investing etc. 0010

The joy of investing, searching for quality, retrieving orbital space junk, protective packaging, fitted kitchens, power converters and Vimto.

We’ve made it to double figures! We’ve also blown through 300 subscribers (crept, perhaps, or limped, to 306). Today is my birthday. Last weekend was my wedding anniversary. An honorary member of my family ran 3 hours 8 minutes in the London Marathon.

Welcome to investing etc. 0010. There are so many reasons to celebrate.

The joy of investing

In a spirit of unbridled joy, I am starting a roundup of my articles published since investing etc. 0009 with one about Macfarlane.

Macfarlane makes and distributes protective packaging. This is mostly bubble wrap, corrugated cardboard, tape and boxes. Macfarlane is getting bigger by buying up other, smaller, suppliers. 

It’s a pretty mundane product, and it’s a pretty mundane business model. But Macfarlane is growing profitably and since that is the holy grail for long-term investors, it is interesting in itself. 

Why should such a boring business be so profitable? What is Macfarlane secret? Some of the answers are here.

I reckon a large proportion of non-investors think investing is boring; all about numbers and making money, or gambling and losing money. But like most things, investing is intrinsically interesting when you get into it. There is lots to puzzle about.

But that’s not all. Investing is also extrinsically interesting. 

Let me give you an example. Last year, Macfarlane acquired a packaging manufacturing business called B&D. It is very small, but one of its customers is Astroscale. Astroscale is a Japanese company sending satellites to clean up space junk by knocking defunct satellites out of orbit or retrieving them. 

Astroscale has a subsidiary in the UK, and other subsidiaries in the USA, France and Israel. B&D has a small role to provide bespoke protective packaging made from aluminium for some of the payloads that Astroscale is shuttling around the surface of the earth.

Incredibly, by owning shares in a boring old packaging company, we are in some way connected to the future of space.

More joy

Scratch beneath the surface of almost any company, and you can find exotic connections. That is not a reason to invest in them, but it always gives me a sense of involvement in the world that extends far beyond my own activities, and the opportunity to watch videos like this.

Joy, though, can also be found much closer to home. I have also written about Howden Joinery. In my opinion Howdens is an even better business than Macfarlane, and almost as boring. It’s the UK’s biggest supplier of fitted kitchens.

Imagine my delight, my joy even, when I spotted this car outside my neighbours new-build:

Let us forgive the dodgy parking for a minute, and count our blessings. First of all it’s an electric vehicle, proof positive that Howdens is electrifying its fleet as promised.

Secondly, my neighbour is probably buying a Howdens kitchen! Yes, kerching, they’re making a fractional contribution to my pension. But next time I walk past while he’s waiting for the cement to mix, I can ask about their experience with Howdens’ kitchen designers.

Investing, it broadens our outlook beyond even the bounds of our planet, but it also strengthens our bonds with neighbours.

It does not always bring joy though. Sometimes companies go rogue, and sometimes we thought they were better than they really were. XP Power, a manufacturer of power converters, has brought me much intrinsic joy in the past.

Like Howdens it was one of my favourite companies because it explained so well why it was doing so well.

It isn’t one of my favourite companies any more, but there is joy to be found even in sadness. The joy of unburdening myself of disappointment!

And once more for good luck

While we’re talking about joy, let me just mention the satisfaction to be gained by tweaking a routine so it takes less effort to get even better results.

SharePad contains so much data on shares, it can be intimidating. No human could make sense of it all, so we need to weed out the vast majority of shares we are unlikely to be interested in. 

We do this by searching for shares that meet our criteria, aka filtering. Often these criteria are financial, but they can also relate, for example, to where the share is listed, or whether the directors own shares.

Because I am a long-term investor I choose criteria that determine whether a company might be of sufficient quality to stay the course. Quality means I can be confident the business makes money consistently without recourse to excessive borrowing or raising money from shareholders. 

I call my filter the Minimum Quality Filter, and I have tweaked it, I think to good effect.

One share that passed the MQF recently was Nichols, better known as the owner of the recipe for the purple profit fountain known as Vimto (just in case you live on another planet it is a soft drink!) 

My article about Nichols also bought me joy, because I revisited a theory about the company I figured out a couple of years ago and it still appears to be holding true.

There is also joy in putting ideas out there for people to scrutinise. In fact the idea that I might write a sequel, was seeded by someone who had read the first article.

Thanks for reading

Thanks for reading. If you are enjoying investing etc. please subscribe and share it, and if you are moved to comment please email me, richard@beddard.net.

Gratuitous picture from my local parkrun at Wimpole Hall. There is little joy in the weather, but hey, that means we’ll enjoy the sun more when it comes :-)

Before I sign off, did you know Neil Woodford is back? 

Woodford was the feted fund manager at Invesco who left to found his own investment company, Woodford Investment Management. The collapse of that company trashed some investor’s portfolios and his reputation. 

In tune with today’s theme he has returned with sunny views on the UK’s economic prospects. You will have to decide  whether to read the blogs. They are a relief from the mainstream narrative though.