UK STOCK – Judges Scientific Stock Analysis – Small Cap Investing
Scientific Investing: What it is and How You Can Benefit
Scientific investing is an investment strategy that combines mathematical models, quantitative research, and data analysis. It is an approach to investing that attempts to remove subjective judgment from the decision-making process. By using the scientific method to analyze stocks, investors can make more informed decisions about where to put their money.
At its core, scientific investing is based on the idea that investors should rely on facts and data, rather than emotional decisions, when making financial decisions. By using quantitative analysis and mathematical models, investors can assess the risk and potential reward of an investment before investing. This approach can help investors make better-informed decisions and minimize their investment risks.
How Does Scientific Investing Work?
Scientific investing relies on the application of mathematical models and data analysis to assess the risk and potential return of an investment. It involves analyzing both historical and current data to assess the potential performance of a security. By looking at past performance, investors can gain insight into how the security might perform in the future.
In addition to analyzing historical data, scientific investing also relies on the use of quantitative analysis and mathematical models. These models are used to forecast the future performance of a security. They can help investors determine the potential risk and reward of an investment.
Benefits of Scientific Investing
Scientific investing has several advantages over other investment strategies. First, it can help investors make more informed decisions. By relying on facts and data, rather than emotion, investors can make decisions that are more likely to be successful. Additionally, scientific investing can help investors manage risk. By analyzing the potential risks and rewards of an investment, investors can make more informed decisions about where to put their money.
Finally, scientific investing can also help investors diversify their portfolios. By analyzing the potential risks and rewards of different investments, investors can decide which investments to include in their portfolios. This can help investors spread their investments over a variety of different securities, reducing their overall risk.
Drawbacks of Scientific Investing
Although scientific investing has some advantages, it also has some drawbacks. First, it requires a significant amount of time and effort. Investing using a scientific approach requires a great deal of research and analysis, which can be time-consuming. Additionally, scientific investing can be expensive. Analyzing data and using mathematical models can be costly, and investors may need to pay for access to the data and models.
Key Points
• Scientific investing is an investment strategy that combines mathematical models, quantitative research, and data analysis.
• It is based on the idea that investors should rely on facts and data, rather than emotional decisions, when making financial decisions.
• Scientific investing can help investors make better-informed decisions, manage risk, and diversify their portfolios.
• It requires a significant amount of time and effort, and can also be expensive.
People Also Ask Questions and Answers
Q: What is scientific investing?
A: Scientific investing is an investment strategy that combines mathematical models, quantitative research, and data analysis. It is an approach to investing that attempts to remove subjective judgment from the decision-making process.
Q: What are the benefits of scientific investing?
A: The benefits of scientific investing include making better-informed decisions, managing risk, and diversifying portfolios.
Q: What are the drawbacks of scientific investing?
A: The drawbacks of scientific investing include the time and effort required, as well as the cost of accessing the necessary data and models.
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In today’s video I’m looking at a company called Judges Scientific and there are so many things to like about this company.
I based a lot of my knowledge on the great investors. Peter Lynch, Warren Buffett, Charlie Munger, Mohnish Pabrai and a handful of others.
Judges Scientific is a UK based company that essentially looks to acquire small scientific equipment companies.
This scientific instrument business is things like testing equipment for private research laboratories and unique instruments for university research centres.
Most of their businesses are UK based but sell their products worldwide.
They have spent nearly 20 years building up a reputation in the industry as a place for niche scientific instruments companies to sell their businesses to.
Scientific instruments is a really interesting field because it serves an ever important need for humans.
Scientific research is key to progressing technology, so all the laboratories in the world need to measure their experiments.
Judges businesses supply the measurement instruments to these laboratories, so science can continue to improve the world.
It is a long lasting industry and something that will continue to trend upwards for the foreseeable future.
Judges have simple plans for continued growth.
They work on organic growth inside the businesses they already own which has been growing at 5-10% per year.
Plus actively looking to acquire new businesses.
It is something that has been working for the past decade and the company has been growing above 20% per year as a whole.
Their market cap is only 400 million British pounds, which makes this a small cap stock.
I like this, as they have a long runway to grow bigger and bigger.
This is a criteria of a potential 100 bagger.
Overall, the niches and specialisation required to run these businesses that Judges own, creates a good barrier for competition and something that will most likely help revenue and book value continue to compound.
I really like the management team.
They are disciplined buyers of businesses and after listening to them all speak in the last 3 years of annual presentations, They are not chasing companies to buy.
They set fair prices that fit into their idea of a fair deal, and if the seller doesn’t want to sell, then that is ok.
I think their deal rate is actually fine, but it must be hard work to do all that due diligence and make an offer only to see it rejected.
Fair Price
Factoring all this in, 27.45 Pounds or 2745 British pence is what would be a very good buy price.
Plus a better multiple as historically this company trades at a PE far higher than 20.
About 5000 pence would be the price I would be ok with paying, but maybe just an entry position. I’ll average down after that if I get this price.
Opinion
I think this is a great company. They are a small cap company in a solid industry with long term prospects. So this means growth can continue for a long period.
The barrier to entry is high for their specialised scientific instruments which makes competing difficult.
Plus, the management team are disciplined acquirers of businesses and the CEO is personally aligned with the shareholders.
The growth rates are really solid and the compounding metrics are really good as well.
Thanks for staying to the end and I’ll see you in the next video.
Judges Scientific (JDG.LSE)
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