AstraZeneca: Where Has All the Cash Gone?

[Dod101]

In a rare move, I sold out of AZN about 6 months ago at about £56. I didn't, and don't, trust their adjusted eps. Over many years, it consistently flatters the basic eps. Eventually the dividend will have to suffer, so a 3.3% yield doesn't look particularly secure to me.

Who cares about a 3.3% yield when we have a capital appreciation of nearly 25% since you sold? That is about 7 years income.

Dod

Wow - Mr. Hindsight.

I do not understand. That is not hindsight. As at Friday's closing that is fact. That is not why I have held on to Astra for a long while. That is just to me a stroke of luck. It may, indeed probably, will fall again on Monday. If so so be it. I was/am perfectly happy to hold on to AstraZeneca now as I was in the past.

Seriously please explain what you mean.

Doid

[Arborbridge]

In a rare move, I sold out of AZN about 6 months ago at about £56. I didn't, and don't, trust their adjusted eps. Over many years, it consistently flatters the basic eps. Eventually the dividend will have to suffer, so a 3.3% yield doesn't look particularly secure to me.

Who cares about a 3.3% yield when we have a capital appreciation of nearly 25% since you sold? That is about 7 years income.

Dod

Wow - Mr. Hindsight.

Sarcasm not needed. I took it simply as a report of what had happened rather than taking any particular credit for sound judgement. Dod knows there's an amount of luck involved.

Arb.

[Dod101]

Not sure which thread this should be on but I have just trimmed AstraZeneca at £70 and I see that it is now quoted at £70.56. Amazing. Now what to do with the proceeds?

Dod

[Bubblesofearth]

Sarcasm not needed. I took it simply as a report of what had happened rather than taking any particular credit for sound judgement. Dod knows there's an amount of luck involved.

Arb.

Luck need not be involved. If you buy a well diversified portfolio of shares and leave it alone then one or two of those shares will in all likelihood go on to become stellar performers. That's how all markets tend to evolve over time. The sound judgement elements involve starting with a wide enough level of diversification and then leaving well alone.

Examples for myself have been Greggs, Diageo and RB.

The trick is to avoid the temptation to sell down the good performers.

BoE

[Dod101]

Luck need not be involved. If you buy a well diversified portfolio of shares and leave it alone then one or two of those shares will in all likelihood go on to become stellar performers. That's how all markets tend to evolve over time. The sound judgement elements involve starting with a wide enough level of diversification and then leaving well alone.

Examples for myself have been Greggs, Diageo and RB.

The trick is to avoid the temptation to sell down the good performers.

Up to a point I agree but the trouble is that you do not know the 'good performers' until after the event and of course as this Board is for discussing an income strategy, a 'good performer' is one with a sustainable and growing dividend. Astra for instance now has a fairly modest yield and not much prospect of an increase for some time, and so for me the time came to trim and find a better income producer for the modest proceeds.

Dod

[tjh290633]

I keep a record on my PC of how the shares in my HYP have done since January 1st. If I remember, I save a copy at the end of the year. It is always instructive to compare one year with another.

There is always a wide range of share price movements, and often last year's losers become this year's winners, and vice versa.

This is another reason why I use median values, rather than averages.

TJH

[Bouleversee]

Sarcasm not needed. I took it simply as a report of what had happened rather than taking any particular credit for sound judgement. Dod knows there's an amount of luck involved.

Arb.

Luck need not be involved. If you buy a well diversified portfolio of shares and leave it alone then one or two of those shares will in all likelihood go on to become stellar performers. That's how all markets tend to evolve over time. The sound judgement elements involve starting with a wide enough level of diversification and then leaving well alone.

Examples for myself have been Greggs, Diageo and RB.

The trick is to avoid the temptation to sell down the good performers.

