Learning a lesson from the markets
SIXTH formers at St Bartholomew’s School scooped third prize in the Shares4Schools competition after doing substantially better than most professional fund managers.
Luckily for the pupils in Newbury, Berkshire, the competition ended before recent stock market setbacks and their portfolio increased by about 21 pc from £1,500 to £1,809 between last October and June this year.
This brought it to near the top of the league table of 54 schools, and compares with growth of less than 14pc on the FTSE 100 index over the same period. That index is the benchmark for most British unit and investment trust managers — and many fail to match it.
The school investment club consisted of 10 students in Year 12, who started to buy and sell shares in October last year, meeting once a fortnight during their lunch break after raising the initial £1,500 investment pot by approaching local sponsor Vodafone. It provided half the sum, with the remainder supplied by The Share Centre, which runs the competition.
Sarah Shilito, head of the Vodafone UK Foundation said: “Our aim is to select projects which unlock the potential in young people, so we were delighted to help educate students by investing in this initiative.”
Phil Gray, 53, a teacher of economics and business studies, who oversaw the competition, added: “We benefited from a group of students with a flair for financial affairs, who were interested in how the market works.
The portfolio is invested through an online dealing account with The Share Centre, and controlled by teachers or adults authorised by the school. Rules dictate that the team had to make one share trade or more each month, and that at least 50pc of the portfolio had to be actively traded.
The St Bartholomew’s team had a careful stock-picking strategy, ensuring they had some relatively secure holdings in ‘blue chip’ or large company shares. However, they took a high-risk approach in some respects by holding just four companies, with a few littleknown stocks. Mr Gray said: “We bought one stock to start with, then two more a few weeks later. In January we bought a fourth, choosing companies because they were doing well and their shares showed a steady rise.”
As a solid base, they chose Tesco and Barclays. They bought £400 worth of shares in Tesco at £3.93 in December last year, and sold half towards the end of January at £4.15, keeping the remainder until the end, when they sold them at £4.40.
Mr Gray said: “I encouraged them to read background information on the holdings, but didn’t go into technical analysis.
“I preferred them to read newspapers and websites to get tips on which stocks to pick, which in turn makes the competition come alive for them.”
However, the star stock, from which they profited most, was Party Gaming, the world’s largest online gaming company, which is listed on the FTSE 250 index.
The club bought two lots of shares, one for £400 in November last year, and another for £300 in January, both when it was trading at about 28p. They sold them at a healthy 45p in March.
Mr Gray said: “The students decided to buy as there had been a fall in the share price when online gaming was effectively shut down in the United States.
“They thought the stock was undervalued and likely to rise, and when it was clear they had made a lot of money they decided it was a good time to get out.”
Another stock on which the club took a gamble was Protherics, a pharmaceutical company listed on the Alternative Investment Market (Aim). They bought 370 shares for 79p in January, but sold them at a loss for 73p in June. Every school has an equal chance in the Shares4Schools competition. While Eton College has produced more than its share of senior financiers over the years, it ranked 45th out of 55 schools at the end of this year’s competition.
To find out more, go to www.shares4schools.org. Schools that would like to participate in the 2007/08 competition should register online before September 29.
For more information on this year’s competition, go to www. telegraph.co.uk/shares4schools
Flair for finance: teacher Phil Gray and his budding St Bartholomew’s brokers