Growth Portfolio buys

Growth and value can be loose terms in the investment industry. As Warren Buffett once put it: ‘Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive. In addition, we think the very term "value investing" is redundant.  What is "investing" if it is not the act of seeking value at least sufficient to justify the amount paid?'

Growth, in the context of the Intelligent Investor Equity Growth Portfolio, means growth in investment value over the long term. And to get that growth, we'll happily invest wherever we see sufficient value. That might include rapidly growing businesses such as Nanosonics, but it might also include those that have been going backwards. Ultimately, it all comes down to price.

One stock in the latter category is Thorn Group, whose net profit is expected to almost halve in the year to March due to reduced lease originations. But that's more than accounted for by a share price that sits at around half its net tangible assets – most of which are in the form of receivables that will convert into cash within the next four years. Indeed at current prices there's an argument that reduced lease originations are a good thing since they'll result in the incoming cash going out the door again less quickly – thereby allowing more certainty over the value.

Given that value, we've bought a 2.5% weighting in Thorn Group in the Intelligent Investor Equity Growth Portfolio at an average price of 61.7 cents.

Find out how you can invest directly in this and other Intelligent Investor and InvestSMART portfolios by clicking here.

Intelligent Investor is loading up the van and going on tour in April and May, with events on the NSW central and north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. If you'd like to hear us talk about building a portfolio to weather any storm, book your spot here.