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Tinkering time again

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tjh290633
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Tinkering time again

#267598

Postby tjh290633 » November 27th, 2019, 10:40 am

This morning I sold 25% of my holding in Segro, as it had gone way past my limit of 1.5 times the median holding value. I topped up Aviva and South 32, by 15.5% and 19.7% respectively, being the two highest eligible shares. I could also have topped up BATS, but decided to leave that for another day, as otherwise the topping up of the two I chose would have been lower than desirable.

My top-up table now looks like this:

Top-up          Income                     Cost                
Rank EPIC Rank EPIC % Income Rank Epic % Cost
1 IMB* 1 TW. 5.97% 1 MARS 4.70%
2 MKS* 2 IMB 5.07% 2 AV. 4.58%
3 BATS 3 BT.A 4.75% 3 BT.A 4.52%
4 TW.* 4 AV. 4.66% 4 MKS 4.34%
5 KGF 5 RIO 4.49% 5 LLOY 4.25%
6 BP. 6 MARS 4.29% 6 WMH 4.07%
7 BLND 7 LGEN 3.96% 7 GSK 4.01%
8 BT.A* 8 RDSB 3.86% 8 S32 4.01%
9 LLOY* 9 BATS 3.68% 9 SSE 3.97%
10 BHP 10 SSE 3.62% 10 BHP 3.80%
11 TSCO 11 ADM 3.54% 11 LGEN 3.69%
12 S32 12 BP. 3.54% 12 PSON 3.66%

As I have said before, any share which, if topped up by 20% would have breached my arbitrary limits of 5% of either portfolio cost or share of income is diqualified. Hence those in the income rank column down to MARS are disqualified, as are those in the Cost rankings down to LLOY. This means that BATS, KGF and BP. now rank highest for topping up.

My portfolio, ranked by holding weight, now looks like this:

Value                           
Rank EPIC Weight % Median
1 GSK 3.86% 133.7%
2 MARS 3.83% 132.8%
3 AZN 3.55% 122.8%
4 DGE 3.48% 120.6%
5 LGEN 3.46% 120.0%
6 UU. 3.32% 114.9%
7 SGRO 3.26% 113.1%
8 AV. 3.26% 112.9%
9 RIO 3.26% 112.9%
10 VOD 3.16% 109.5%
11 SSE 3.14% 108.9%
12 RDSB 3.09% 107.0%
13 BT.A 3.07% 106.4%
14 ADM 3.06% 106.0%
15 TW. 3.00% 103.9%
16 BHP 2.92% 101.0%
17 ULVR 2.90% 100.5%
18 NG. 2.89% 100.0%
19 BP. 2.86% 99.1%
20 BATS 2.85% 98.7%
21 S32 2.77% 96.1%
22 CPG 2.76% 95.8%
23 WMH 2.76% 95.6%
24 BLND 2.68% 92.7%
25 TATE 2.64% 91.4%
26 LLOY 2.53% 87.6%
27 BA. 2.52% 87.2%
28 IMI 2.39% 83.0%
29 SMDS 2.35% 81.6%
30 MKS 2.24% 77.4%
31 KGF 2.19% 75.9%
32 IMB 2.15% 74.6%
33 RB. 2.13% 73.9%
34 PSON 2.04% 70.6%
35 TSCO 1.63% 56.3%

SGRO is now 13% above median weight, AV. is about the same level and S32 is 4% below median weight.

TJH

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Re: Tinkering time again

#267618

Postby keith » November 27th, 2019, 11:29 am

Hi

when you talk of median value are you talking about cost or valuation as at the current date

Keith

tjh290633
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Re: Tinkering time again

#267685

Postby tjh290633 » November 27th, 2019, 2:54 pm

keith wrote:Hi

when you talk of median value are you talking about cost or valuation as at the current date

Keith

The value of the holdings at that particular time. The median can vary quite a lot, which can cause the best laid plan to be set at naught. If a share at or below the median point has a big rise, it means that the hurdle, over which the highest value share has to climb to be triggered, can rise out of reach. Quite often I have been on the cusp of trimming back the leader, only to be thwarted.

TJH

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Re: Tinkering time again

#267693

Postby biffinsbridge » November 27th, 2019, 3:14 pm

Used my Greenking proceeds on 3813 MARS & 964 TATE, so now have a Brewer & Food, ISA now back to 15 shares. This not tinkering it was forced by Greenking sale! Regards Dickie.

