The Lemon Fool

Morning all, my HYP was last discussed in this thread on 24 Aug 18; viewtopic.php?f=15&t=13319&p=161786#p161786 , perusal of which showed at that time my exposure to the travel & leisure sector, via my holdings in Marston's, stood at about 2.4% in capital value terms of the HYP. I have elected to make a smallish top up of that holding this week, pushing it up to about 3.2%. Comments welcome.

Ian.

At beginning of month my hyptuss had MARS, CNA up there and went for GNK as a 2nd in leisure to MARS. Then they made their announcement and both shares SP rose. The yield on GNK was the pulling power for me.

Raptor

Raptor wrote:At beginning of month my hyptuss had MARS, CNA up there and went for GNK as a 2nd in leisure to MARS. Then they made their announcement and both shares SP rose. The yield on GNK was the pulling power for me.

Raptor

Thanks for your input Raptor. I have held Greene King in the past, but no more as I lost faith in them. I do have form for doubling up in any given sector if possible/viable. I'll mull (Pickering) that over, thank you.

Ian.

idpickering wrote:

Raptor wrote:At beginning of month my hyptuss had MARS, CNA up there and went for GNK as a 2nd in leisure to MARS. Then they made their announcement and both shares SP rose. The yield on GNK was the pulling power for me.

Raptor

Thanks for your input Raptor. I have held Greene King in the past, but no more as I lost faith in them. I do have form for doubling up in any given sector if possible/viable. I'll mull (Pickering) that over, thank you.

Ian.

Hi Ian - I also hold GNK in my new HYP and, as a holder, am curious to know what spooked you before with GNK and made you sell? Looking back, are you glad you sold or would you have been better holding on?

Cheers, OLTB.

OLTB wrote:leisure ]

Hi Ian - I also hold GNK in my new HYP and, as a holder, am curious to know what spooked you before with GNK and made you sell? Looking back, are you glad you sold or would you have been better holding on?

Cheers, OLTB.

Hi OLTB, at that time I was having a bit of a reshuffle, and dumping what I considered to be weak holdings. Also to go were Centrica. I bought GNK on 29 Jun 17 and sold them on 12 Sep 17, so not held long at all. It was very naïve of me to sell out of GNK so quick, and not HYP, or like me at all, so in short, yes I do regret being so fickle at that time now. I was distracted by our forthcoming big move from Nottinghamshire up to Orkney maybe? Going back to this months top up though, I can still just top up MARS this month and maybe look at bringing GNK back on board over Oct & Nov maybe? At 32 holdings already, I am wary of diworsification though.

This is my 3000th post on this TLF! Only fitting that I should celebrate that fact with a post on HYP Practical. Thank you all for your input, help and guidance.

Ian.

Just to clarify my intentions, my top up of Marston's stands for this week. Toying with going for Greene King this month instead has clouded my thinking somewhat I admit, but I still might buy back into them next month. We'll see.

Ian.

https://www.londonstockexchange.com/exc ... 40700.html

DIRECTOR DEALINGS: MARSTON'S CHAIRMAN DESIGNATE BUYS SHARES
[ 17 Sep 2018 14:56 ]
Pub operator Marston's PLC said Chairman Designate William Rucker purchased 100,000 shares at a price of 99.95 pence per share on Friday.

monabri wrote:https://www.londonstockexchange.com/exchange/news/alliance-news/detail/1537192561839040700.html

DIRECTOR DEALINGS: MARSTON'S CHAIRMAN DESIGNATE BUYS SHARES
[ 17 Sep 2018 14:56 ]
Pub operator Marston's PLC said Chairman Designate William Rucker purchased 100,000 shares at a price of 99.95 pence per share on Friday.

Thanks for that monabri. I do like it when management buy their own company's shares. They know more about the inner workings of the firm than I do. This top up will be my last bet on Marston's for me for some time I suspect.

Ian.

monabri wrote:https://www.londonstockexchange.com/exchange/news/alliance-news/detail/1537192561839040700.html

DIRECTOR DEALINGS: MARSTON'S CHAIRMAN DESIGNATE BUYS SHARES
[ 17 Sep 2018 14:56 ]
Pub operator Marston's PLC said Chairman Designate William Rucker purchased 100,000 shares at a price of 99.95 pence per share on Friday.

