Meet Aston: The 23-year-old already making moves on the market
A decade ago, a young Aston decided he wanted to be a lawyer. It wasn't for the money or glory, or because his parents encouraged him to do so, but instead, a particular fondness for the art of the argument.
"What I love about the law is that there isn't necessarily a right answer," Aston says.
"There could be something that has been done a certain way for 20 years, and you can look at it and be like actually, no, that's wrong. And you can be right and you can change something by arguing it from a different angle. I really like that aspect of it."
Similarly, in investment, to make money you need to think differently, particularly given the plethora of information that is available online, he says.
At just 23, Aston has already been investing for six years - seriously for three - and follows the words of Benjamin Graham and Warren Buffett like gospel. His head was never turned by cryptocurrency or NFTs - unlike other investors his age - and instead, he spends hours poring over company reports in the search for compelling value.
In this wire, Aston shares his top five holdings, his strategy inspired by his heroes, as well as his worst investment during his relatively short investing journey so far.
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Livewire investor profile
- Name: Aston
- Age: 23
- Employment status: Employed part-time, student full time
- Years investing: Six
- Investment goals: Build my wealth over the next few decades so that I can live comfortably off the income my wealth produces
- Products used: Domestic and international equities
- Biggest portfolio holding: Hallenstein Glasson Holdings (NZE: HLG)
1. How old are you and how long have you been investing?
I am 23 years old and have technically been investing for six years, although realistically, it’s more like five years. I made my first investment when I was 17, investing $100 through the Raiz micro-investing app. Once I was 18, I began investing set amounts weekly, still through Raiz. I formally began my investing journey in mid-2018 when I was 19, buying my first share in BHP.
My investing has developed considerably since then. Soon after buying my first BHP shares, I read Ben Graham’s The Intelligent Investor, which shaped how I invest.
Once I turned 20, I decided to stop using Raiz and put that money towards buying shares in individual companies. I now consider myself quite a serious investor, although, I still have lots to learn.
Right now, I am actually working part-time as a tax accountant (and have been doing so for the past three years). While I don't think it has helped me hone my investment skills directly, I am able to see how other people manage their money, and if they are doing something pretty clever, then I can learn from that.
2. What is your investment objective?
My investing objective is to considerably build my wealth over the next few decades so that I can live comfortably off the income my wealth produces. In pursuing this objective, I have a low appetite for risk, however, I don’t consider volatility and stock price falls to be a risk.
As a buyer of companies, why would I complain if they become cheaper? With no intention of selling my companies any time soon (I intend to own my companies forever when I buy them), I don’t regard volatility as a risk. So in terms of my tolerance for volatility, it is high.
When I say I have a low appetite for risk, I mean that I have a low appetite for risks relating to intrinsic value and the actual business itself. In practice, this means I have a low tolerance for businesses where the long-term economic characteristics of the business are highly uncertain or poor, and where it is too difficult for me to form an idea of the businesses’ intrinsic value.
3. What products do you use to execute your strategy?
At the moment, I invest in the shares of both domestic and internationally listed companies.
4. How would you describe your strategy?
Put simply, I aim to invest in companies that I understand with favourable long-term prospects - run by honest and competent management and available at very attractive prices.
When I say available at very attractive prices, I don’t mean that I think the price is going to move up at any given point in the future. I mean that I consider there to be a significant discount between the company’s intrinsic value and its market price, giving me an adequate margin of safety. I price my investments rather than time them.
I also don’t attempt to navigate markets, nor do I try to set up my portfolio to take advantage of the latest trends. I consider what the business is likely to do, not what the market or the economy might do.
I am simply buying these businesses with the aim to make money through my ownership of them, just as a buyer of a business in its entirety would. I must acknowledge though that I am constantly learning and developing my investing. For this reason, some of my older holdings might seem a bit different from my newer investments.
5. Could you please share your top five holdings in % terms and tell me a bit about why you hold each of these positions?
Hallenstein Glasson Holdings Limited (NZE: HLG): 32.8%
Hallenstein Glassons is easily understandable with favourable long-term prospects. The company is well managed with a high return on equity while using little to no debt. There is significant room for the business to expand, with the women's brand Glassons only recently expanding and opening its first store in South Australia, and no stores in Western Australia. They also have the opportunity to expand through the male brand, Hallenstein Brothers, which currently has a very small presence in Australia. Although I do admit that it will be harder for Hallenstein to grow in Australia as it is unknown here, and it may be more difficult to market to men. Glassons, however, is well known and loved by its customers, and has been very successful in growing its brand.
Intel Corporation (NASDAQ: INTC): 12.2%
Intel is one of those companies going through some issues at the moment, but I believe will pull through in the long term, which presents a buying opportunity at present. Despite some manufacturing issues, such as delays, Intel is still a dominant, trusted and well-known brand. With ample resources, Intel is in a good position to overcome these issues.
The commentary on Intel seems to be hyper-focused on Intel’s stock price and near-term quarterly results. It seems few commentators focus on the long-term opportunities, not being able to see past the next quarter. If we take a 5+ year view, there are some things to be excited about. Although there is potential to fail, Intel is investing billions into their new business, Intel Foundry Services, which will manufacture chips for third parties. While in the short term this will require large capital investments, this is a significant opportunity for those with the patience to wait. Although there is a risk the new business may not succeed, Intel has a dominant brand, is trusted in the industry, and has a wealth of expertise in chip manufacturing, which makes me think the venture will pay off.