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Re: Tinkering time again

#267699

Postby idpickering » November 27th, 2019, 3:36 pm

biffinsbridge wrote:Used my Greenking proceeds on 3813 MARS & 964 TATE, so now have a Brewer & Food, ISA now back to 15 shares. This not tinkering it was forced by Greenking sale! Regards Dickie.


Hi Dickie, I sold my GNK holdings taking advantage of the nice uptick in the sp, and put most of the released funds into MARS, thereby maintaining my exposure to the sector.

Ian.

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Re: Tinkering time again

#267714

Postby funduffer » November 27th, 2019, 4:05 pm

Well you do really have to admire Terry’s disciplined top up methodology.

I don’t tinker very often, but if I did, I would have to follow a system like this, otherwise I would be all over the place, acting on whims and rumours.

As for Terry’s top ups, Avila looks good, but I have questions over S32 due to their rather odd dividend cut, which they tried to sell as not a cut in the last accounts, and the baffling dividend forecast on Sharecast, which seems completely spurious as far as I can judge.

They are top of my top up list but I am cautious at the moment until I have understood a bit better what is going on.

Unlike Terry, I would generally not top up a cutter, unless there are well explained circumstances, or an indication that the dividend has started to rise again.

FD

tjh290633
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Re: Tinkering time again

#267718

Postby tjh290633 » November 27th, 2019, 4:11 pm

funduffer wrote:Unlike Terry, I would generally not top up a cutter, unless there are well explained circumstances, or an indication that the dividend has started to rise again.

FD

My philosophy is that, if a company reduces its dividend, yet the yield is still at a reasonable level, then I may top it up.

If it cuts it completely, as did Indivior, then it is for the chop.

TJH

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Re: Tinkering time again

#267781

Postby moorfield » November 27th, 2019, 7:21 pm

tjh290633 wrote:Tinkering time again


As always TJH I'm interested in the costs you rack up through your regular top slicing, which is something you don't seem to discuss on your posts. You have incurred three lots of (I assume non-cheap-day) dealing commission and two of stamp duty in there.

It would be interesting to see how much each £1 of (forecast) portfolio income you have ratcheted up has cost today ?

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Re: Tinkering time again

#267788

Postby monabri » November 27th, 2019, 7:33 pm

Difficult question as then one might be able to back calculate the holding values - something that TJH might not wish to divulge.

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Re: Tinkering time again

#267792

Postby idpickering » November 27th, 2019, 7:43 pm

monabri wrote:Difficult question as then one might be able to back calculate the holding values - something that TJH might not wish to divulge.


Spot on imho. I always put up my HYP with %age values of the holdings and sector weighting. For me the actual monetary value is private, but other HYPers might not mind being that open of course. Each to their own.

Ian.

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Re: Tinkering time again

#267800

Postby moorfield » November 27th, 2019, 8:22 pm

monabri wrote:Difficult question as then one might be able to back calculate the holding values - something that TJH might not wish to divulge.


I think the way I've framed the question shouldn't be too revealing, at least not until it is compared against other medianic tinkerers...

Your post highlights another point - those fortunate to have six-, or seven-, figure portfolios will have lower tinkering costs relative to those with a portfolio of say £60k, which is roughly the average size of UK pension pots.

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Re: Tinkering time again

#267805

Postby IanTHughes » November 27th, 2019, 8:55 pm

moorfield wrote:
monabri wrote:Difficult question as then one might be able to back calculate the holding values - something that TJH might not wish to divulge.

I think the way I've framed the question shouldn't be too revealing, at least not until it is compared against other medianic tinkerers...

Your post highlights another point - those fortunate to have six-, or seven-, figure portfolios will have much lower tinkering costs relatively speaking than those with a portfolio of say £60k, which is roughly the average size of UK pension pots.

With regard to the cost of tinkering, Stamp Duty is 0.5% on the new purchase of shares whatever the value of the holding. With regard to trading commissions total, it does not take a very large trade to make them less than the 0.50% Stamp Duty, assuming of course Trade Commissions are fixed amounts.

But you are right in that, whatever the size of the portfolio, the minimum "charge" for a tinker would be 0.50% of the transaction value. For a small portfolio - £60,000 or less - that "charge" might well be 1.00% of that transaction value. Whether 0.50% or 1.00%, it is an amount which I would suggest is not to be taken on lightly.