I think that the response to that should be I would jolly well hope so.

If the Chairman didn't have a decent stake in the company, he is not worth having.

The price has risen, perhaps in response. Let's hope the dividend does likewise.

TJH

Ian

Very surprised to hear you say you will be topping up Marston's, for two reasons. First, I thought you had a much higher threshold for market cap, and second, with a yield of over 7% I thought you would see this as being in 'too good to be true' territory.

Terry.

MARS would not be on my radar for a top up. The divi is not covered. Payment of the interest on debt ( of which there is a lot) is a possible concern. Look at the share price/ yield over the last year

They will get a fillip from the World Cup so hopefully they will maintain the divi. I don't think MARS is a strong place to be.

Wizard wrote:Ian

Very surprised to hear you say you will be topping up Marston's, for two reasons. First, I thought you had a much higher threshold for market cap, and second, with a yield of over 7% I thought you would see this as being in 'too good to be true' territory.

Terry.

Hello Wizard, thanks for your input. You are correct with regards to my usual screening procedure in that I do normally have a minimum of 1bn market cap, and I am normally wary of 'to good to be true' dividend yields. I originally went for Greene King in the sector as it is a lot bigger than Marston's, and might therefore be a safer bet. As mentioned before I lost faith in GNK, and wanted exposure to the sector, hence my initial investment in Marston's. I accept that there are risks, and also for me, as I'm 7% down in capital value terms on my MARS holdings, I want to top up to lower my average purchase price, and lock in some of that juicy yield. It's only a small top up, so it's not going to make to much difference. I note monabri's words of caution in his post too, thanks.

Ian.

Hi monabri -

MARS would not be on my radar for a top up. The divi is not covered.

According to the MARS website's 5-year summary:-

http://www.marstons.co.uk/investors/res ... r-summary/

Year....Earnings per share....Underlying earnings per share....Dividend per share
2013..............10.0p...........................12.0p...............................6.4p
2014..............(8.9p)...........................11.7p...............................6.7p
2015...............4.1p............................12.9p...............................7.0p
2016..............12.7p............................14.0p...............................7.3p
2017..............14.2p............................14.2p.............................. 7.5p

So there was a big exceptional cost (£142.2m) in 2014, of which c£100m was non-cash adjustments to the property portfolio. This was followed by c£60m in 2015, again mainly relating to the estate.

The numbers wouldn't get me reaching for my bargepole, with around 50% of EPS being paid out as dividends.

Anyway, each to his or her own....

I'm taking data from MorningStar which indicates that the dividend was not covered at £0.02 last year (free cash flow per share). The EPS figures are similar to the ones in your table.
The free cash flow per share is the money available to pay the dividend (and not the EPS).

http://financials.morningstar.com/ratio ... region=GBR




Separately, the data in SimplyWallStreet also indicates that the dividend was not covered (I can't post this but you might be able to glean the info from here)

https://simplywall.st/stocks/gb/consume ... ons-shares

What's all the capex going on?

TUK020 wrote:What's all the capex going on?

opening new pubs & lodges


http://www.marstons.co.uk/docs/financia ... 160518.pdf

monabri wrote:

TUK020 wrote:What's all the capex going on?

opening new pubs & lodges


http://www.marstons.co.uk/docs/financia ... 160518.pdf

I suspect that I am missing something. So why hasn't the book value per share budged up?

Firstly, thanks for your input guys. I don't mind admitting that I'm suffering a bout of Pickering currently. I'm wondering if I've spent enough on MARS already, and to double up in the sector, and thereby spreading the risk, by bringing Greene King on board over the next couple of months, may well be a better idea after all? Hmm? Thoughts anyone please?

Ian.

monabri wrote:

TUK020 wrote:What's all the capex going on?

opening new pubs & lodges


http://www.marstons.co.uk/docs/financia ... 160518.pdf

monabri,
thank you for this.
Slide 20 (cash flow) turned me off them for any topups.
2/3 of heir operating cashflow is consumed by interest. When you subtract "organic capex", and add back in disposals, they come out even.
Meaning they are selling pubs to pay the interest bill and refurbish their other pubs.
So then they are borrowing to pay dividends, and a bunch more to build and buy new pubs. On thin margins.
Not mentioned pension deficit yet.

Slide 25. ( Segmental Analysis)..maybe they should stop making beer?