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PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

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tjh290633
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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#402950

Postby tjh290633 » April 9th, 2021, 5:10 pm

Difficult to compare, but I share Aviva, DS Smith, RDSB, British Land, IMB and BP of those cutters.

In addition I had IMI, Taylor Wimpey, Lloyds Bank, William Hill, Marstons, Marks & Spencer, Kingfisher, Compass, and BT.A who all cut out dividends. WMH was replaced with IGG once the take-over was confirmed, in December 2020. I also introduced PHP in March 2020, following 3 big trimmings of Admiral, AstraZeneca and Glaxo.

One can only compare on dividends declared, and maybe on dividend per income unit. 19.34p down from 29.71p, excluding special dividends.

TJH

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#402964

Postby csearle » April 9th, 2021, 5:55 pm

IanTHughes wrote:It is not that hard
If I have understood him correctly he does not readily have the information you specify in 1) and 2); just the totals for past calendar years. So it might possibly be a lot of work to figure it out?

Chris

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#402965

Postby Gengulphus » April 9th, 2021, 5:56 pm

IanTHughes wrote:
daveh wrote:I don't keep records for my Income portfolio by tax year, just by calendar year.

Well, all you have to do is calculate two dividend totals as follows:

1) The total sum of dividends received between 6 April 2019 and 5 April 2020, inclusive
2) The total sum of dividends received between 6 April 2020 and 5 April 2021, inclusive

Make sure the same number of shares are used in each annual total

That's highly likely to be incompatible with your instruction to calculate the "total sum of dividends received" in each of the tax years concerned - it's only compatible with that instruction if the numbers of shares held have remained the same at each dividend payment date during the two years concerned, which more-or-less means no buying and no selling during those two years - and I suspect that most HYPers have done some of at least one of them...

I'd guess that you mean "the total sum of dividends that would have been received if the number of shares had remained unchanged, apart from adjustments for corporate actions". But that changes it from a simple matter of picking out the dividends from one's financial records and totalling them to having to look at each dividend and adjust it for any buys, sells or corporate actions that have affected it. That isn't difficult if one knows how, but there can easily be 100+ dividend payments to look at over the two years (e.g. a 20-share HYP including five quarterly payers produces 50 dividend payments per year), making it quite a bit of work. And some HYPers won't know how, at least for the trickier corporate actions such as rights issues...

IanTHughes wrote:Now you simply calculate the difference between the two years and the percentage increase/decrease from 1) to 2)

It is not that hard

Agreed - provided that sentence is completed with "if you run a strict no-tinkering, all-income-drawn-down HYP."!

Gengulphus

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403536

Postby SuperCally » April 12th, 2021, 9:41 am

Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded

dealtn
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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403569

Postby dealtn » April 12th, 2021, 10:58 am

ReallyVeryFoolish wrote:
SuperCally wrote:Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded

It seems you can not view without an account. Thanks.

RVF


You're not missing much by way of a review, don't worry.

PinkDalek
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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403590

Postby PinkDalek » April 12th, 2021, 11:22 am

SuperCally wrote:Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded


Yes but I don't think that version over there is "DRAWDOWN".

tjh290633
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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403610

Postby tjh290633 » April 12th, 2021, 12:04 pm

PinkDalek wrote:
SuperCally wrote:Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded


Yes but I don't think that version over there is "DRAWDOWN".

He gives the capital value and the Dividend income for the year, which implies no reinvestment as far as I can see.

TJH

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403615

Postby SuperCally » April 12th, 2021, 12:27 pm

PinkDalek wrote:
SuperCally wrote:Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded


Yes but I don't think that version over there is "DRAWDOWN".


Well, it’s certainly not “REINVEST” ?

ReallyVeryFoolish wrote:
...that individual...

RVF


Class :roll:

PinkDalek
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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403616

Postby PinkDalek » April 12th, 2021, 12:33 pm

tjh290633 wrote:
PinkDalek wrote:
SuperCally wrote:Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded


Yes but I don't think that version over there is "DRAWDOWN".

He gives the capital value and the Dividend income for the year, which implies no reinvestment as far as I can see.

TJH


Got it!

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403617

Postby Alaric » April 12th, 2021, 12:40 pm

tjh290633 wrote:He gives the capital value and the Dividend income for the year, which implies no reinvestment as far as I can see.