BoE

I agree. I also did very well with Greggs and though the yield on current price is not high since the s.p. is up about 410% on my purchase price I am still getting a high yield on my investment. Cursing myself for not doing a bit of bed-an-ISA though that didn't pay off when I did it with Marston's and others. I don't feel inclined to let go of AZN (which I have both inside and outside ISAs) just yet as it looks to me as though there should be more to come. I understand they are concentrating on treatment for early stages of diseases rather than the stage 4 level treatment which other companies provide. AZN's strategy makes a lot more sense but the success or otherwise will depend on how speedily cancers and other diseases are diagnosed and the attitude of NICE to spending more money at an earlier stage which at last seems to be changing. I see no point in spending millions on giving people a few more weeks/months when in an advanced stage and denying treatment when it could prolong life for a long period or even effect a cure if offered earlier. Regrettably, I don't see any evidence of quicker diagnosis than was the case 25 years ago (still waiting for a diagnosis of something I reported to GP nearly 3 years ago, after finally being referred to consultant). I'll keep an eye on the situation and if the price starts to fall back will sell the non-ISA holding.

RB has also done very well for me. It suffered a check recently but seems to be picking up again. Another one to watch. As you say, if you are widely diversified, things tend to even out even if you do nothing, which is just as well as one can't hope to keep track of them all, just as with all the research you might do, you can't anticipate major problems which fall out of the sky. CAKE anyone? (At least I didn't have that one.)

[Bouleversee]

Not sure which thread this should be on but I have just trimmed AstraZeneca at £70 and I see that it is now quoted at £70.56. Amazing. Now what to do with the proceeds?

Dod

What indeed? Do let us know. It will be interesting to see at the end of a year whether the increase in dividend after buying and selling costs was worth it. I might be kicking myself for not selling though I still have a huge amount of cash in my ISA so it makes more sense for me to sit tight on AZN. I still think luck plays a big part.

[Dod101]

Not sure which thread this should be on but I have just trimmed AstraZeneca at £70 and I see that it is now quoted at £70.56. Amazing. Now what to do with the proceeds?

Dod

What indeed? Do let us know. It will be interesting to see at the end of a year whether the increase in dividend after buying and selling costs was worth it. I might be kicking myself for not selling though I still have a huge amount of cash in my ISA so it makes more sense for me to sit tight on AZN. I still think luck plays a big part.

It is not so much to improve the income as to capture what I thought was a spike in the share price but it is still going up, now over £71! I needed to trim it anyway. I think I will put it in to Glaxo, although it is over £17 to I may just sit on the cash until I get some inspiration.

Dod

[idpickering]

I'm going to do absolutely nothing with my AZN shares, apart from continue to hold for the long term.

Ian.

[Ricksure]

Good on you Ian, I very nearly sold out AstraZeneca a few weeks ago based on the article as it appears to make a lot of sense also the yield is now well under 4% however what do I replace it with, already own the popular HY shares also so many of them seem to be under threat from a Labour government or seem likely to cut the dividend so decided to put AZN on watch until it goes ex-dividend but at £71 + it is so very tempting to cash in a big profit

[kempiejon]

Not sure which thread this should be on but I have just trimmed AstraZeneca at £70 and I see that it is now quoted at £70.56. Amazing. Now what to do with the proceeds?

Dod

What indeed? Do let us know. It will be interesting to see at the end of a year whether the increase in dividend after buying and selling costs was worth it. I might be kicking myself for not selling though I still have a huge amount of cash in my ISA so it makes more sense for me to sit tight on AZN. I still think luck plays a big part.

This I think highlights some of the attraction to me for HYPing, it removes the worries about when and what to sell at what's the best price, what to buy and the risk of getting out before a bigger capital increase and moving into something that then damages your portfolio.

I've had AZN for 10 years or so, some still in my ISA, I sold my unsheltered portion end of the year to move the cash in to my ISA , I seem to remember I sold for £6something and I bought a higher yield.

[idpickering]

Good on you Ian, I very nearly sold out AstraZeneca a few weeks ago based on the article as it appears to make a lot of sense also the yield is now well under 4% however what do I replace it with, already own the popular HY shares also so many of them seem to be under threat from a Labour government or seem likely to cut the dividend so decided to put AZN on watch until it goes ex-dividend but at £71 + it is so very tempting to cash in a big profit

Thank you Ricksure. I’m holding for all the reasons you mentioned above. Besides, I’m not an expert stock picker, so shan’t even try to kid myself that I am. I’m happy to, as The Beatles would say, Let It Be. I get why others might want to top slice, I did so myself last year as I mentioned above, but regret selling out tbh.

