Great Titchfield Street, London -- Last month, reporting on our decision to buy Nokia(Nasdaq: NOK), James ended this report by saying: "In the meantime, we must hope that nothing happens to affect our investment decision." Well, guess, what; it did.
After an awfully protracted discussion, several e-mails, and lots of dedicated head/brick wall interface work from Angus, we decided at our April meeting that buying Nokia -- and by extension any company not quoted on the London Stock Exchange -- was simply too complicated. It proved difficult to find a broker who would set up a dollar-based account for an investment club, and those who would charged an arm and a leg for the privilege of handling our money.
We'd voted to buy it at the previous meeting; so how would we proceed now? We could buy the second-placed candidate, but unfortunately that was Autonomy, quoted on Easdaq. In the end, we decided to have a whole new round of candidates.
Our performance, considering the recent cries of anguish emanating from the tech sector, has in fact held up relatively well. That's what we tell ourselves, anyway. Going in to the March meeting, Tesco (LSE: TSCO) had been propping us up; it has continued to do so, and at the time of writing is our only holding to be showing a profit. But hey -- we're long term investors. Come May's meeting, we may well be looking out for bargains.
Check out the details of our April pow-wow in the minutes, lovingly reproduced below.
In Attendance: Bruce Jackson (TMFGoogly); Nick Jenkins (TMFJenko); Stuart Watson (TMFTiger); Norma Boylan (TMFSymphony); Rob Davies (TMFEssex); Martin Wake (TMFSorted); Renée Rosen-Wakeford (TMFPurr); Keith Milner (TMFKeith); James Carlisle (TMFJimmyC); Mandy Boylan (TMFTalisker); Christopher Spink (TMFEagle); George Row (TMFGrow).
Observers: John Hancock (TMFVenturian).
Late Arrivals: Adrian Gordon (TMFSid); Phil Southgate (TMFPopper); Ewan Wilson (TMFTheDogs); David Berger (TMFFoolUK).
Early Departures: Phil Southgate (TMFPopper).
Apologies Recieved From: David Berger (TMFFoolUK).
AWOL: Nigel Roberts (TMFNigel); Alan Oscroft (TMFAlan); Angus Scott-Brown (TMFLost).
Everyone agreed that these were great, although few appeared actually to have read them. Thanks anyway Keith. No-one has agreed to do the May minutes. Might I suggest that one of our AWOL Fools fills in as a penalty (probably not Angus though as he's in Thailand)?
2. Matters arising
It became apparent that Mandy's standing order had not quite become operative and some cash was offered for April's contribution. There was a discussion about whether the club should accept cash and there was even nearly a vote. Chris pointed out that it wasn't very Foolish to be making decisions for others to which Rob replied that, as he was getting married soon, he'd better get used to it. Stuart complained that accepting cash would confuse things no end. Everyone agreed that this was hard cheese on Stuart, as a Wise accountant he should be able to deal with all eventualities.
3. Treasurer's report
Stuart gave a sketchy account of the club's finances. Our shares had mostly gone up a bit and then down a bit. The unit value at the end of March was 105.27p, everyone had a total of 220.60 units. This means everyone was £9.33 up on their £225 contributions. There was a pause for general back-slapping all round. Of course Angus has a grand total of 456.8 units following his stakebuilding activities. The club had about £1,700 in cash pending a decision on whether to buy Nokia.
4. Trading Report
The club's trader, Rob, reminded the meeting that, at the last meeting, we had decided to buy a funny foreign fone company. This, he said, was likely to cause extreme buggeration. The trouble was that the club would have to open a separate dollar-based account and this would be expensive. There had been e-mail discussion involving investment club guru Mark Goodson (TMFFatBlokeMarge) which went into a range of complex schemes involving trusts and things like that. Rob read out Mark's comments and there were blank faces all round.
In the end, a vote was taken on whether we should stick (for the time being) to buying shares quoted on the London Stock Exchange. The matter would be reviewed from time to time as the club expects trading in foreign stocks to get cheaper and easier in due course because of this internet thingy. This vote was passed unanimously. Ewan muttered a couple of words of dissent, but was made happy when told that it meant we'd be buying British.
5. Review of Investments
Stuart said that he was a little worried about the level of "spam" that he is receiving from Marconi, but it was probably better than nothing.
Keith congratulated the club on realising, before everyone else ('ish), that Tesco is in fact a "dotcom". Generally everyone agreed that it was good to see them pulling out of the 3G licence auction now that it was getting a bit rich. Tesco final results were due for release the following week and Stuart said that he was looking for like-for-like sales growth of around 5% and operating margins of around 5-6%.
The club was generally happy with NXT. The share price has been flying all over the place, but nothing in the business had really changed since it was purchased.
Rob wanted to spend some time looking at the various decisions that the club had taken (and not taken) with the help of Mr Hindsight. No-one was very enthused about this, although the club agreed that Rob should be allowed to get his Baltimore gripe off his chest.
6. Investments
Members were full of ideas following the non-purchase of Nokia, with a number of shares which had been discussed on the board being proposed as well as a couple of flyers being suggested at the last minute.
Plasmon(LSE: PLM) was proposed by Rob. It is involved with magneto-optical data storage equipment. No-one really understood what this meant except George and Nick and they didn't sound too keen. The general feeling was that there wasn't much in the way of barriers to entry.
FI Group(LSE: FI.) was proposed by Martin. Since proposing it last November, it had bought Druid (another IT outsourcing company) and had got a little cheaper. A P/E of only 71 for a good looking growth record and prospects. The forward order book stood at a healthy £380m (1.5 times sales) providing good prospects of maintaining growth. Questions were asked about the rich valuation.
Games Workshop(LSE: GAW) was proposed by Nick. It makes games (one in particular) for "spotty teenagers and sad old men". A surprising number of spotty teenagers and sad old men promptly crept out of the woodwork and there was a discussion about toy soldiers. Bruce wondered where growth would come from.
After his return from Australia, Bruce appeared to have changed some of his spots and become something of a technology bull after recent price falls. He wanted to put forward Psion(LSE: PON) and ARM Holdings (LSE: ARM). When told to make his mind up he plumped for ARM. The meeting discussed ARM's strong market position, but was concerned about the valuation. In particular, it was felt by some that competition would soon arrive to knock the company off its perch. Rob said "a high growth company is a high growth company while it is a high growth company".
Scottish & Newcastle(LSE: SCTN) was proposed by Chris. The main theme was that the capital-intensive pub estate was being reduced in favour of the more attractive brewing business. There was the possibility of a name change to (recently acquired) Kronenbourg and the shares were on a very low rating. James liked Kronenbourg -- "strong lager, strong brand" -- and Ewan liked the sound of a "pure beer play". Again questions were asked about barriers to entry. Norma asked what this meant. Several people gave rather different descriptions all at the same time (generally things which made it difficult for other companies to set up in competition), but Norma seemed happy enough. In the case of S&N, the strong brands were considered reasonable barriers to entry
7. Voting
It was felt that the voting process had been a bit slow, raising the possibility that too much might change between a share being discussed, votes being made and the shares being bought. The meeting agreed that voting should be completed by e-mail before noon on Friday 7th April to enable a purchase (if any) to be made before the weekend.
8. Any Other Business
There wasn't any.
9. Date, time and location of next meeting
1pm on the first Wednesday of the month: 3 May, next time. Meeting room 7th floor.
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