Something would have to have been done about the proceeds from the Greene King takeover. A judgement free approach would be to have a specific report on one off capital distributions. In other words treat them as windfall income with no plan to reinvest and no expectation of annual repeat.

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403621

Postby SuperCally » April 12th, 2021, 12:52 pm

Alaric wrote:

Something would have to have been done about the proceeds from the Greene King takeover. A judgement free approach would be to have a specific report on one off capital distributions. In other words treat them as windfall income with no plan to reinvest and no expectation of annual repeat.


The proceeds went into Marstons, if I recall correctly.

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403625

Postby IanTHughes » April 12th, 2021, 1:13 pm

Alaric wrote:
tjh290633 wrote:He gives the capital value and the Dividend income for the year, which implies no reinvestment as far as I can see.

Something would have to have been done about the proceeds from the Greene King takeover. A judgement free approach would be to have a specific report on one off capital distributions. In other words treat them as windfall income with no plan to reinvest and no expectation of annual repeat.

So, you believe that taking a "Capital Distribution" as "Income" in one year, an act that will unarguably reduce the portfolio's income in all future years, is not a "Judgement Call"?

Interesting


Ian

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403665

Postby Alaric » April 12th, 2021, 4:28 pm

IanTHughes wrote:So, you believe that taking a "Capital Distribution" as "Income" in one year, an act that will unarguably reduce the portfolio's income in all future years, is not a "Judgement Call"?


No decision needs to made about reinvestment, so yes. It's a suitable method of observing and reporting a "buy and forget" portfolio. "Growth HYP"s are managed to the extent of having rules about reinvestment of dividends even if they mostly avoid having rules about rebalancing.

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403685

Postby IanTHughes » April 12th, 2021, 6:08 pm

Alaric wrote:
IanTHughes wrote:So, you believe that taking a "Capital Distribution" as "Income" in one year, an act that will unarguably reduce the portfolio's income in all future years, is not a "Judgement Call"?

No decision needs to made about reinvestment, so yes. It's a suitable method of observing and reporting a "buy and forget" portfolio. "Growth HYP"s are managed to the extent of having rules about reinvestment of dividends even if they mostly avoid having rules about rebalancing.

This is the HYP Strategy, and as such is only about drawing down the Income generated, not the capital employed! The amendment to the strategy that you are suggesting, to also draw down the capital, is very much a "Judgement Call" in my opinion.

No HYP is entirely "buy and forget" in that the forced takeover of any holding, which of course turns Capital into cash, has to be appropriately managed.


Ian

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403687

Postby Gengulphus » April 12th, 2021, 6:13 pm

Alaric wrote:
tjh290633 wrote:He gives the capital value and the Dividend income for the year, which implies no reinvestment as far as I can see.

Something would have to have been done about the proceeds from the Greene King takeover. A judgement free approach would be to have a specific report on one off capital distributions. In other words treat them as windfall income with no plan to reinvest and no expectation of annual repeat.

Even if you did that, it would not be a judgement-free approach: judgement has to be exercised when one initially selects the shares, so the best it could be is judgement-free-after-the-start. And more importantly, the evidence of HYP1 is that adopting such a 'judgement-free-after-the-start approach' would be an act showing extremely poor judgement. To see why take a look at the 20-year HYP1 portfolio listing with all the holdings that are purely the result of reinvestment of takeover/corporate action proceeds (rather than at least partly original holdings or what they've been turned into by corporate actions) crossed out:

..........................................Income......................Value

Anglo American              283.71             10,011
BA Tobacco 1,799.79 24,164
BT Group 262.51 6,983
Dixons Carphone 27.92 1,438
Glaxo 281.60 5,095
InterCon Hotels 0.00 18,425
Land Sex 78.30 4,585
Lloyds 0.00 2,590
Mitch & But 0.00 1,479
Persimmon 422.80 28,920
Pearson 173.75 5,325
RD Shell B 289.22 4,411
Rio Tinto 1,536.58 24,697
RSA 38.16 3,103
United Utilities 339.10 7,401

Total £ 5,533.44 148,627
2,565.07 76,702

And that table over-states what its income and capital value would be, because there have been numerous smaller returns of capital along the way that were reinvested in the holding that generated them or another holding. As just one example, when Six Continents demerged into Intercontinental Hotels and Mitchells & Butlers, about 9/59ths of its capital value was returned, which HYP1 reinvested in the two demergees: without that reinvestment, both holdings would be about 15% smaller.

