New HYP shares

[NeilW]

To get this board back on track I was wondering if anybody had spotted a share that had drifted into the HYP selection criteria recently that isn't one of the usual suspects.

Is there anything left unloved that is just getting on with it we don't know about?

About the nearest I've come across is MicroFocus, and I have severe doubts about that.

[monabri]

Is there anything left unloved that is just getting on with it we don't know about?

If there isn't, then it is only a matter of time..or so it seems!

How about Direct Line?

[IanTHughes]

To get this board back on track I was wondering if anybody had spotted a share that had drifted into the HYP selection criteria recently that isn't one of the usual suspects.

Is there anything left unloved that is just getting on with it we don't know about?

About the nearest I've come across is MicroFocus, and I have severe doubts about that.

Damn! I saw the title of the thread and thought: "I'll tell them about Micro Focus International PLC (MCRO)", only to find that you got there first. Great minds think alike?

Anyway, I noticed it yesterday when reviewing my latest list of yields. So far what I have is:

Index: FTSE 100
Market Capital: £5,555M
Price: 1,274.00p
Last Full Dividend: 70.86p (USc 88.06 converted at 1.3114)
Dividend Cover: 2.00
Yield: 5.55%

While adding them to my Watchlist, I had a very brief look at the latest results, which were published 0n 11 Jul 2018. Cash generation looks OK but they are rather indebted. I will have to look some more when I have the time.

For now they look interesting not least because they are in Software & Computer Services Business Sector, part of the Technology Industry. You do not see many HYP candidates from there!

So, apart from the debt, what should I watch out for?


Ian

[monabri]

Quite a few director buys over the last year for MCRO ( Micro Focus International) and no sales so ( assuming they know more than the ex directors (!) of Conviviality then that's a positive). Debt...well, they bought HPE software. They are selling the SUSE side of the business for $2.5 billion USD so that'll help the debt.

(Disclosure I hold shares in MCRO).

[idpickering]

I had noticed that share recently myself, but I’m wary of such outfits after the dot com boom and bust. Is the risk worth it? I’m not so sure so shall not be adding this to my HYP.

Ian.

[Raptor]

To get this board back on track I was wondering if anybody had spotted a share that had drifted into the HYP selection criteria recently that isn't one of the usual suspects.

Is there anything left unloved that is just getting on with it we don't know about?

About the nearest I've come across is MicroFocus, and I have severe doubts about that.

This does pop in and out on a regular basis. My only concern is that they do seem to have a lot of "legacy" software on big iron. Not saying that is going to go away. I am now working on Green Screen technology that I first "supported" 31 years ago and it is still going strong. I "retired" from IT 15 years back but then they were one of our major competitors and expanding fast by "buying" either whole companies or software. They were being watched closely by us (major US tech company).

To be honest the selection seems to have gone "stale", my last buy was SLA to fill a gap in my daughters HYP, at the time nothing "new" really jumped out at me (beginning of July).

Hope this thread throws up some newbies as look to have some "dosh" to spend next month.

Raptor.

[Alaric]

Is the risk worth it?

Microfocus previously had a more modest dividend. Its current high yield is down to the price having collapsed somewhat in recent months. There's a thread somewhere on the Lemon Fool speculating as to reasons.

viewtopic.php?f=15&t=9428&p=139470&hilit=microfocus#p108814

[monabri]

It's a pity that Standard Life Aberdeen (SLA) is not Standard Life + Aberdeen Asset Management. It seems to be the case that they've morphed into Aberdeen Asset Management but with a new name. Why o why?

[SalvorHardin]

It's a pity that Standard Life Aberdeen (SLA) is not Standard Life + Aberdeen Asset Management. It seems to be the case that they've morphed into Aberdeen Asset Management but with a new name. Why o why?

Standard Life Aberdeen was formed by the merger of Standard Life and Aberdeen Asset Management. Currently yielding about 6.7%

https://en.m.wikipedia.org/wiki/Standard_Life_Aberdeen

Edit. Doh! Didn't realise that they are planning to sell their life business. Double Doh!

[Alaric]

It seems to be the case that they've morphed into Aberdeen Asset Management but with a new name. Why o why?

It seems they just wanted to be asset managers rather than also be risk managers. They've dumped all the "life" bit of Standard Life onto Phoenix, but Phoenix get to keep the Standard Life name.

https://www.standardlife.com/sl/propose ... rship.page

[idpickering]

It's a pity that Standard Life Aberdeen (SLA) is not Standard Life + Aberdeen Asset Management. It seems to be the case that they've morphed into Aberdeen Asset Management but with a new name. Why o why?

Standard Life Aberdeen was formed by the merger of Standard Life and Aberdeen Asset Management. Currently yielding about 6.7%

https://en.m.wikipedia.org/wiki/Standard_Life_Aberdeen

I hold SLA, and am tempted to top up my holdings as the sp has gone South recently, but something is holding me back. I too wish they’d stayed as just Standard Life.

Ian.

[Raptor]

It's a pity that Standard Life Aberdeen (SLA) is not Standard Life + Aberdeen Asset Management. It seems to be the case that they've morphed into Aberdeen Asset Management but with a new name. Why o why?

Standard Life Aberdeen was formed by the merger of Standard Life and Aberdeen Asset Management. Currently yielding about 6.7%

https://en.m.wikipedia.org/wiki/Standard_Life_Aberdeen

I hold SLA, and am tempted to top up my holdings as the sp has gone South recently, but something is holding me back. I too wish they’d stayed as just Standard Life.

Ian.

