Investor Views: "I Bought a Property with Cash from my Investment Gains"

Private investor Leigh Moss has made healthy returns from investments in industrial companies. He tells Morningstar about his stock-picking success

Emma Simon 30 November, 2016 | 9:40AM
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Leigh Moss has been investing for more than 30 years. His first investment was before many firms were privatised in the 1980s, which saw the likes of British Gas offer shares to ordinary investors.

He says: “Initially, I didn’t know much about investing. I was simply looking to try and boost my savings. I was in a low paid job with a young family to support and a mortgage. Although savings rates were paying a good rate of interest the money was far too easy to access. The temptation to spend all that I had saved was overwhelming, leaving nothing left for emergencies.”

Looking for a longer-term investment he spotted an advert in the paper for a property investment trust. “Being pre-internet I filled out the coupon and my first steps in to investing had begun.”

Private investor Leigh Moss

From these relatively small beginnings Moss has built up a diverse portfolio. He now has savings in a stocks and share ISA, a SIPP, peer-to-peer lending, high interest savings accounts, and in several properties. Moss has been particularly happy with the performance of his SIPP and ISA portfolios, both of which invest in open-ended funds, investment trusts, direct shareholdings and ETFs.

He adds: “I now have sufficient funds to retire so I am investment more for the fun of it.”

Stock-picking for ISA Success

Moss takes a more speculative approach with his ISA. He has worked in the chemical industry for a number of years, and has often invested in companies working in this sector.

Recently purchases include Andalas Energy (ADL) after he read favourable comments from brokers. He has also invested in Bacanora Mineral (BCN).

His most profitable investment has been in Albermarle Corp (ALB), another chemical company which manufactures lithium for batteries and bromine used in flame-retardant materials.

This company has a four-star valuation rating from Morningstar, meaning equity analysts consider it to be trading at less than its fair value. It is listed on the New York Stock Exchange.

Morningstar analysts say the company is well placed to benefit from growth in the lithium market, and it has the capacity to expand.

Moss invested in Albermarle through a share save scheme, which effectively boosted his overall returns, as contributions were matched by his employer. It also allowed him to buy shares at a discount.

He says: “I noticed the shares would go to $65 and then drop back to $45 dollars or less, so I started buying additional shares at $45 or less and selling at $65 or more.

“The last time I sold at $68 the price continued to rise to more than $85 and the price of the pound against the dollar also dropped which I was a bit annoyed about,” he admitted. “However, by this time I had made enough in the Albemarle Corporation to pay off two mortgages, buy a flat for cash, purchase a pre-owned Rolex watch, save the maximum that would attract interest in one of the best UK current accounts and have some money left over.”

Elsewhere he says he’s also made healthy gains from investment in the blur Group (BLUR), the enterprises service platform. Moss said he bought shares for 80p, selling out for just less than £8 a share.

This company saw its share price rocket away during 2013, although since the start of 2014, the decline has been just as sharp and it is now priced at just over 10p per share.

Moss says: “The gains on made on this has more than covered losses I’ve made elsewhere.”

Before buying stocks of funds Moss says looks at broker recommendations, reads media reports and also the news letters published by investment companies. “I do look at past performance as well, buy mostly it comes down to instinct. My instincts though can be wrong, and if lose money as well as make gains. Luckily enough I have made significantly more than I have lost overall.”

Long Term Funds for Pension Profit

With regards to his SIPP, Moss says he take a steadier approach, and has invested in a number of funds that have performed well. He says: “I am particularly pleased with the Cullen North American High Dividend Value Equity Fund. Since my initial purchase of this fund I have topped it up three times and it is still showing a 26% increase.”

This fund has a two-star performance rating from Morningstar. Analyst Lena Tsymbaluksays: “A major strength of this fund is the experience of its management team. Veteran investor James Cullen, a founder of Cullen Capital Management, has been investing since 1964.

The remit of the fund hasn’t changed since its 1994 launch: stocks are screened to identify those with high dividend yields and low price/earnings multiples. The fund managers prefer companies with predictable dividend payments and are content if this results in large concentrations in certain industries.

Morningstar adds: “We think the fund remains a reasonable offering for investors seeking a value-style US equity fund. The fund retains its Morningstar Analyst Rating of Neutral.”

Moss also uses his SIPP to invest in another US fund, Neptune US Income. Moss has seen gains of around 30.5% gain on the fund.

Tax Free Lump Sum Pays for Property

Two years ago, at the age of 57, Moss said he took a tax-free lump sum from his SIPP and used it to purchase a fire-damaged property, which he then renovated.

He says: “The rental I eventually received was giving me a yield of 11.5%. While this yield is very good it did not come without hassle. I had to start filling out the self-assessment tax form, something I didn’t have to worry about with the ISA and pension fund, and having to chase the tenant every month for rent was time consuming.

“After 22 months, he stopped paying any rent altogether and is no longer living in the property.” Moss also pointed out that new legislation in Wales meant he had to register as a landlord and then go on a course to get his license, both of which cost money.

He calculates it would take another eight years of rent for him to recover his initial outlay. “I have decided to put the property up for sale and will hopefully make a profit from it. In future it may be prudent to purchase and rundown property to renovate then sell, rather than as a buy-to-let.”

He adds: “Investing in funds and stocks is far more interesting that renovating property so regardless of the money to be made I would still choose investments over property.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Albemarle Corp103.51 USD-4.01Rating
Beacon Energy PLC Ordinary Shares0.01 GBX0.00

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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