Investing is a serious pursuit and arguably one of the advantages a professional investor has over a part-time investor is simply more hours in the day dedicated to identifying, researching and analysing investment opportunities.
One listed investment company (LIC) with an incredibly successful track record at adding value for shareholders is Argo Investments Limited (ASX: ARG). Argo is one of the largest LICs on the ASX with a market capitalisation of $5.1 billion and a portfolio weighted towards blue-chip stocks.
Indeed of the seven companies Argo spent over $10 million investing in during FY 2014, six of them were all very large with a market capitalisation of around $10 billion or more. They were three banks, Telstra Corporation Ltd (ASX: TLS), Sydney Airport Limited (ASX: SYD) and Transurban Group (ASX: TCL).
Although Argo is skewed towards larger companies it also owns a number of smaller companies too. In FY 2014 the seventh company which it invested over $10 million of its cash in was MMA Offshore Ltd (ASX: MRM) – formerly known as Mermaid Marine Australia.
Unlike the other six stocks which are all trading at higher levels than they were in June 2013, in contrast MMA’s share price is around 65% lower. As a major provider of marine logistics and supply base services to the oil and gas sector, this stock is obviously not in a popular sector at present. In fact, ever since the company announced a very large, ‘transformational’ acquisition which was well supported by many fund managers the share price has been slipping.
Foresight and perfect timing
With the benefit of hindsight, building the perfect portfolio would be relatively straightforward. While we can’t expect to have perfect foresight and timing, by approaching investing as a long-term pursuit, investors expose themselves to the opportunity to buy at great prices. While many of the professionals may have purchased MMA in the past 18 months at much higher prices, investors looking at the company with a fresh pair of eyes today may ultimately do much better.