Zulu growth stocks passing Jim Slater’s investing rules

Jim Slater, the businessman and one of Britain’s most popular share traders, once wrote that “investment is essentially the arbitrage of ignorance”. He insisted that individual DIY investors could get an edge against professional money managers by going where most of them feared to tread: into smaller, less well-known growth shares. In his 1992 book The Zulu Principle, Slater said the successful investor “believes he knows something that other investors do not fully appreciate”. But he noted that this was next to impossible with large-caps because the market knows so much about them. By contrast, given that most brokers can’t spare the time or money to cover small-caps, Slater said it was this relatively under-exploited area of the stockmarket that you’d be more likely to find a bargain (with some ignorance to arbitrage). Nearly 30 years after he first made that observation, small-cap investing still hinges on the idea that it’s an area of the market where individual investors can find an edge. On the hunt for growth shares Part of Slater’s considerable legacy is his strategy for finding the most promising, reasonably priced growth shares in the market. He described it in detail in The Zulu Principle, which…