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How this 19-year-old manages a $30,000 portfolio

James Flynn, 19

Occupation

University student

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Portfolio

Includes shares in Manulife Financial, Canadian Natural Resources, BP (ADR), SNC-Lavalin Group, Royal Bank of Canada, Banco Santander Mexico SA (ADR), Procter & Gamble.

The investor

James Flynn has a grasp of investing far beyond his years. His interest was first piqued at the age of 12 when his aunt gave him a subscription to Fortune magazine. In the summer after his final year of high school, most of his classmates were living it up but he completed the gruelling Canadian Securities Course. Now enrolled at university, Mr. Flynn manages his $30,000 portfolio, reads The Globe and Mail's business section, and maintains an investing blog at jamesflynn.ca.

How he invests

"I would describe my investment approach as value-based and strongly influenced by the investing principles of Benjamin Graham and David Dodd. I primarily seek out stocks that are trading at discounts to their book value due to negative, short-term news affecting the company." The company should also have an easy-to-understand business model and history of earnings growth.

The majority of his portfolio – as much as 90 per cent – is allocated to equities. That's because his long-term investing horizon gives him a high tolerance for risk. "Since I invest on a 40-year horizon, the stocks I own have plenty of time to rebound from short-term shocks," he reasons.

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Best move

He invested in Bank of America when it was trading at a large discount to book value due to fears of bankruptcy. But Mr. Flynn saw it as too big to fail. The stock was sold after it rebounded nearly 100 per cent.

Worst move

Buying Research In Motion at $15 on the grounds its large cash hoard, strong subscriber base and trove of patents gave it a liquidation value higher than the market price – then selling below $10 in a panic only to see it rebound back.

Advice

The earlier one starts to invest, the better – if only to reap the benefits of compounding interest and returns.

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Special to The Globe and Mail.

Want to share your strategies?

E-mail mccolumn@yahoo.com

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