Persistent Holdings

One of the important features of a consistent value investor is to look for shares that can be owned for many years to come. Vortechz usually has a investment horizon of 5-15 years for holding purposes.

Some numbers for value investors

Here, we are going to give away a solid hint on fundamentals that we always consider before investing.

The numbers 6 and 12 are very important to us when we determine our investment strategy. 12 is an approximate value for the P/E (price per earnings) that we consider acceptable and 6 is the percentage return we require each year.

So why P/E 12?

A company with low P/E (below 9) is either grinding profit without growing or just have a broken business model which investors do not approve of. A company with high P/E (over 15) could have great expectations to live up to which always induces an extra element of risk w.r.t. owning the share during a period in which it underperforms. We are looking for companies that might outperform the expectations but more importantly have a solid foundation of profits to make. Such companies are surprisingly often evaluated at a P/E close to 12.

So why 6% yearly return?

6% yearly return is the minimum return acceptable (including dividends). The reason for this is that there are lots of companies that have managed to provide this yearly return for 1-2 decades (with the possible exception of years where the result was influenced by a crisis).

Here comes the punchline

The P/E 12 means that after ideally owning the share for 12 years, the earnings of the company should have leveled out our initial investment. (Ignoring taxes and inflation, if 100% of the earnings were returned to share holders as dividends each share would have payed for itself assuming that the rate of generated profit was exactly the same as when we bought the share.)

However, with a yearly return of 6%, assuming the profit is reinvested, the 12 year return is 100%. (For those who know the 72 rule, 6*12 = 72. The real calculation is of course 1.06^12 = 2.0122...)

So ideally the result is that we got back what we paid for the share and also doubled our money. Not bad, right? Including taxes, the situation is slightly different so the yearly return required to double your money could be up to approximately 8.5%

A few shares from our longterm portfolio




Latest News


Vortechz accepted the offer to sign up for a small set of shares in Dahl Sweden Mobile Technology and prepared the transaction


Vortechz accepted the offer to sign up for a minor set of shares in Ingate Systems and prepared the transaction


Vortechz accepted the offer to sign up for preference shares in Alliance Oil and completed the transaction


Vortechz accepted the offer to sign up for preference shares in Sagax real estate and completed the transaction