Ian

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Re: Tinkering time again

#267807

Postby Arborbridge » November 27th, 2019, 9:00 pm

moorfield wrote:
tjh290633 wrote:Tinkering time again


As always TJH I'm interested in the costs you rack up through your regular top slicing, which is something you don't seem to discuss on your posts. You have incurred three lots of (I assume non-cheap-day) dealing commission and two of stamp duty in there.

It would be interesting to see how much each £1 of (forecast) portfolio income you have ratcheted up has cost today ?


Terry has frequently mentioned not topping until there was a deal of an "economic" amount. I guess that is up to the individual to "tune" - i.e. 0.5% in dealing costs, or whatever.

Up to you!

Arb.

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Re: Tinkering time again

#267899

Postby TheMotorcycleBoy » November 28th, 2019, 10:47 am

Terry, when you tinker / rebalance etc. your HYP, do you base your decisions entirely on weight and continued presence of a dividend? Or do you also do a quick check on the current fundamentals of the companies involved, that is, read a few of the last results and search online for any good or bad news?

Matt

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Re: Tinkering time again

#268125

Postby tjh290633 » November 29th, 2019, 12:28 pm

moorfield wrote:
tjh290633 wrote:Tinkering time again


As always TJH I'm interested in the costs you rack up through your regular top slicing, which is something you don't seem to discuss on your posts. You have incurred three lots of (I assume non-cheap-day) dealing commission and two of stamp duty in there.

It would be interesting to see how much each £1 of (forecast) portfolio income you have ratcheted up has cost today ?

I have just looked at the last transaction. The cost incurred (3 trading fees plus stamp duty on AV. - no SD on S32) amounts to just over 45% of the increase in dividends anticipated. I have assumed that South32 with pay a similar interim to the last final, with no special dividend. I also have cash left to invest when sufficient dividends have rolled in.

As far as my typical transaction cost are concerned, these are my records since this ISA was started, when it was converted from a PEP and amalganated with my other ISA.

.        .   Percent     Portfolio   Value    Value at    Percent  
Tax Yr Trades Brokerage Fees Total . Income
FY08-09 48 0.489% 0.080% 0.569% 05-Apr-09 6.29%
FY09-10 27 0.245% 0.060% 0.305% 05-Apr-10 10.11%
FY10-11 27 0.241% 0.052% 0.294% 05-Apr-11 8.09%
FY11-12 12 0.093% 0.050% 0.143% 05-Apr-12 3.45%
FY12-13 12 0.058% 0.042% 0.100% 05-Apr-13 2.30%
FY13-14 19 0.124% 0.029% 0.152% 05-Apr-14 3.55%
FY14-15 12 0.042% 0.033% 0.075% 05-Apr-15 1.80%
FY15-16 25 0.119% 0.034% 0.152% 05-Apr-16 3.79%
FY16-17 24 0.121% 0.017% 0.137% 05-Apr-17 3.44%
FY17-18 20 0.058% 0.007% 0.065% 05-Apr-18 1.38%
FY18-19 15 0.033% 0.008% 0.041% 05-Apr-19 0.77%

Average 22 0.147% 0.037% 0.185% 4.088%
Max 48 0.489% 0.080% 0.569% 10.105%
Min 12 0.033% 0.007% 0.041% 0.771%

Obviously the number of transactions has an effect. I give them as a percentage of the Portfolio value at the year end and also as a percentage of the income received in that year. 2008-9 was a year in which portfolio value fell after the Financial crisis. (Not the Great Recession, which was in the 1930s.)

TheMotorcycleBoy wrote:Terry, when you tinker / rebalance etc. your HYP, do you base your decisions entirely on weight and continued presence of a dividend? Or do you also do a quick check on the current fundamentals of the companies involved, that is, read a few of the last results and search online for any good or bad news?

Matt


I keep a continual watch for results and trading statements, taking those into account when I make my decisions. I keep a summary of each result announcement, so that I can link back to the original if I want to revisit it.

TJH

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Re: Tinkering time again

#268131

Postby moorfield » November 29th, 2019, 12:53 pm

tjh290633 wrote:The cost incurred (3 trading fees plus stamp duty on AV. - no SD on S32) amounts to just over 45% of the increase in dividends anticipated. I have assumed that South32 with pay a similar interim to the last final, with no special dividend.


