Born in 1929, British expert stock investor James Derrick Slater (Jim Slater) is the pioneer of the “Price-Earnings to Growth” or PEG ratio. This simple equation combines uniquely, growth and value investing and compares a company’s price-earnings (P/E) ratio with its expected, or estimated, earnings per share (EPS) growth rate.
Jim, as they call him, began his career as a chartered accountant and then moved into corporate managerial. In 1964, he and Peter Walker founded an investment company called Slater Walker Securities and became famous as a major player in the U.K. in aggressive corporate takeovers, building Slater Walker into a significant industrial and financial conglomerate.
His successful career in investment banking came to an abrupt end with the collapse of Slater Walker Securities during the U.K.’s 1973-74 recession. He fought his way back to solvency through private investing and launched a career as a financial writer. His widely read investment column under the pseudonym “Capitalist” for London’s Sunday Telegraph and the popular investment advisory service called “Company REFS,” which provided “Really Essential Financial Statistics” on all publicly traded U.K. companies, positioned Slater as an investment expert.
In 1992, he wrote the best-selling books, The Zulu Principle and Beyond the Zulu Principle. A parallel career as an educator of individual investors and as an author of children’s books flourished.
Slater’s stock investing strategy favours small growth company that are undervalued by the market – so-called hidden gems that can be bought at a reasonable price. At the core of the methodology is the focus on finding small growth stocks before they hit the big time. The main tool, which Slater invented and popularized to find this type of stock, was his pioneering “Price-Earnings to Growth ratio, or PEG.