Pickering time: new holding?

[PinkDalek]

It is neither Gengulpus nor Gengulphud to whom you are replying.

[Arborbridge]

Following Gengulphus post, I though an income view might be helpful, ranked in income percentage:



If the capital weights are slightly different from the previous table, it's because this was "run" today.
Arb.

[csearle]

...disappears up its own fundamental orifice like the Oozlum Bird...

A reminder, lest we forget, of the importance of education, amusement, and enrichment. C.

[Davidsb]

Well, I started reading this thread (a) because I am also looking to invest, and (b) because I hold some of the shares mentioned by Arborbridge. As I currently hold 46 shares in my HYP, I skipped through all the posts which discussed theoretical optimum portfolio sizes.....

Playing with the HYP spreadsheet (in particular blending the yield, cover and P/E numbers to give an overall rating), the shares which emerge as candidates are:-

Galliford Try (GFRD)
Babcock (BAB)
Redrow (RDW)
Aviva (AV.)
Marston's (MARS)
Petrofac (PFC)


I notice that AV. is already held in Arb's portfolio, but I suggest the others on the list as possible candidates.

[Arborbridge]

Well, I started reading this thread (a) because I am also looking to invest, and (b) because I hold some of the shares mentioned by Arborbridge. As I currently hold 46 shares in my HYP, I skipped through all the posts which discussed theoretical optimum portfolio sizes.....

Playing with the HYP spreadsheet (in particular blending the yield, cover and P/E numbers to give an overall rating), the shares which emerge as candidates are:-

Galliford Try (GFRD)
Babcock (BAB)
Redrow (RDW)
Aviva (AV.)
Marston's (MARS)
Petrofac (PFC)


I notice that AV. is already held in Arb's portfolio, but I suggest the others on the list as possible candidates.

I'll take a look at those too late. Babcock I would reject because I am not sure about the solidity of its future. Already contracts have been lost due to Brexit and there are people being laid off.

Arb.

[Gengulphus]

I'll take a look at those too late.

Well, I suppose that deciding in advance to look at things too late is one way to go about masterly inactivity! ;-)

Gengulphus

[Arborbridge]

I'll take a look at those too late.

Well, I suppose that deciding in advance to look at things too late is one way to go about masterly inactivity! ;-)

Gengulphus

I really must leave time to proof read before rushing out of the door!

[Davidsb]

Hi Arborbridge -

Babcock I would reject because I am not sure about the solidity of its future.

Well, I am with Niels Bohr and Yogi Berra on this one - "It's tough to make predictions, especially about the future."

I topped up my BAB investment earlier this month, working on the theory that if contract losses and redundancies have been announced, then they count as known knowns, which are, one would hope, included in broker forecasts.

Yesterday, I went with one of your original options, ITV, taking my HYP holdings up to 47. Please keep it under your hat - I don't want to offend anyone unnecessarily.....

;¬)

[Arborbridge]

Hi Arborbridge -

Babcock I would reject because I am not sure about the solidity of its future.

Well, I am with Niels Bohr and Yogi Berra on this one - "It's tough to make predictions, especially about the future."

I topped up my BAB investment earlier this month, working on the theory that if contract losses and redundancies have been announced, then they count as known knowns, which are, one would hope, included in broker forecasts.

Yesterday, I went with one of your original options, ITV, taking my HYP holdings up to 47. Please keep it under your hat - I don't want to offend anyone unnecessarily.....

;¬)

I just think BAB might be a "brave decision, minister" but I since hope I'm wrong because it is a thoroughly useful outfit giving much needed skilled and semi skilled jobs to people in regions that really need them.
Just not for me as a choice.

Arb.

[Bouleversee]

Well, I started reading this thread (a) because I am also looking to invest, and (b) because I hold some of the shares mentioned by Arborbridge. As I currently hold 46 shares in my HYP, I skipped through all the posts which discussed theoretical optimum portfolio sizes.....

Playing with the HYP spreadsheet (in particular blending the yield, cover and P/E numbers to give an overall rating), the shares which emerge as candidates are:-

Galliford Try (GFRD)
Babcock (BAB)
Redrow (RDW)
Aviva (AV.)
Marston's (MARS)
Petrofac (PFC)


I notice that AV. is already held in Arb's portfolio, but I suggest the others on the list as possible candidates.