Thanks for taking the time TJH. That’s what I was getting at and I must say I'm surprised by this - 45 pence on the pound seems eye-watering, and you’ve never struck me as someone who needs to buy additional income so expensively. It would be interesting to see how others’ tinkering costs compare.

By the way, I can infer nothing about your holding values!

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Re: Tinkering time again

#268136

Postby Dod101 » November 29th, 2019, 1:06 pm

tjh's comment of 45% is presumably based on the anticipated increase in divs in year 1 only. I expect he hopes to gain the benefit for several more years than that, but I do take the point. I seldom reinvest my dividends but when I do I will always use the free trading credits that I get from the platform. Anyway I am looking hopefully for capital growth as well as an increase in the dividends, year on year.

Dod

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Re: Tinkering time again

#268145

Postby tjh290633 » November 29th, 2019, 1:48 pm

Dod101 wrote:tjh's comment of 45% is presumably based on the anticipated increase in divs in year 1 only. I expect he hopes to gain the benefit for several more years than that, but I do take the point. I seldom reinvest my dividends but when I do I will always use the free trading credits that I get from the platform. Anyway I am looking hopefully for capital growth as well as an increase in the dividends, year on year.

Dod

It is indeed, Dod, based on the next year's dividends. If this was a simple purchase, rather than a sale and purchase, the percentage would be a lot lower. In the case of AV. It is 18% and for S32 it is 12%, reflecting the absence of STP duty on S32. One factor that I omitted, is that the increase in dividends is 62% from that chunk of capital.

TJH

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Re: Tinkering time again

#268392

Postby Arborbridge » December 1st, 2019, 4:28 pm

moorfield wrote:
tjh290633 wrote:The cost incurred (3 trading fees plus stamp duty on AV. - no SD on S32) amounts to just over 45% of the increase in dividends anticipated. I have assumed that South32 with pay a similar interim to the last final, with no special dividend.


Thanks for taking the time TJH. That’s what I was getting at and I must say I'm surprised by this - 45 pence on the pound seems eye-watering, and you’ve never struck me as someone who needs to buy additional income so expensively. It would be interesting to see how others’ tinkering costs compare.

By the way, I can infer nothing about your holding values!


Out of interest, what you regard as an economic top up amount, in that case? I'm guessing many people might consider 1% a reasonable purchase cost, which would indicate at least 20% of one's income from that would go in charges in the first year given 5% return. But one is not just buying income for one year, and one is buying capital return (hopefully) as well as income.
Running a HYP inevitably has costs, and they aren't necessarily dead cheap. Over 2.5% of my income goes on charges, both trading charges and those associated with having a SIPP.

Arb.

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Re: Tinkering time again

#268406

Postby moorfield » December 1st, 2019, 5:58 pm

Arborbridge wrote:
moorfield wrote:
tjh290633 wrote:The cost incurred (3 trading fees plus stamp duty on AV. - no SD on S32) amounts to just over 45% of the increase in dividends anticipated. I have assumed that South32 with pay a similar interim to the last final, with no special dividend.


Thanks for taking the time TJH. That’s what I was getting at and I must say I'm surprised by this - 45 pence on the pound seems eye-watering, and you’ve never struck me as someone who needs to buy additional income so expensively. It would be interesting to see how others’ tinkering costs compare.

By the way, I can infer nothing about your holding values!


Out of interest, what you regard as an economic top up amount, in that case? I'm guessing many people might consider 1% a reasonable purchase cost, which would indicate at least 20% of one's income from that would go in charges in the first year given 5% return. But one is not just buying income for one year, and one is buying capital return (hopefully) as well as income.
Running a HYP inevitably has costs, and they aren't necessarily dead cheap. Over 2.5% of my income goes on charges, both trading charges and those associated with having a SIPP.

Arb.



I usually try to top up in amounts of one quarter of annual portfolio income. This year I have done 9 purchases (I had a cash surplus carried over from last) and no sales; the costs incurred amount to just over 5% of the additional income bought, so considerably less than TJHs tinker.

I'd encourage builders in particular to ask themselves what they are trying to achieve through tinkering and top slicing that they cannot by simply continuing to top up elsewhere. And do your purchases on cheap dealing days (£1.50 not £9.95 in my case).


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