So what was his system?

First, he preferred small companies to large ones. “Mammoth companies rarely double their market capitalisation in a year. “In contrast, small companies often do this and more,” he said, summarising this analysis neatly in the phrase “elephants don’t gallop”.

Then he came up with a means to determine which small companies with good growth prospects were undervalued. Most investors are familiar with the “price to earnings” or p/e ratio, which shows how much you have to pay for each £1 of profit made by a company (so a smaller figure signifies that you are buying profits cheaply). Mr Slater took it a stage further to work out when investors were buying growth cheaply.

He devised the “Peg” ratio, which is the p/e figure divided by the annual growth rate of the company. For example, a share with a P/E ratio of 20 but growing at 25pc a year would have a Peg of 0.8.

David Fuller's view

Here is The Sunday Telegraph article.

There is a logic to the system, especially if it is applied to shares with small capitalisations, ensuring that they are less monitored by investment analysts and systems traders. 

Any feedback on this from subscribers would be welcomed.