I'll take a look at those too late. Babcock I would reject because I am not sure about the solidity of its future. Already contracts have been lost due to Brexit and there are people being laid off.

Arb.

I hold BAB, AV., MARS and PFC and the only one I'd feel inclined to take a punt on (if I didn't feel I had enough already) out of that list is PFC, which is probably enough to put you off!

[monabri]

I've found some cash down the back of a sofa - enough for some generous topups or a single holding. As it happens, this cash is in a broker account with few other holdings, giving little opportunity for topsup and one from which I do not yet draw income: the account is in effect part of my margin of safety.

The holdings in there which could be topped up are:-

VOD
SLA,
PSN
IGG
PNN
MYI (Murray International)
SOI (Schroder Oriental Income)

SLA is likely to come in for a top up very soon - all the others are fairly well up to the mark.

A new holding could be a benefit and I've checked the current status using Step-One, ruled out those shares I already own and a couple of others which don't make the cut for one reason or another. This leaves the following as front runners:

TUI
ITV (paired with WPP, and/or replacing Informa)
SMDS (Smith DS)
RIO (paired with BHP)
IMI

Does anyone know of particular concerns or alternatively big advantages of any of these? I would also consider any further options, though I would prefer forecast yield to be around 4.5% or more. As I'm not drawing income from this account, I can be more lenient on yield if the record of increases is steady.
At present RIO or SMDS float to the top of my preferences.

For the sake of putting this in context, here is my HYP ranked in capital weight, then the second table is sector weighting.



Sector distribution:-

Life Insurance                  | 10.71%
Financial Services              |  8.16%
Pharmaceuticals & Biotechnology |  7.02%
Oil & Gas Producers             |  6.60%
Food Producers                  |  6.53%
Gas, Water & Multiutilities     |  6.52%
Media                           |  6.36%
Tobacco                         |  5.72%
Banks                           |  5.52%
Food & Drug Retailers           |  5.52%
Household Goods                 |  4.31%
Beverages                       |  3.91%
Nonlife Insurance               |  3.62%
Mining                          |  3.35%
Travel & Leisure                |  3.33%
Multiutilities                  |  2.90%
Retail REITs                    |  2.76%
Electricity                     |  2.56%
Fixed Line Telecommunications   |  2.52%
Mobile Telecommunications       |  2.08%
                                |       
Total                           |   100%

Any suggests or discussion is welcome.

Arb.

Sorry to re-post the OP but a few questions, observations.

- Is the money in a tax free shelter or could it be withdrawn into one in April 19?
- the original candidates (VOD,SLA,PSN,IGG PNN,MYI,SOI) and the 4.5% yield rules out the 2 ITs.
- the money is in a margin of safety account but is it really needed as a margin of safety ? /viewtopic.php?f=15&t=2305
- Based on info here viewtopic.php?p=22453#p22453 I'd be tempted to top up something else (HFEL) rather than add another HYP share ... NO FURTHER DISCUSSION HERE
- you've posted openly on TLF so I hope you don't mind me referring to previous postings.

[Arborbridge]

Sorry to re-post the OP but a few questions, observations.

- Is the money in a tax free shelter or could it be withdrawn into one in April 19?
- the original candidates (VOD,SLA,PSN,IGG PNN,MYI,SOI) and the 4.5% yield rules out the 2 ITs.
- the money is in a margin of safety account but is it really needed as a margin of safety ? /viewtopic.php?f=15&t=2305
- Based on info here viewtopic.php?p=22453#p22453 I'd be tempted to top up something else (HFEL) rather than add another HYP share ... NO FURTHER DISCUSSION HERE
- you've posted openly on TLF so I hope you don't mind me referring to previous postings.

Thanks for your observations, which I will try to answer:

- the money is in an ISA
- actually, the 4.5% does not rule out investment into those. It just means more money in the IT basket rather than the HYP.
- margin of safety is part of the strategy I'm working to i.e. I draw 80% of my HYP income - the rest stays invested.
- I have investment in HFEL already in another account, so I would not wish to start a separate HFEL holding.

