It’s a busy time at LWM villas with the Investec proposal and yearly rebalances being transacted. As I am useless for both (!), the guys have stuck me in a corner and told me to be constructive by writing something for clients.

It struck me that this was like the times at school when I was told to write 100 lines describing the inside of a ping pong ball; I said this to them and they pointed out what I was writing would probably be about as interesting as that, oh the respect!

Rather than write about one subject I thought it might be less ping pong ball if I chunked it down to bite size.

Charges and performance

We are asked quite frequently about both, the two more negative questions being.

  1. The performance of the portfolio is not as good as my UK stocks did last year? And
  2. The costs of the portfolio seem higher than other providers are offering?

When we started LWM we wanted it to be different, to be totally transparent and to say and do what was right in the long term and not ‘short term easy’.

The charges question has a simple answer.

We state clearly the total cost a client will pay (this covers fund costs, platform costs and our costs); most others do not. They quote a base cost but then have a number of additional charges which they are not obliged to state explicitly.

We regularly run comparisons of costs against the likes of Hargreaves Lansdown and ours are meaningfully lower; this is even without the additional charges they make for switches, cash payments etc and not including the planning advice we offer (tax, IHT, CGT, VCT, ISA and face to face meetings) at no cost.

What we want is to remove the marketing and spin associated with the Financial Services industry and just tell it how it is whilst offering great value and service, that’s our aim and we think we do it well.

As regards performance the answer is more nuanced.

In 2013 the portfolios did not return the same as the S&P or the FTSE100, that’s a fact.

Against this fact however we would point out:

  1. The portfolios are created to invest across all major asset classes and markets, which lessens volatility and over a full cycle captures upside in all of them
  2. If investing in only one sector (such as UK equities) then this is likely to be more volatile in its valuation, because it is not as diversified into other markets (US / Asia/ Japan / Global / Emerging Markets / Property)
  3. No one knows in advance which markets will do best in the next year
  4. The UK Equity Sector of the portfolio was up around 50% more than the FTSE index so we beat that benchmark. The FTSE is the benchmark for the UK Equity Sector of the Portfolio only – not the entire thing and this is the apples to apples comparison
  5. The portfolio is designed to act like a roulette wheel in essence, the house has an edge of around 6% so for every £1m bet the profit will be £60000, over and over again

Individuals creating their own portfolio must believe (otherwise they wouldn’t play) that they can beat the odds.

We would obviously rather be the logical ones making the predictable yet consistent regular profits through a diversified portfolio.

My individual investments

As many of you know I have my own portfolio of shares which cannot be recommended and included in the LWM portfolios. Most of these I have mentioned in past blogs.

So here is an update on the first six months and I am happy to say most have generally been positive (unlike my erstwhile colleague who has been sucked into the excitement of IPOs and is nursing more negative results – he must believe he can beat the roulette wheel!)

Existing investments

AIG warrants

These were bought in 2011 at around $10; they run until 2021 and give the right to buy AIG shares at a specified price. They were attractive because they contained an anti-dividend dilution clause and did not come at a premium; they are up around 35% year to date and trade today at $26.

Bank of America

Still one of the best investments I made post crisis.

This was a back up the truck opportunity and I did, although everyone I spoke to about it thought I was mad.

I didn’t speak to Mr Buffett or Berkowitz but they did the same thing shortly after and at lower prices than me because that’s why they are them, and I am me!

The share price is up from my average purchase price of around $6 to a high of $18, they have dropped back to around $16 but I am still happy to hold for the long term, they will I believe be at $25-30 paying a decent dividend within 3 years.

I also bought the warrants in 2011 and these are doing fine, and I added some on the recent pull back.


I love Apple; it’s a wonderful company and I bought shares from around $250 up to around $450 a few years ago and watched it rise to $700, result.

It then fell to a low last year of around $375, I lost much of my profit but I decided to buy a tonne more because I couldn’t work out why the fall?

It had $150 billion in cash, a PE of around 8, amazing products that everyone loved and wanted and a multitude of areas to expand into with its ecosystem (mobile payments, wearable computers, health, Apple TV etc).

It’s now back at a pre-split price of $620 and it hasn’t yet fired the big new product guns, the market just lost faith for a bit and gave everyone a second bite of the Apple.

New investments

The four newer investments I have made are:

Alpha Bank
GM Warrants


I have written previously about why I like BP, so no point in repeating myself but the other three are all interesting.


Softbank is not a bank; it’s a Japanese investment Company which owns stakes in a number of companies.

The jewel is the 30% plus holding in Alibaba; the Chinese Internet company which is shortly to float on the US market.

I will write a full article on Alibaba shortly but it is potentially a game changing entity to rival Amazon, but unlike Amazon it makes serious profits.

Softbank is at a discount to assets of anywhere up to 40% and if Sprint (which it owns) gets the go ahead to merge with Tmobile then it’s an even bigger discount.

It’s also valued as a stock in Yen which I believe should weaken against the £ so there is a currency gain potentially as well.

Alpha Bank

Alpha Bank is a bank and what’s more it’s a Greek bank!

(Investing money in a Greek bank, has this man lost the plot?)

Several years ago I put decent money into Bank of Ireland at €8 and it rose to $38 this year, I made the investment for three reasons.

Firstly I was comfortable that the financial position of the Irish banking system had stabilised.

Secondly I knew that most people still hated the sector so prices were low.

Thirdly I watched great investors such as Wilbur Ross and Prem Watsa take meaningful positions and I figured they had done some serious due diligence and were happy.

The Alpha Bank investment was really therefore only a repeat of the above scenario but with the added benefit of my most favourite investor, David Einhorn taking a stake (with the likes of Seth Klarman, John Paulson and Wilbur Ross also investing in various Greek banks as well).

So far it’s up about 10% on the initial purchase price; it’s volatile but very cheap.

GM Warrants

The story of General Motors is fascinating, in 2009/10 it entered bankruptcy with the help of the US government and as part of the restructuring warrants to 2016 were created.

The importance of the cleansing effect of the bankruptcy process cannot be overstated, prior to that the Company was heavily unionised with massive pension and healthcare liabilities it couldn’t escape from.

Today it is debt free, has significant cash, has redrawn employment contracts, has a new fleet of award winning cars and trucks and is going great guns in emerging markets especially China.

I had missed it on the first go round (as I did with Tata motors which I was very close to buying and which has since doubled DOH!) but the recent ignition key scandal caused a major price retracement and I took the opportunity. So far it’s up around 10% in the last month since I bought and with a fair wind it has much further to go.

The reason I bought the warrants and not the stock is that it’s cheaper to buy the warrants and so you get a geared upside if it goes well (badly and you get stuffed though).


All the above investments have been positive but to give balance I did invest a meaningful amount several years ago in Deutche Speymill, an investment company which owned German residential property. It was however over borrowed, breached bank covenants, got foreclosed on and liquidated at a give-away price.

I might get pence back but it was a shocker.

Valuable lessons learned though, high gearing is a potential killer and banks fornicate with their mothers.

Anyway that’s me done, hope it was not too excruciating and as always thanks for your continued trust and support, it’s a pleasure to work with and for you.

NOTE: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. This is not a recommendation to buy any product or service including any share or fund mentioned. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.