Ian.

[Dod101]

My itchy finger has just put the proceeds from the AstraZeneca top slice into Glaxo. A slightly better yield but my primary reason is that Glaxo was the smaller holding and it is not a huge amount anyway.

Dod

[monabri]

My itchy finger has just put the proceeds from the AstraZeneca top slice into Glaxo. A slightly better yield but my primary reason is that Glaxo was the smaller holding and it is not a huge amount anyway.
Dod

GSK - from the FTSE ICB sector "Pharmaceuticals, Biotechnology and Marijuana Producers" according to the London Stk Exchange.

https://www.londonstockexchange.com/exc ... ml?lang=en


(I heard on the radio this morning (BBC radio 5 Live) that the UK might be considering the legalisation of Marijuana for medical usage).

[Bouleversee]

I have 2 holdings of those as well, so it's a good day for once.

I should imagine AZN could also get into marijuana and cannabis production pdq if they wanted to.

[ADrunkenMarcus]

I looked this morning and saw the Sterling value of my holdings in Kone (Finland) and Mastercard (USA) had risen significantly. Upon checking, the £1/Euro rate is now under £1.09 and the £1/$ rate is now around £1.21. This is quite a marked decline compared to recent weeks. I suspect that foreign earners and companies such as AZN which report in Dollars will, therefore, become more valuable in Sterling terms if this is maintained or continues. The exchange rate is probably partly behind its recent strength. Same effect likely on HYP shares like HSBC.

Best wishes

Mark.

[Arborbridge]

The trick is to avoid the temptation to sell down the good performers.

BoE

I'd say there is considerable luck involved, though many of us think it's skill

More seriously, the above comment reminds me that it took me many years to come to terms with the HYP idea (as practiced by some of us here) of selling down those shares which perform well. This is probably quite controversial to those in a "normal" investment background - run your winners, cut your losers, is the normal adage. To risk doing the opposite takes some getting used to.

In any case, I'd say: define good perfomer? What's the criterion? what's the time scale? (this is critical).

However, I'm sure you know all the problems with definition, as so on, and that's where people's skill with a huge measure of luck come in.

HYP isn't for "skilled" investors but for average folk. It is based on the idea that we are just as likely make a muck up if we try second guess events as we are to profit, and certainly my own experience suggests about a 50:50 ratio between successful sell decisions and just doing nothing. Because of this, and because we believe we cannot guess the future, the classic HYPer leaves well alone, and the slightly "non classical" HYPer trims shares to keep them from getting much too big a proportion of the portfolio, thereby decreasing the risk of major earthquake upsetting income flow. This is how HYP logic arrived at the controversial decision to sell down winners. So far, I might add, I've had remarkably few of those - DGE and AZN being two I can remember.

Arb.

[Dod101]

I looked this morning and saw the Sterling value of my holdings in Kone (Finland) and Mastercard (USA) had risen significantly. Upon checking, the £1/Euro rate is now under £1.09 and the £1/$ rate is now around £1.21. This is quite a marked decline compared to recent weeks. I suspect that foreign earners and companies such as AZN which report in Dollars will, therefore, become more valuable in Sterling terms if this is maintained or continues. The exchange rate is probably partly behind its recent strength. Same effect likely on HYP shares like HSBC.

Much more than the weakness of sterling is behind Astrazeneca'a recent rise. I am sure your suspicion's are correct though re the effect of this weakening of sterling. The question is can the companies take advantage of that and increase their sales? Foreign exchange rates can move either way very quickly.

Dod

[Arborbridge]

My itchy finger has just put the proceeds from the AstraZeneca top slice into Glaxo. A slightly better yield but my primary reason is that Glaxo was the smaller holding and it is not a huge amount anyway.

Dod

You surprise me a little. I thought you would turn away from GSK on the grounds that the dividend hasn't gone anywhere for a long time, and neither is there any compensation in the share price growth. Surely, not your sort of investment?

Arb.