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Value Board

Pull up a chair, have a biscuit - discuss the site and general questions about the LemonFool
TUK020
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Value Board

#156610

Postby TUK020 » August 1st, 2018, 5:22 pm

In one of the threads on HYP Practical, there was reference to a 'value board' which I understand existed on TMF.
Should we have one here?

PinkDalek
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Re: Value Board

#156625

Postby PinkDalek » August 1st, 2018, 7:03 pm

TUK020 wrote:In one of the threads on HYP Practical, there was reference to a 'value board' which I understand existed on TMF.
Should we have one here?


Hello TUK020,

You've probably seen the reply that Investment Strategies might be the place. I seem to recall a "Value shares board" was suggested near the start of TLF. Unfortunately the excellent search on here didn't let me find the discussion, as value & shares & Board are too common words.

However, it may have been discussed in one of, so I've had a quick look:

viewtopic.php?f=21&t=6
viewtopic.php?f=21&t=234

Clariman wrote Only Requested by one person - Value Shares - Topic somewhere appropriate? but I haven't read further. That, of course, was then and you may get more support on this, including from me, now we are some 20 months on.

There's also Share Ideas, where one could start a Topic entitled "Value Shares" and keep that one running.

Edit: In case you haven't seen, there also THE BORING INVESTMENT GREEN ROOM (a replacement for The Cornishman's Foolish Friends), which I think has a Value investing slant to it. It is over at Other Investing as below and is quiet, which I think is the intent:

viewtopic.php?f=78&t=627

PD

Gengulphus
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Re: Value Board

#156676

Postby Gengulphus » August 2nd, 2018, 8:59 am

The Value Shares board on TMF basically concentrated on strategies that looked for shares which looked undervalued on a number of fundamental ratios - the classic set was Price/Earnings, Dividend Yield, Price/Net Tangible Book Value and Gearing, but others could be (and were) used. This was done with a view to buying them and selling when the market recognised the real value and raised the price to the point that the share no longer looked so undervalued, at which point they would be sold for the capital gain.

It was a more specific board than Investment Strategies - it only considered shares, and it looked for shares that were undervalued on the basis of their current fundamental ratios or possibly short-term forecast ones. There was a different Growth Shares board for shares that looked undervalued on the basis of their growth prospects / long-term forecasts, and indeed a Growth At A Reasonable Price board that went for a hybrid approach.

The type of share the Values Shares board looked for was quite similar to that looked for by the HYP Practical board, and the same shares might quite often be discussed on both, but they were somewhat different. HYP Practical has a great deal of emphasis on dividend yield, with things like P/E, P/NTBV and gearing being regarded as "safety factors" that increase the investor's confidence in the dividend being at least sustained, while Value Shares treated its fundamental ratios more equally, with (if anything) P/NTBV or similar asset measures being given the most emphasis. Also, HYP Practical would mostly regard high market cap as a "safety factor", so smallcaps would only infrequently crop up and generally have their small size commented on as a danger sign when they did (this has been strengthened into an actual requirement to be a FTSE 350 share on TLF's HYP Practical board), whereas smallcaps were frequently raised on Value Shares.

But the biggest difference between HYP Practical and Value Shares was that HYP Practical looked at shares from an income-oriented point of view: the primary aim was to get a sustainable (and preferably growing) income, with capital gains being a welcome bonus (and sort-of-expected over the long term if the portfolio's income did indeed increase) but not the primary aim, and that income primary aim leads to wanting to hold the shares long-term (trading fees will consume quite a lot of a new share's first-year income, and capital gains and losses will tend to frequently be larger than income for shorter holding periods). In contrast, the primary aim on the Value Shares board was capital gains: dividend income was the welcome (but unnecessary) bonus there, and holding periods were typically the few months to a few years required for the value in a share to "out" (or for it to become apparent that the perceived undervaluation of the share was illusory). Indeed, the most successful investments on the Value Shares board might well be sold for a substantial capital gain after just a few months, and never pay their owner a dividend despite having a dividend yield because the holding period was entirely between two successive dividends...

