Well known stock market investor and “asset stripper” Jim Slater has died aged 86. He first made a big name for himself as co-founder of Slater-Walker Securities in the 1960s – an investment company that specialised in rapid deal making. By acquiring companies, reorganising them and then disposing of them the company grew rapidly but built a reputation for “asset stripping” (a derogatory term for taking out the good parts of a business and dismantling the rest leaving workers out of jobs). It eventually ran into financial difficulties in the mid-70s leaving Slater a “minus millionaire” as he put it.
He trained as an accountant and wrote an investment column for the Sunday Telegraph before the above activities, but his main claim to fame among private investors will be the book he published on stock market investment entitled “The Zulu Principle”. The title was chosen because he argued you could become more expert on Zulus than anyone else with just a little study suggesting that a focused approach to investment would be most productive. But the book really became popular from its promotion of the PEG (Price Earning Growth) factor as a more appropriate way to value rapidly growing businesses. Earnings that are growing rapidly are more valuable then those that are growing slowly so by dividing the Price/Earnings ratio by the growth factor you get a better measure to compare companies.
He was keen on investing in growing business, and I was amused to spot when I retrieved my original copy of The Zulu Principle that in 1968 Tesco was on a p/e of 43 from which it subsequently declined sharply after supermarkets became more commonplace. That and his other investment books are still well worth reading.
He subsequently wrote some children’s stories and an autobiography called Return to Go. One of his sons, Mark Slater, is also active in the investment world as a fund manager where he follows his father’s investment style with success.