Beat The Market With Champion Shares

Maynard Paton

By

Maynard Paton

Published in Investing on 13 July 2009

Maynard Paton outlines the Fool's share-tipping service, and how it's beating the market.

I'm sure you've seen the adverts and articles about Champion Shares on the Motley Fool site. I want to take this opportunity to explain what we're trying to offer.

Market-beating share tips

Champion Shares is the Motley Fool's share-tipping service. Its aim is quite simple -- to help you become a stock-market winner. Essentially Champion Shares tells you which shares to buy, why you should buy them... and when to sell them.

Here are some key points:

  • Champion Shares is written by me, Maynard Paton;
  • Champion Shares is an online-only service;
  • Champion Shares offers a free 30-day trial;
  • Champion Shares members receive at least twelve top share recommendations a year;
  • Champion Shares members receive ongoing tip updates, plus numerous watch-list ideas; and
  • Champion Shares is beating the market, as the latest scorecard summary shows:
DateAverage tip*FTSE All-Share*
11 August 2009+3.8%-2.5%

Let me give you some background to Champion Shares and its recommendations.

Champion Shares was launched in September 2005 and has so far tipped 49 different companies, of which 24 remain in the service today. The companies chosen vary in size and status. To date I've tipped three FTSE 100 shares, three large-cap overseas shares, eleven FTSE 250 shares, thirteen FTSE Small-Cap shares and nineteen AIM-quoted shares. I've only recommended two companies that had market values below £30m, with the smallest being £12m.

Initially Champion Shares published a fresh recommendation every month. However, as the market continued to rise during 2006 and 2007, I felt quality tips became much harder to find. So at the start of 2008, I dropped the obligation to provide a brand new tip every month. These days, I re-tip an existing recommendation if I can't find a suitable alternative.

The decision to re-tip old shares certainly enhanced the Champion Shares portfolio. This is how my recommendations and re-recommendation made since the start of 2008 have fared:

DateAverage 2008/2009 tip*FTSE All-Share*
11 August 2009+15.6%+0.0%

Good companies, cheap prices

I use a simple, fundamental approach to find potential winners for Champion Shares. In my experience, taking a business-focused perspective and backing companies that sport cash-strong balance sheets, owner-orientated managers and modest valuations remains the mostly likely route to prolonged investment success. Names I'm currently backing include Microsoft (MSFT), IG Group (LSE: IGG) and FW Thorpe (LSE: TFW).

My approach also ignores market fluctuations, avoiding obvious trouble areas (such as banking and house builders), and maintaining a watch list of time-tested businesses in order to spot buying opportunities. I'd like to think my investment style could help rebuild your portfolio after last year's turmoil.

Of course, not every share I've recommended has been a winner and some have in fact recorded heavy losses. Sadly I had to bail out of CSR (LSE: CSR), Johnston Press (LSE JPR) and Jarvis (LSE: JRVS) after their shares fell as much as 70%. I've learnt the hard way about how management changes, technological advances, onerous debt positions and dominant customers can wreak havoc on a recommendation. I should add some of my existing tips may eventually be removed from Champion Shares at a loss as well.

No blue sky

I know many Fool readers are sceptical about Champion Shares and share-tipping in general. Fair enough -- some investors have the time, skill and inclination to sift through the market and pick their own winners. But most people don't, and I'm convinced Champion Shares can help many ordinary investors and their portfolios.

As I mentioned earlier, I'm only interested in good companies at cheap valuations for Champion Shares. On the other hand, my ten years at the Fool have taught me that sexy, exciting, blue-sky issues -- the types of shares associated with many tipsheets -- generally disappoint over time.

When you join the Champion Shares community, I'll e-mail you a share recommendation (or re-recommendation) on the second Wednesday of every month. I'll also send you an update on any developments at my current tips, plus a watch-list report on shares that are on my radar. On the fourth Wednesday of every month, I'll dispatch another update and watch-list report.