Another big difference was the level of diversification, where 15-share diversification was pretty much the minimum on HYP Practical but Value Shares had no minimum, with anything from bet-the-farm (aka put-all-your-eggs-in-one-basket-and-watch-it-very-carefully) strategies trying for 'deep value' only up to ones buying dozens of shallower-value shares being discussed.

The Value Shares board was pretty popular when I joined TMF in late 1999, and I read it fairly fully for several years. That did die away over time as I evolved my investment strategy, with the less-risky part of it moving to HYP and the more-risky part focussing on smallcaps using something more similar to (but not the same as) a Growth At A Reasonable Price approach, and eventually I stopped reading the Value Shares board, IIRC sometime during the financial crisis. I had the impression that it was becoming less popular at the time I left, but the result is that I can't really supply any input about how popular it was during the last several years of TMF.

Finally, something I should probably add is that I am not trying to defend or attack HYP strategies in the above, nor indeed Value strategies - such things belong on the High Yield Shares & Strategies board or the Investment Strategies board, not here. I am also neither supporting nor opposing the creation of a Value Shares or similar board here on TLF. My objective is simply to describe the Value Shares board as it existed on TMF and how it fitted in with some other boards, as input for those who end up making any decision about whether such a board should be created here.

Gengulphus

csearle
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Re: Value Board

#156818

Postby csearle » August 2nd, 2018, 6:43 pm

Gengulphus wrote:My objective is simply to describe the Value Shares board as it existed on TMF and how it fitted in with some other boards, as input for those who end up making any decision about whether such a board should be created here.
Thank you. That was a great summary. Whilst there is a certain resistance here to opening up new boards I would welcome a new Value Shares board very much. If, after a while, it turned out that there was little interest in it we could always merge its content with something else and lose it.

Chris
stooz wrote:...

Itsallaguess
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Re: Value Board

#156821

Postby Itsallaguess » August 2nd, 2018, 6:54 pm

csearle wrote:
Whilst there is a certain resistance here to opening up new boards I would welcome a new Value Shares board very much. If, after a while, it turned out that there was little interest in it we could always merge its content with something else and lose it.


I always thought one of the old TMF processes went a little bit like this -

1. I've bought XXX share for my HYP Portfolio - it's currently paying a 12% dividend!!


<time passes.....................>


2. It seems that XXX share has now stopped paying a dividend, and it's share-price has suddenly dropped by 85%, but I'm not too worried, as it's now part of my Value Portfolio....

;)

Cheers,

Itsallaguess

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Re: Value Board

#156829

Postby csearle » August 2nd, 2018, 8:28 pm

Itsallaguess wrote:...
Hi Its, I see the parallels :D. Was just trying to help this idea over the hurdle of getting a new board up and running. I sort of feel that "Value Shares" (even if it was possibly in decline as at which has been hinted) was a small cornerstone of the last place and might possibly become one in this (relatively) new place.

Chris

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Re: Value Board

#156831

Postby Lootman » August 2nd, 2018, 8:33 pm

csearle wrote:Whilst there is a certain resistance here to opening up new boards I would welcome a new Value Shares board very much. If, after a while, it turned out that there was little interest in it we could always merge its content with something else and lose it.

The quid pro quo to a Value Board would be a Growth Board. Since shares get classified as either growth or value, both boards would cover all shares. But then isn't there a Shares Board already, on which both strategies can be discussed?

As was mentioned earlier, there is a great deal of overlap between HY strategies and Value strategies. The only shares I can imagine being discussed on Value and not on a HY board is where the share is not currently paying a dividend, and many of those get discussed on a HY board anyway because they used to or may again (referencing the recent discussion about that here).