If I want to add to the HYP, Smith (DS) is the current favourite. Otherwise, it would be a combination of topups and more into the 2 ITs. The "current favourite" might alter, of course

BTW - since I have enough income to live off, and this is a safety margin account which I haven't yet drawn on, I can choose to be less fussy about the yield if I wish

Arb.

[Arborbridge]

- the money is in a margin of safety account but is it really needed as a margin of safety ? /viewtopic.php?f=15&t=2305

Just thinking about what your wrote here. This points to a thread with 40 posts: to which one were you referring? I can't off-hand find a discussion there about safety margins or whether they are needed.


Arb

[idpickering]

Arb, may I just express my thanks to you for initiating this very interesting thread.

Ian.

[monabri]

- the money is in a margin of safety account but is it really needed as a margin of safety ? /viewtopic.php?f=15&t=2305

Just thinking about what your wrote here. This points to a thread with 40 posts: to which one were you referring? I can't off-hand find a discussion there about safety margins or whether they are needed.


Arb

The margin of safety account is in your opening para. when you talk about finding some money down the back of the sofa but you answered the question in your reply to me that confirmed what I thought...( you call it a m.o.s account but you already have " sufficient" by a margin as discussed in your HYP is 10 post...( I know there is an ARB 11 and 12 update).

[Arborbridge]

The margin of safety account is in your opening para. when you talk about finding some money down the back of the sofa but you answered the question in your reply to me that confirmed what I thought...( you call it a m.o.s account but you already have " sufficient" by a margin as discussed in your HYP is 10 post...( I know there is an ARB 11 and 12 update).

I'm still not totally clear what you mean, but I think you are saying my margin of safety is big enough, so why add more to it?

The margin of safety is - in effect - that dividend income and associated capital which I do not need to spend to live. It is just a coincidence that I the amount needed is broadly speaking, provided by my capital in two complete broker accounts from which I have not drawn income, and some of the income from a third which I occasionally use to top up my SIPP income.

If my margin of safety gets bigger, I don't see a problem. Or maybe you were making another point I've missed?
What this does mean is that I can afford to be more forgiving of low yielders since any additional income may not be needed.

Arb.

[Dod101]

At the risk of going off topic, once the 'margin of safety' as you call it becomes excessive what do you do then? My margin of safety- an expression I do not really use - is about three years expenditure in Index Linked NSCs. Thus excess income from my investments tends to go to grandchildren. Better now than in a few years when I am dead. It helps with things like school trips, kitting out for Uni and the like.

Dod

[monabri]

Arb, what I meant to say was that if the money/account was truly a margin of safety then it should be invested cautiously. The desired yield mentioned could be achieved by a comparatively safer investment than in a single HYP share ( which looks fine at the moment but turns into the next Interserve...for example).

[Arborbridge]

Arb, what I meant to say was that if the money/account was truly a margin of safety then it should be invested cautiously. The desired yield mentioned could be achieved by a comparatively safer investment than in a single HYP share ( which looks fine at the moment but turns into the next Interserve...for example).

I think there's a mixing of terms here. The margin of safety is just the investments you are not drawing down on. The investment policy for it is exctly the same as the main body of holdings - it is all regarded as one, but just not drawn on. What you have described is nearer to me Income Reserve - that is what I have in cash.

Arb.

[Arborbridge]

At the risk of going off topic, once the 'margin of safety' as you call it becomes excessive what do you do then? My margin of safety- an expression I do not really use - is about three years expenditure in Index Linked NSCs. Thus excess income from my investments tends to go to grandchildren. Better now than in a few years when I am dead. It helps with things like school trips, kitting out for Uni and the like.

Dod

I think what you call "margin of safety" in your example above is what we refer to on the board as "income reserve". It's cash or near cash tht can be released in an emergency or to make up for a dividend shortfall in the case of a market crash.

Margin of safety is the percentage of the main body of investments which are not being drawn down for income. For example, my target for margin of safety for my HYP is 25% - that is I drawn done 80% of my HYP income.

Arb.