Free 30-day access to all my tips

As a member of the Champion Shares community, you'll be able to access:

  • A full and transparent scorecard of ALL past and present recommendations;
  • Buy/hold/sell tables that list my buy limits for every recommendation; and
  • Exclusive members-only discussion boards to ask questions direct to me.

Of course, the Champion Shares website has a complete archive of ALL past and present recommendations, updates and watch-list reports -- and they can be read right now through this 30-day free trial. If you do join but then feel Champion Shares is not for you, let us know within 30 days and we will cancel your membership -- no questions asked.

I look forward to welcoming you as a Champion Shares member -- and helping you become a stock-market winner!

* Champion Shares returns are based on mid prices taken on publication of the 'buy' advice and include due dividends but exclude costs. FTSE All-Share returns are based on the FTSE All-Share total return index, which includes re-invested dividends and excludes costs, and taken on publication of the 'buy' advice. Returns include all current and 'sold' recommendations, and are calculated using closing prices on 11th August 2009 or at the time of the 'sell' advice.

For all Champion Shares subscription enquiries please e-mail ChampionShares@Fool.co.uk or call 0845 226 3237.

Risk Warning

You run the risk of losing money when investing in shares. Prices may change quickly, they may go down as well as up and you may not get back the full amount invested. You should not invest using money you cannot afford to lose. We have taken all reasonable care to ensure that all statements of fact and opinion contained in this publication are fair and accurate in all material aspects. Investors should seek appropriate professional advice from their stockbroker or other adviser if any points are unclear. Champion Shares gives general advice only, and the investments mentioned may not necessarily be suitable for any individual.

Authorised by The McHattie Group, St Brandon's House, 29 Great George Street, Bristol BS1 5QT | Tel: 01179 200 070 | Fax: 01179 200 071 | E-mail: enquiries@mchattie.co.uk

The McHattie Group is authorised and regulated by the Financial Services Authority.

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

seriousmoneyFool 13 Jul 2009 , 8:03pm

If investing in shares is for the long term, then why are only half the recommended shares left in this portfolio, less than four years in?

TMFMayn 14 Jul 2009 , 8:39am

Hello seriousmoneyFool,

If investing in shares is for the long term, then why are only half the recommended shares left in this portfolio, less than four years in?

Good point. Some of the recommendations performed well in a reasonably short space of time so I thought it prudent to take profits. A few more performed badly and I wanted to cut our losses. In most cases, the prices of all these ex-tips are lower now than they were at the time of sale.

There have been two or three takeover situations as well, and also the sudden death of a managing director prompted a sell.

The pace of sells has slowed of late, following the market crash of last year and the opportunity to recommend better quality businesses for the long term. This year I have sold just four different shares.

Foolish Best

Mayn

AuditorGeneral 14 Jul 2009 , 3:04pm

Hi,

I don't see the point of subscribing to Championshares (as advertised agressively by TMF in almost all of their articles!!) and the reason is this. Most shares have been at their lowest since the last few months. Progressing then on, the market improved albeit slightly, and as a result the share price improved, not only those Championshare ones but in general, the whole market. So, why do I need Championshares or whatever Motley Share dealing service, etc?

FURTHERMORE, you guys totally missed some big winners like Barclays and RBS, when these shares were way low and subcribers were not advised to profit on them at their lowest. What gives, mate.

jmaesl 14 Jul 2009 , 7:53pm

How come share tippers need money from subscribers?

TMFMayn 15 Jul 2009 , 8:09am

Hello AuditorGeneral,

FURTHERMORE, you guys totally missed some big winners like Barclays and RBS, when these shares were way low and subcribers were not advised to profit on them at their lowest. What gives, mate.

Yep, I did not tip banks at their lows. But I can live with that, having carefully avoided the sector throughout my time in Champion Shares. Well done if you did manage to invest in banks around the bottom.

Foolish Best

Mayn

AuditorGeneral 15 Jul 2009 , 4:17pm

It looks like it's about time to be tipping bank shares now I reckon, Maynard.

datacast 22 Jul 2009 , 10:12am

I like this article as it is what it is.

It's true you can look on the individual stocks boards on MF but most of the boards are biased bullishly towards the share.