I realised what they were doing a while back. Reclassified them as "Asset Managers" in my spreadsheet and then brought LGEN for the life sector. I would not top them up in my HYP but they have been "extremely" good to me in the past and hope they will continue.

Raptor.

[monabri]

Thus my percentage holding in "life insurance" has reduced...

A possible LGEN top up might be on the cards or Aviva?

(SLA reclassified in my copy of HYPTUSS as Asset Managers as well, Raptor).


(Maybe when SLA return the 30 something pence per share?)

[IanTHughes]

I had noticed that share recently myself, but I’m wary of such outfits after the dot com boom and bust. Is the risk worth it? I’m not so sure so shall not be adding this to my HYP.

This appears to have been the news that precipitated a sharp correction in the share price

https://www.investegate.co.uk/micro-foc ... 00060714I/

Since the interim results on 8 January 2018, the rate of year-on-year revenue decline has been greater than anticipated and accordingly the Group is issuing revised constant currency revenue guidance for the twelve months ending 31 October 2018 of minus 6% to minus 9% compared to the proforma 12 months ending 31 October 2017. This updates revenue guidance of minus 2% to minus 4% provided at the interim results on 8 January 2018. The impact of this on adjusted EBITDA margin percentage for the period is expected to be mitigated by the progress made in the cost reduction programme which is currently tracking ahead of schedule. The Board expects for the Group's net debt position at 31 October 2018 to be broadly in line with market expectations.

Chris Hsu has submitted his resignation in order to spend more time with his family and pursue another opportunity. He will step down immediately as the CEO of the company. Stephen Murdoch, currently Micro Focus COO, becomes CEO and rejoins the Board with immediate effect.

The recent revenue performance is primarily due to lower than expected licence income and is a result of a number of factors, which management believe to be largely one-off transitional effects of the combination with HPE software, rather than underlying issues with the end market or the product portfolios.

I will investigate further but that appears to be quite a red flag.


Ian

[Dod101]

It's a pity that Standard Life Aberdeen (SLA) is not Standard Life + Aberdeen Asset Management. It seems to be the case that they've morphed into Aberdeen Asset Management but with a new name. Why o why?

Standard Life Aberdeen was formed by the merger of Standard Life and Aberdeen Asset Management. Currently yielding about 6.7%

https://en.m.wikipedia.org/wiki/Standard_Life_Aberdeen

Edit. Doh! Didn't realise that they are planning to sell their life business. Double Doh!

Not planning,. They have sold the life business to Phoenix as someone else has said. SLA has 20% of Phoenix as a result though for the time being at least. If you want more direct exposure to life insurance I would think you ought to buy Phoenix ( yield 6.5%) not L & G which is at least as big a fund manager as a life insurer.

The answer to your Why o why? is that they do not wish to be involved in the risk business aka life insurance. Derisking they call it.

I hold L & G and Phoenix.

Dod

[funduffer]

I just ran a screen on Digitallook:

market Cap > £1Bn
Yield > 5%
Div growth >2% over last 4 years
Cover > 1.5

It threw up a few new ones besides MicroFocus:

Crest Nicholson (builder) 8.4% (yield)
Playtech (software) 6%
Dunelm ( home furnishings) 5%
Polymetal International (precious metal mining) 5%

All are rather low-cap, and I do not profess to know much about them, but some new names at least.

[Horsey]

If you don't mind dipping your investment toes into foreign stocks, there are quite a number of interesting Eurozone candidates many of which are household names....
e.g. BMW, Daimler, Unibail-Rodamco, Allianz, BASF, Aegon, ING Group

Not for everyone, especially HYP-purists, but maybe worth some thought for the OP.

Moderator Message:
Whilst it is possible that one or more of these shares might form part of a high yield share strategy we have decided that on this board discussion of shares is subject by the following guidance...

For the HYP Practical board we define an HYP as a portfolio comprised exclusively of ordinary shares. If selected, such shares should have a dividend yield above the average for the FTSE100 index and be drawn from the constituents of the FTSE 350 index.

Please try and adhere to this, thanks. - Chris

[Alaric]

Dunelm ( home furnishings) 5%

Being aware of them as a retailer, I took a brief look. The share price has been drifting downwards over the past five years, which would account for the higher yield if they had been maintaining or increasing their dividend.

According to Hargreaves, five years ago the dividend yield was 1.7%
https://www.hl.co.uk/shares/shares-sear ... /dividends

Today's price is 518, five years ago it was over 1000.

[CryptoPlankton]

Without wishing to put the dampers on this exercise, Is there actually a need to find new candidates? At a glance, there are thirty odd companies (from fifteen or sixteen sectors) in the FTSE 100 that yield greater than the average. I haven't looked at them in depth for a while as my "HYP" has been essentially complete for some time now, but I can't believe it wouldn't be possible to buy an entirely satisfactory HYP (as defined by this board's guidelines) just from this pool of shares alone.

While it can certainly make things more interesting to look further afield, my experience has been that over time the "usual suspects" have tended to plod on fairly steadily and uneventfully (with the odd exception) while the more 'experimental' additions have caused far more headaches and losses (again, with the odd exception). Given the objectives of this particular strategy (which don't include thrills and spills!), I have concluded that boring actually tends to be best - both in terms of performance and hassle. So, unless there is a real need, I'd suggest that there is little to be gained by looking beyond the usual suspects - they tend to be so for good reasons...

[Arborbridge]

When the occasional plodder starts to falter, it's inevitable that one should look around and see what else is out there. For example, as shares like Pearson trip over, or UBM turns into Informa- two recent examples of my own - one looks around to see what one is missing.

The answer may be "not much" but it's worth asking!