And the bad diversification of that no-judgement-after-the-start version of HYP1 puts the bad diversification of the actual HYP1 into the shade: it gets nearly 60% of its dividend income from a single company!

Basically, it can be fun having a look at what HYP principles are capable of doing if carried to extremes - but don't mistake the results for a practical HYP approach!

Gengulphus

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403690

Postby dealtn » April 12th, 2021, 6:30 pm

Given enough time, the PYAD "judgement call" and the ITH "judgement call" will diverge sufficiently such that the portfolios will be meaningfully different. The experiment may need retitling but to the benefit of having two portfolios in the long run to analyse (or quibble about!).

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403692

Postby Alaric » April 12th, 2021, 6:48 pm

Gengulphus wrote:Total £ 5,533.44 148,627
2,565.07 76,702
And that table over-states what its income and capital value would be, because there have been numerous smaller returns of capital along the way that were reinvested in the holding that generated them or another holding.


If a consistent no interference policy had been followed, all the smaller returns of capital would also have been treated as distributions and not reinvested. It's also showing that the final value has relied as much on fortuitous or successful reinvestment decisions as on the long term quality of the original choices.

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#403718

Postby Gengulphus » April 12th, 2021, 8:00 pm

Alaric wrote:
Gengulphus wrote:Total £ 5,533.44 148,627
2,565.07 76,702
And that table over-states what its income and capital value would be, because there have been numerous smaller returns of capital along the way that were reinvested in the holding that generated them or another holding.

If a consistent no interference policy had been followed, all the smaller returns of capital would also have been treated as distributions and not reinvested. ...

Yes - that's why I said that the table with crossings-out over-states what HYP1's 20th-year income and capital would have been if that consistent policy had been followed.

Alaric wrote:... It's also showing that the final value has relied as much on fortuitous or successful reinvestment decisions as on the long term quality of the original choices.

An interesting bit of 'spin': you're attributing the success of the original HYP1 investment decisions to 'long-term quality' of the chosen companies and the success of the later HYP1 re-investment decisions to the decisions being 'fortuitous'. That's despite (a) both types of decision having been made by the same person; (b) the fact that a fair number of the original decisions definitely have not shown 'long-term quality' - of the survivors, RSA and Lloyds stand out (*) and of those companies that have gone, Alliance & Leicester also stands out; (c) a fair number of the reinvestments definitely have shown 'long-term quality' - British American Tobacco and Persimmon in particular.

Stripped of that 'spin', the reality is that a few of the original companies have done well enough for the 'long-term quality' of the decisions to invest in them to be pretty obvious by now, a few of them have done poorly enough for the lack of 'long-term quality' of their investment decisions to also be pretty obvious by now, and the rest are still muddling along somewhere in the middle. And a very similar statement can be made about the reinvestment decisions...

(*) I've not put Mitchells & Butlers into that list, despite its very low value, because both it and the Intercontinental Hotels holding derive from the same original investment decision, and the combined value of the two holdings s enough to make that decision one of the most successful original investment decisions.

Gengulphus

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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#404834

Postby Wizard » April 16th, 2021, 9:05 pm

dealtn wrote:
ReallyVeryFoolish wrote:
SuperCally wrote:Stephen Bland/pyad recently published his own Y2 review over on Stockopedia:

https://app.stockopedia.com/content/how ... e=threaded

It seems you can not view without an account. Thanks.

RVF


You're not missing much by way of a review, don't worry.

Appreciate that it can’t be cut and pasted, but is anyone able to provide a pithy summary?

dealtn
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Re: PYAD HYP 2019_04 DRAWDOWN – Year 2 Commentary

#404839

Postby dealtn » April 16th, 2021, 9:15 pm

Wizard wrote:
dealtn wrote:
ReallyVeryFoolish wrote:It seems you can not view without an account. Thanks.

RVF


You're not missing much by way of a review, don't worry.

Appreciate that it can’t be cut and pasted, but is anyone able to provide a pithy summary?


Company Name, Income, Capital Value.

Comments such as income is down x% on last year.

Will be higher next year as companies are now restarting paying.

At the risk of the pun it is simply a short bland summary and nothing that hasn't been said (better) here already.


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