As I recall the TMF Value board was mostly a vehicle for Pyad and his value portfolio. That went seriously awry during and after the financial crisis due to its high weightings in dogs like Lloyds, RBS and Aviva, which he doubled down on disastrously. He then deserted it at that point, leaving the board a shell of its former self.

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Re: Value Board

#156839

Postby csearle » August 2nd, 2018, 9:30 pm

Lootman wrote:As I recall the TMF Value board was mostly a vehicle for Pyad and his value portfolio. That went seriously awry during and after the financial crisis due to its high weightings in dogs like Lloyds, RBS and Aviva, which he doubled down on disastrously. He then deserted it at that point, leaving the board a shell of its former self.
I think you probably have a better grasp of the fortunes of the Value board than I do. My recollection is probably somewhat dated, but it is of a place where every now and again "exciting" value plays would be mentioned, sometimes by pyad, and I enjoyed trying to learn to identify the tell-tale signs myself. Maybe my romantic, nostalgic memory of the place is no longer able to be replicated. If so it would be a shame.

Chris

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Re: Value Board

#156848

Postby Gengulphus » August 2nd, 2018, 10:22 pm

Lootman wrote:The quid pro quo to a Value Board would be a Growth Board. Since shares get classified as either growth or value, both boards would cover all shares. ...

I'm sure I've come across a third category - namely hopeless shares that are neither growth nor value! ;-)

Gengulphus

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Re: Value Board

#156853

Postby tjh290633 » August 2nd, 2018, 10:47 pm

It's probably a timely comment that Pyad suggested Aviva as a farm bet on the Value board, just as the bottom fell out of it. That stimulated me to watch it and invest in it when it showed signs of recovery.

As I recall, he was about 18 months too early, but the early worm catches the bird, or vice versa.

A Value Share board would be a useful addition to the forum.

TJH

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Re: Value Board

#160578

Postby TheMotorcycleBoy » August 19th, 2018, 1:40 pm

TUK020 wrote:In one of the threads on HYP Practical, there was reference to a 'value board' which I understand existed on TMF.
Should we have one here?

Hi TUK020,

I've created a possibly similar request here.

Would that be of interest?

Matt

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Re: Value Board

#161141

Postby AndyPandy » August 21st, 2018, 11:50 pm

There has been mudslinging in both directions on the HYP board, initially overt but now just snarky asides every now and again.

For me, HYP principles are often a good place to start looking for value, but in the absence of a Value Board, anyone poking their head over the HYP parapet, mentioning Capital Gains or voluntary selling to realise the aforementioned gets shot to pieces.

I know that there are true LF Dorisians that post Annually, then go back to sleep but I would venture that most of the posters are not. Doris, herself, would not be seen engaging in chatter on a Bulletin Board - very un-Dorislike - so, in the absence of a Value / GARP board, why not broaden the remit of the HYP Board?

or open a Value Board and let it sink or swim.....

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Re: Value Board

#161145

Postby Alaric » August 22nd, 2018, 12:04 am

AndyPandy wrote:or open a Value Board and let it sink or swim.....


I'd be inclined to suggest TRIP as a strategy. Total Return Income Portfolio. You look for stocks producing income but you also want the portfolio to maintain its value in real terms. If 6% is a target, you are looking for shares between 1% income and 5% growth and 5% income and 1% growth. 8% income and -2% growth is outside your target. You might live with it though, but need to be aware of the risk that it might flip to 8% income and -8% (or worse) growth. Worse than that it might go to 0% income and minus quite a lot growth. C***ll**n being a case in point.

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Re: Value Board

#161152

Postby YeeWo » August 22nd, 2018, 6:11 am

Alaric wrote:I'd be inclined to suggest TRIP as a strategy. Total Return Income Portfolio. You look for stocks producing income but you also want the portfolio to maintain its value in real terms. If 6% is a target, you are looking for shares between 1% income and 5% growth and 5% income and 1% growth. 8% income and -2% growth is outside your target. You might live with it though, but need to be aware of the risk that it might flip to 8% income and -8% (or worse) growth. Worse than that it might go to 0% income and minus quite a lot growth. C***ll**n being a case in point.

