past. He says: “It’s always exciting dabbling in smaller exploratory companies, many of which are listed on the Alternative Investment Market (Aim).”
Two of these Aim-listed stocks that have done particularly well for him are Amerisur Resources (AMER) a South American explorer, and Sound Energy (SOU).
Amerisure invests in oil and gas exploration and development firms across Paraguay and Columbia. According to Morningstar, its share price has risen in value from 2009 to mid-2014, with some particularly steep gains in 2012/2013.
According to Morningstar figures, Amerisure shareholders have seen total annualised returns of 14.4% over the past 10 years. However, over shorter time frames, these gains have evaporated: over three years shareholders have total annualised losses of 22.7% and over the past year they are sitting on a total loss of 17.7%.
It is a similar picture with Sound Energy,is a Mediterranean gas company engaged in exploration activities in Italy and Morocco. The company’s share price gained rapidly in both early 2011 and in 2016. In early 2017 it was trading at a high of 89.7p per share. Today, though, it is back to just 8.9p per share.
For some investors, this volatility has translated into losses. According to Morningstar figures, Sound Energy shareholders have seen annualised total losses of 36p over the past three years.
Roger, who lives in London, says: “With companies like these it is all about timing. Both companies have had some good runs but also rather precipitous falls.
“Trading divides people into Chicken Littles, always worried the sky’s about to cave in, and Panglossian optimists. It is easy to say that investors should set target exit prices and stick to them — but often you can get caught up in the moment.”
Roger says the tide seems to have turned “surprisingly fast” against this sector as a whole. “There does seem to be some poetic justice in this,” he adds.
While he has made reasonable returns from the oil and gas industry, other holdings have not been as lucrative: “I was heavily invested in Flybe and it nearly wiped me out.” Since losing money on the airline, he has learned to be “very wary” of the motives of all the players involved in a share — be it the directors, brokers, the bulletin board cheerleaders and ‘de-rampers’.
“Ordinary employees tend to be the most trustworthy and loyal, and sadly often the most dispensable.”
At the moment Roger splits his investment across his Sipp and ISAs, both of which are held with AJ Bell. He doesn’t necessarily contribute to both every month, but invests as and when funds are available to do so.
When it comes to selecting shares for his portfolio, he looks at the directors’ track record, the product or service relevance, the demographics of the market it is servicing, and whether the share price is temporarily unloved and may be due a recovery.
Roger also tries to keep an eye on wider market trends with a view to capitalising on changes — or at least protecting his holdings for any potential downside.
He says: “There are a number of issues that I am keeping an eye on at the moment. Many, and perhaps all, investments are cyclical in nature the trick is spotting whether there are structural changes at work that will break the cycle up or down.
“For example, retail is deeply unloved at the moment of course. The question is, will bricks and mortar stores make a come back, and if so, in what form? After all ‘live’ experiences are increasingly valued above, and as a supplement to, the speed and convenience of digital. So perhaps we will see some high street brands coming to the fore again.”
Roger works as an agency director, and now contributes to a workplace pension too. Living in the capital with his wife and two children, who are both at university, he has seen the value of his home rise in value. “But this is where we live so I don’t really see it as an investment. It’s certainly not a liquid investment and I wouldn’t want to rely on these gains.
