Investor Views: “I’m Sticking with Financial Stocks”

Private investor Carl Thomas has made healthy gains from investing directly in shares – including financial and technology stocks

Emma Simon 8 December, 2016 | 1:39PM
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IT services worker Carl Thomas uses his ISA to invest directly in shares, rather than buying funds. He describes himself as a contrarian investor; always looking for value when it comes to buying individual stocks. Currently, he has a number of out-of-favour financial holdings, both in the UK and US.

He says: “I currently hold Barclays (BARC) shares. I think these have been hard hit by the negative sentiment against UK banks. But I think they have the potential to offer real value over the longer term.”

Other financial shareholdings include Apollo Global Management (APO), a US-based asset manager which specialises in illiquid credit markets. It is listed on the New York Stock Exchange.

Barclays has a three-star rating from Morningstar equity analysts, meaning they consider it fairly valued. Morningstar analysts say that Barclays UK – which includes the retail banks, its credit card division, wealth management and business banking – continues to look attractive, particularly as Barclays has invested in digital customer service channels.

But they point out that Barclays’ investment banking business is “particularly risky... with the potential for losses to overwhelm the earnings power of the [rest of] the group.” For this reason Morningstar does not assign Barclays an economic moat, saying it has no competitive advantage over peers.

Morningstar analysts are more positive on Apollo Global Management. Analysts says this company has a narrow economic moat, meaning its business model is better defended against rival firms.

Morningstar notes: “Apollo delivered a solid third quarter amid continued improvement in many areas. Management fee income has been a very strong… and investing activity has increased. Broadly, this suggests a rapid improvement in earnings for Apollo in 2017 and 2018.”

Profiting from Privatisations

Thomas, who is now in his early 50s, has been investing since the mid 1980s. “I started investing before I’d even bought my first flat.” This was the time, he says, of several large-scale Government-led privatisations, designed to appeal to first-time investors like himself. “This helped foster an interest in investing. I certainly bought shares in BT (BT.A) at the time.”

He invests through his Selftrade ISA. He says he also has a couple of company pensions from current and previous employers. But he likes the flexibility that a self-select ISA offers. “There seem to be an extra layer of costs with many funds. I prefer to pick my own investments.

“My ISA enables me to buy individual UK, US and other overseas shares, as well as invest in other assets, such as ETFs. Outside my ISA portfolio I have also traded in covered warrants - which I dabbled in for a time.”

Investing in What You Know

Thomas has worked in the IT sector for many years and this has also influenced his choice of investments. “I’ve have always worked in the technology area and have invested in this area – although I don’t hold quite so many tech stocks at present.”

One of his best performing investments has been ARM Holdings, the UK-based technology company that makes the chips that appear in many processors and smartphones. In July this year the company was bought by Japan’s Softbank in a £24 billion deal which saw it taken off the London Stock Exchange. Thomas says: “I’ve made good gains, over several phases, from this holding.”

Other technology stocks he currently holds include ServiceNow (NOW) a US-based IT service company. This stock is considered fairly valued by Morningstar analysts.

Morningstar analysts say: “The company has become the dominant IT service management vendor globally, commanding upwards of 35% market share by revolutionising the market with its software-as-a-service delivery model.”

They add: “We think ServiceNow has a clear path to continue up-selling its customers while cross-selling to other service management applications, which underscores our reiterated positive moat trend rating.”

But it’s not all fast-growing technology stocks. Thomas says that companies such as British American Tobacco (BATS) and Imperial Brands (IMB) have have formed part of the bedrock of his portfolio, alongside passive fund holdings. He has invested in iShares ETFs that track the Chinese and Indian stock markets.

Investing for the Next Generation

Thomas runs Junior ISAs for his children; Mimi, Ben and Flora, pictured with his wife Raquel. Again, he prefers direct shareholdings, rather than funds. He says: “The approach is very similar. I will look at key indicators such as price earnings ratio, dividend yield and so on.

Private investor Carl Thomas, pictured with his family


"But I think I’m often looking to see whether the share offers value. One share at the moment I am interested in is Clipper Logistics (CLG).”

This UK-based logistics company provides consultancy-led services for the retail industry, particularly those in the fashion and non-food sectors. It’s blue chip clients based includes John Lewis, ASOS and Supergroup.

Thomas says: “I think this company might go on to do big things so I am slowly building up a stake in these shares.”

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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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for