About the wisest words I’ve read on this subject!

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Re: Value Board

#161156

Postby IanTHughes » August 22nd, 2018, 7:24 am

Alaric wrote:I'd be inclined to suggest TRIP as a strategy. Total Return Income Portfolio. You look for stocks producing income but you also want the portfolio to maintain its value in real terms. If 6% is a target, you are looking for shares between 1% income and 5% growth and 5% income and 1% growth. 8% income and -2% growth is outside your target. You might live with it though, but need to be aware of the risk that it might flip to 8% income and -8% (or worse) growth. Worse than that it might go to 0% income and minus quite a lot growth. C***ll**n being a case in point.

Too risky an investment strategy for me but I do wish you well.

One comment: If by “C***ll**n” you mean Carillion PLC (CLLN), a “TRIP Portfolio” advocate would surely point out that CLLN is but one single share, not a portfolio. Or are you suggesting that a “TRIP Portfolio” should only invest in one single share?

Ian

TUK020
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Re: Value Board

#161157

Postby TUK020 » August 22nd, 2018, 7:35 am

While we are on the subject of heresy,a value board could regularly host a piece by a guest writer - they contribute on the understanding that they get to use it as a advertising slot for their main bulletin.

An example could be John Kingham, UK Value Investor. https://www.ukvalueinvestor.com/

In effect we would be inviting them to give part of their work for free, in exchange for the exposure to a potential pool of new subscribers.
Done right, and transparently, this could encourage some great new material

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Re: Value Board

#161159

Postby Snorvey » August 22nd, 2018, 7:57 am

The TMF Value board used to be linked to TMFPyad's weekly article on the Fool - which usually alternated between a value shares pick and a High Yield Portfolio article.

I can't remember if the board was in decline before or as a result of Pyad being binned by the Fool.

Incidentally, for those that don't know PYAD = Price Yield Assets Debt

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Re: Value Board

#161174

Postby Alaric » August 22nd, 2018, 9:24 am

IanTHughes wrote: a “TRIP Portfolio” advocate would surely point out that CLLN is but one single share, not a portfolio.


It's a single share. The point though is that you aren't interested in a high yield dividend if it comes at the cost of a declining share price. Advocacy of a no sale, ignore the share price approach rather ignores this problem. I think of it as avoiding "junk equity". If you had a corporate bond with a yield well above 6% in current conditions, you would be wary and might regard it as a "junk bond". Similarly with high yield equity.

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Re: Value Board

#161176

Postby tjh290633 » August 22nd, 2018, 9:34 am

Alaric wrote:
IanTHughes wrote: a “TRIP Portfolio” advocate would surely point out that CLLN is but one single share, not a portfolio.


It's a single share. The point though is that you aren't interested in a high yield dividend if it comes at the cost of a declining share price. Advocacy of a no sale, ignore the share price approach rather ignores this problem. I think of it as avoiding "junk equity". If you had a corporate bond with a yield well above 6% in current conditions, you would be wary and might regard it as a "junk bond". Similarly with high yield equity.

Surely the point is that often the declining share price leads to the yield rising. The converse would be unusual, though not impossible. We often see price falls after a substantial increase in dividend, as with BLT yesterday. Would that lead you to discard BLT for a TRIP portfolio?

TJH

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Re: Value Board

#161182

Postby Alaric » August 22nd, 2018, 9:47 am

tjh290633 wrote: We often see price falls after a substantial increase in dividend, as with BLT yesterday. Would that lead you to discard BLT for a TRIP portfolio?


I think you would investigate. What's financing the substantial increase in dividend? Is the management making a repayment of capital under guise of a dividend, or have the sustainable profits genuinely increased? It would be a buy and hold strategy, but an increase in dividend coupled with a fall in share price is a warning sign.

If you don't hold the share already, a fall in the price might be a buying opportunity.


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