For £199 per annum someone with a reasonable size portfolio £50,000 + can avoid pitfalls such as lack of diversifation that comes from have punts on shares.

Whilst tipping smaller and medium size companies looks beneficial - I see little value is FT100 tips as the shares are so well covered.

Maynard made a good comment about no being in bank shares at the bottom, it's so easy to post throw away comments in hindsight.

martinnewkirk 03 Aug 2009 , 9:53am

Hello Fools,

I have found this service very useful. Maynard uses vast experience and puts in a lot of work to find shares of good value, the price of this service is itself good value. I don't myself have time to do this research or have the knowledge Maynard does, so it's well worth paying the small sum for his service.

Martin

FunSize 03 Aug 2009 , 12:03pm

Hello All, the Champion Share Service is great and useful! Since I joined it back in Feb09 my average unrealised gain is 36.37% with one stock line posting a whopping 64.74% unrealised gain at the moment. Surely beating the bank! What I most value of the service is that somebody is doing the leg work for you - remember you don't need to by the recommendation - it is a advice only! For me it is impossible to research the whole market by myself. The service sticks to basic, yet solid share picking practices so that you can learn from the whole process, ultimately letting go and doing your own thing based on what you have learned from the the professionals. Yes, we all could have bought the RBS or banking shares making millions by doing so - however in the Champion Share spirit, RISK was considered, how much cash is available to the bank, who really owns the bank and what management structure is in place. Typically banks have "salaried top managers" where as the companies on the Champion shares list have "owner managers"...thus a real incentive for the guy that owns the company to make it work if they have millions at stake from their own pocket.
Funsize.

cr0bar 04 Aug 2009 , 2:13pm

Hmmm, I wrote a long post then accidentally deleted it by pressing the back button. I'll summarise by saying I find this article insulting to my intelligence and it is because of articles like this that I rarely ever now return to what was once a regular haunt.

RansomStark 08 Aug 2009 , 5:44pm

I always find the Champion Shares service at odds with the Fools tracker passive investing mindset. If your a small investor with a FTSE100 tracker, then arguably you have said you don't have enough knowledge to research the market, so why would you add additional risk to yourself investing in single shares, based on the advice on someone else at a fee? Surely this means Maynard will have to consistently outperform the FTSE100 to make the fee worthwhile, (plus of course you have your own trading fees every time you buy/sell), which based on several past articles is very very difficult over long periods of time, so which is to be Champion Shares, tracker or both (and if both why?)

TMFMayn 10 Aug 2009 , 3:10pm

Hello RansomStark,

I always find the Champion Shares service at odds with the Fools tracker passive investing mindset. If your a small investor with a FTSE100 tracker, then arguably you have said you don't have enough knowledge to research the market, so why would you add additional risk to yourself investing in single shares, based on the advice on someone else at a fee? Surely this means Maynard will have to consistently outperform the FTSE100 to make the fee worthwhile, (plus of course you have your own trading fees every time you buy/sell), which based on several past articles is very very difficult over long periods of time, so which is to be Champion Shares, tracker or both (and if both why?)

Good question. I'd say it is down to human nature -- a lot of people simply want better-than-a-tracker investment results. We've all seen wondershares do well, thought if only I'd bought that, and then started looking at individual shares. That's how I got started with the stock market.

For most people, a tracker is probably their best investment as they won't have the time, skill, inclination, correct pyshcological approach and all the other characteristics that good investors have. But there is no harm in trying to see if you have what it takes to be a good share picker, and to be honest, holding individual shares is good fun for a lot of people.

And I think most investors are sensible enough to dabble with money they could live without if it all went wrong. Just to clarify, I have never told anyone to invest solely in Champion Shares.

Foolish Best

Mayn



cr0bar 12 Aug 2009 , 9:11am

Mayn, [i]Good question[\i]

It certainly is, and you have not answered any of the points RansomStark raised, specifically:

If your a small investor with a FTSE100 tracker, then arguably you have said you don't have enough knowledge to research the market, so why would you add additional risk to yourself investing in single shares, based on the advice on someone else at a fee?