Intel also has other growth opportunities for those with the patience to wait, such as their new dedicated GPU line and Mobileye. When it comes to autonomous driving, most people think of Google’s Waymo or Tesla, but they should really be thinking about Mobileye. Intel’s research and development also far exceeds that of its competitors, which should provide growth opportunities long into the future and security for intel’s long-term market position.
Nintendo Co Ltd (F: NTO) (Japanese company, purchased through listing on Frankfurt Stock Exchange): 10.02%
Most people seem to be focussing on the slowing sales of the Nintendo Switch family of consoles, but I think this misses Nintendo’s true value. Nintendo’s true value lies in the value of its media franchises, such as Pokemon (the highest grossing media franchise of all time), Mario, Animal Crossing, the Legend of Zelda and more. These franchises are loved by their fans and are seen as irreplaceable. These franchises also saw significant growth during COVID as many people bought Nintendo Switches for home entertainment. These introduced new consumers to the franchises who have since become fans. Unlike in other retail settings where the COVID retail boost is a one-off, the introduction of new audiences to Nintendo’s media franchises has long-term implications as these new audiences become long-term fans of the franchises.
Magellan Financial Group (ASX: MFG): 9.41%
To say Magellan has faced some issues would be a bit of an understatement. Although there have been some bumps, I think over the next 10+ years Magellan should be able to recover. I have listened to quite a lot of fund managers, and I have found the talks from those at Magellan Asset Management and Airlie Funds Management to be insightful, and I have agreed with what they say. In terms of future growth, I believe there to be a significant opportunity from their international core series fund which can play the role of a fundamentals-based index in investors’ portfolios. I also think their investment in Barrenjoey will be a good source of further growth, along with potential long-term growth in Airlie’s retail fund.
Shine Justice (ASX: SHJ): 7.55%
I bought Shine as I considered it to be significantly undervalued. So why is this company undervalued? Firstly, investors have tended to avoid listed personal injury law firms since Slater and Gordon’s stock price collapse. Secondly, Shine isn’t the market leader, with that position held by Maurice Blackburn, followed by Slater and Gordon, with Shine only placing third. Investors tend to have more confidence in the market leader, neglecting those in second and third place as smaller is seen as less safe. Although smaller might mean more volatile, that doesn’t mean these smaller players are bad businesses. The neglect of these smaller businesses can often lead to undervaluation and buying opportunities.
6. Could you tell me about your worst investment? What did you learn from this?
My worst investment was Alexium International Group (ASX: AJX). Alexium is a small company with fire retardancy and cooling solutions. This was one of those small early-stage loss-making companies that gave hope for wild success with their revolutionary technology.
In early 2019, I bought some shares - although I knew this was more hopeful speculation than an investment in that there was no level of certainty that the company would succeed.
High risk, but even higher (potential) reward! What could go wrong?
Well, the company could run out of money. And it did. Alexium had to undertake a large equity raising, very much diluting my holding. I no longer hold Alexium or other loss-making companies.
Looking back on this, I learnt that it’s better to be certain of a good result than hopeful of a great one.
7. How does Livewire help with your investing process and what tips can you share with other investors about using Livewire?
For me, Livewire is a great source of learning. It's a great forum where fund managers share their thoughts and lessons about investing, which gives me a lot to think about and learn from. It's also a great source of ideas, in that fund managers may bring my attention to certain companies or aspects of certain companies that I otherwise would not have thought about.
If they haven’t already, I would recommend that other investors listen through all the episodes of Livewire’s The Rules of Investing. It's a great podcast that gives you insights into how some of Australia’s leading fund managers invest and is a great opportunity to learn from professionals.
8. Do you have a favourite contributor you recommend other investors follow?
It's quite hard to narrow this down to a single favourite contributor. It's also very content-specific, in that I prefer educational wires over analytical ones. That said, if I were to pick a single contributor, it would probably be Michael Goldberg. He puts out a lot of quality educational pieces worth thinking about.
9. What can Livewire do better or what do you dislike about Livewire?
There isn't anything that I particularly dislike about Livewire. It has a wide range of content that meets the needs of each individual.
10. Is there a lesson you’ve learned as an investor that could potentially help others?
I have definitely learned a lot of lessons along the way. Most are probably from reading. But if I had to narrow it down to one lesson from my own experience, it would be this:
A couple of years ago I discovered a company that I believed to be undervalued. I was unfamiliar with it, so spent a considerable amount of time learning about it. I took my time. Eventually one night I decided I would invest. However, when the market opened the next morning, the stock was up 8%. I looked at the announcements, and a major institution had announced it had made a large investment. I thought, 'Ok, this should pass, I will wait till tomorrow and hopefully the price should fall back down a bit.' Tomorrow came, and the stock rose by 6%. This continued, and I never got the opportunity to invest again.
True opportunities are often rare and fast-moving. With so many other investors and easily accessible information, it is likely that someone else is looking at the same opportunity you have identified.
When you discover an opportunity, you need to act quickly as the price can move away from you if others take the opportunity before you. This doesn’t mean you should sacrifice research, but more that you should act with haste as nobody will hold the window open for you.
11. Can you share a personal passion or ambition you have for your future?
Investing really is a personal passion of mine. It's not just about building wealth but is also something I thoroughly enjoy. As a passion, I really want to continue improving and become a great investor. As for professional ambitions, I plan on becoming a commercial lawyer next year and am eager to progress through my legal career.
I also love travelling and being active. In February next year, my girlfriend and I are headed to Canada for a snowboarding trip. She's been snowboarding and skiing for years, but I have only just learnt on a recent trip - so I am looking forward to doing a lot more of it in the future. We also love scuba diving, bouldering, wakeboarding and hiking.
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Ally Selby is a content editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian Group, Your...