The only answer I can tease out of your reply is

holding individual shares is good fun for a lot of people

I for one want my investments to provide a return for my pension one day. I do not wish to make them 'fun'. If I want some 'fun' of this kind I can pop down to the casino where they give you free toasties to keep playing!

You also state

I'd say it is down to human nature -- a lot of people simply want better-than-a-tracker investment results

A lot of people want many things. The essence of the Fool's previous advice though is that it is very difficult to achieve this and most fund managers and share pickers do so through luck rather than skill. Even looking at the past record of a fund manager or share picking service, it is impossible to determine if the results were down to skill or luck. Remember, past performance is no guide to the future.

[i]...there is no harm in trying to see if you have what it takes to be a good share picker[\i]

For one thing, exactly how does reading your tips then buying them show me if I have what it takes to be a good share picker? I would say it shows me more how to blindly follow your advice which I pay through the nose for.

For a proper comparison, please could you amend your results to include estimated trading fees, taxes and advice fees in each case. I'll generously allow you a 0.5% annual fee on the balance of a FTSE All-Share tracker held in an ISA or SIPP, but no trading fees.

You must include all trading fees and taxes paid based on your buy/sell reccomendations. You can choose a fixed amount which you spend on each buy recomendation and then you must calculate the fee on selling based on the price at the sell time. For any amount that you spend in each year you must committ the same amount to a FTSE All-Share tracker spread over equal monthly payments, you should also add an amount to the tracker at the end of each year equal to your fee minus the tracker fees as this will be available for investment. You can also comitt your fee minus the tracker fees if it is less to your most recent share pick at the end of the year if you like, but don't forget to include trading fees.

Once you have done this we will see if the 7.7% difference between your service and a FTSE All-Share tracker is still representitive.

TMFMayn 12 Aug 2009 , 3:37pm

Hello cr0bar

It certainly is, and you have not answered any of the points RansomStark raised, specifically:

If your a small investor with a FTSE100 tracker, then arguably you have said you don't have enough knowledge to research the market, so why would you add additional risk to yourself investing in single shares, based on the advice on someone else at a fee?

I'm afraid I can only refer you to my earlier reply. In my view, it's a combination of human nature of wanting better-than-average results plus the enjoyment of looking for winners. Why not raise the question on some of the Fool's dedicated investment/share boards? You may get other explanations why people have branched out from trackers to individual shares. Maybe there is not a one correct answer to RansomStark's point.

For one thing, exactly how does reading your tips then buying them show me if I have what it takes to be a good share picker? I would say it shows me more how to blindly follow your advice which I pay through the nose for.

Well, I was writing in general terms really. Nobody will ever find out if they have a knack for shares if they stick to a tracker. But I think Champion Shares can help investors. The service does not just give the names of the shares to buy, but also explains the attractive features of the share. I'd like to think some people may be able to learn from the service, and then perhaps develop the confidence to look for shares themselves.

You must include all trading fees and taxes paid based on your buy/sell reccomendations...

Champion Shares wil undergo a revamp later this year and trading fees etc will then be included in the results.

Foolish Best

Mayn

TMFMayn 12 Aug 2009 , 4:14pm

Hello Cr0bar,

It certainly is, and you have not answered any of the points RansomStark raised, specifically:

If your a small investor with a FTSE100 tracker, then arguably you have said you don't have enough knowledge to research the market, so why would you add additional risk to yourself investing in single shares, based on the advice on someone else at a fee?

Well, I can only refer you to my earlier reply. I still say it so down to human nature of wanting-better-than-average results and the enjoyment of possibly backing a big winner. As I wrote in the article, some people don't have the time, skill etc to look for promising shares, and I feel a service such as Champion Shares can help them. The key features of each recommendation are explained, and I'd like to think Champion Shares members will be able to develop their own share-picking skills in time.

You must include all trading fees and taxes paid based on your buy/sell reccomendations.

Champion Shares is to undergo a revamp later this year and trading costs etc will then be included in the returns.

Foolish Best

Mayn

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