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Value Investing
Posted: August 22nd, 2018, 8:54 am
by Walrus
Part of my portfolio is somewhat a hybrid HYP/Value investment. Over the last couple of years it's performed pretty well picking up both Glencore and Petrofac at good prices and avoiding Carillon. Imperial brands looks to be recovering somewhat whlstt holdings that have not performed in this space are Marstons and UU which I'm sat with currently.
Vodafone and Rio are currently on my watch list, vodafone is a biy of an anomaly as I already told it as part of HYP, was wondering if anyone had any strong views on either of the above re value plays rather than HYP
Re: Value Investing
Posted: August 22nd, 2018, 9:19 am
by baldchap
Isn't HYP a form value investing?, otherwise they wouldn't have a suitable dividend yield.
I suspect the success is in sifting out the sickly high yielders.
You could say all investing is value investing, who wants to pay top dollar?
My style is more safe/quality yield, and although I have far fewer companies on my radar, I am still looking for relative value before entering a position.
Re: Value Investing
Posted: August 22nd, 2018, 9:23 am
by tjh290633
Regarding VOD and RIO, I view Vodafone as a share which is undervalued, for various reasons. RIO, on the other hand has already risen considerably since I first bought. I have not added since that first purchase, at about median value, and the holding ranked first by value before it went XD. A lot depends on commodity prices, but there may well be more value to come.
Right at the bottom of my holdings, ranked by value, are TSCO, KGF, LLOY, S32, BATS, TATE and BLT. I reckon that all those have a lot of value to come. Apart from TSCO, all have yield above 4%., and TSCO I hold for recovery prospects.
TJH
Re: Value Investing
Posted: August 22nd, 2018, 2:35 pm
by Breelander
baldchap wrote:Isn't HYP a form value investing?....
Yes and no. Pyad wrote about Value Investing for TMF before he wrote about HYP - then continued to write about both. But he was very clear that the two were not the same thing...
he says...
...the two strategies are related to a certain extent as regards their selection criteria ... we sometimes see newcomers who don't always appreciate the differences between the strategies...
...it's only the investor's intended use of the shares that distinguishes their investment purposes, one needs to have quite a clear mind on this and be able to stick to the distinction whatever happens, despite the potential temptation to permit crosstalk between the strategies.
https://news.fool.co.uk/news/investing/ ... r-hyp.aspx
(BTW, all links to news.fool.co.uk seem to give a site certificate error now)
viewtopic.php?f=15&t=3671&p=36046#p36046Sadly, all link to news.fool.co.uk are now completely dead, and unfortunately the only copy of that article in the Wayback Machine is a truncated preview.
https://web.archive.org/web/20121105032 ... r-hyp.aspxBut the full text can (with some difficulty) be extracted from the 'Article Preview' by looking at the source code...
pyad (2012) wrote: I know that quite a few HYPing Fools also dabble in value plays, probably because the two strategies are related to a certain extent as regards their selection criteria, and also perhaps because I introduced both approaches to this website so they are connected through my efforts. For that reason, we sometimes see newcomers who don't always appreciate the differences between the strategies by asking questions on the value board that relate to HYPs or vice versa.
Because it's only the investor's intended use of the shares that distinguishes their investment purposes, one needs to have quite a clear mind on this and be able to stick to the distinction whatever happens, despite the potential temptation to permit crosstalk between the strategies.
Re: Value Investing
Posted: August 22nd, 2018, 3:10 pm
by Bouleversee
This oldcomer hasn't a clue what the last sentence means. Perhaps some kind soul could provide a translation. I don't have a specific intended use of my shares other than to make money which I will spend as and when circumstances dictate which could be sooner or later. So where does that get us in terms of Value/Hyp ?
Re: Value Investing
Posted: August 22nd, 2018, 6:36 pm
by Walrus
baldchap wrote:Isn't HYP a form value investing?, otherwise they wouldn't have a suitable dividend yield.
I suspect the success is in sifting out the sickly high yielders.
You could say all investing is value investing, who wants to pay top dollar?
My style is more safe/quality yield, and although I have far fewer companies on my radar, I am still looking for relative value before entering a position.
I've been advised not to use the other board discussing 'value' as it's not the right place. I won't go into my opinions on the matter.
Re: Value Investing
Posted: August 22nd, 2018, 6:42 pm
by Alaric
Snorvey wrote:I guess mean you can make money in 2 ways from shares. Capital appreciation and Dividends.
HYP concentrates on dividends and long term buy and hold.
The weakness of the approach is that what you gain on dividends, you can lose on capital value. But perhaps you need to consider the duration of the portfolio, the longer it is, the less concerned you may be about capital value. Of course when a Company runs of money, both its share price will collapse and its dividend will be cancelled. So stocks like Diageo or Unilever can be desirable both because of increasing dividends and because the share price grows as fast as or faster than the dividends. Neither would be considered "value" in the sense of making a quick profit and they argue on the HYP board that the yields are too low.
Re: Value Investing
Posted: August 22nd, 2018, 6:43 pm
by PinkDalek
Walrus wrote:I've been advised not to use the other board discussing 'value' as it's not the right place. ...
There are other boards, in addition to the place you haven't mentioned. Such as Investment Strategies.
There's also a Topic on "Value Board" (suggesting a new board with a similar title could be opened), over at the "Biscuit Bar", for those who've yet to see it:
viewtopic.php?f=21&t=12978
Re: Value Investing
Posted: August 22nd, 2018, 6:49 pm
by Lootman
Alaric wrote:perhaps you need to consider the duration of the portfolio, the longer it is, the less concerned you may be about capital value.
What do you mean by portfolio duration? Do you mean how long it has been in existence? Or what is your time horizon for your investment goals?
I do question how many people really do not care about capital value. After all it affects your ability to buy an annuity, the amount you want others to inherit from you, the amount you might need for care home fees, and the amount you can drawdown if and when the running income becoems inadequate to meet your needs.
A sinking fund approach to a portfolio strikes me as quite risky.
Re: Value Investing
Posted: August 22nd, 2018, 6:53 pm
by Walrus
Lootman wrote:Alaric wrote:perhaps you need to consider the duration of the portfolio, the longer it is, the less concerned you may be about capital value.
What do you mean by portfolio duration? Do you mean how long it has been in existence? Or what is your time horizon for your investment goals?
I do question how many people really do not care about capital value. After all it affects your ability to buy an annuity, the amount you want others to inherit from you, the amount you might need for care home fees, and the amount you can drawdown if and when the running income becoems inadequate to meet your needs.
A sinking fund approach to a portfolio strikes me as quite risky.
I agree, certain popular HYP shares I really don't like , businesses that I can't see existing in 20 years time don't in my eyes make sensible investments even if they do yield 6/7 percent.
Re: Value Investing
Posted: August 22nd, 2018, 6:56 pm
by Alaric
Lootman wrote:What do you mean by portfolio duration? Do you mean how long it has been in existence? Or what is your time horizon for your investment goals?
Using it in the same sense as with Gilts and Corporate Bonds, in other words how long before it matures and is disposed of for cash. Is there an intent to run it down towards zero, or is it intended to be a perpetuity? These are shares in individual ownership rather than corporate. The holder will eventually die, what would or should the shares be worth when passed on to those who inherit?
Re: Value Investing
Posted: August 22nd, 2018, 10:50 pm
by tjh290633
Alaric wrote:Lootman wrote:What do you mean by portfolio duration? Do you mean how long it has been in existence? Or what is your time horizon for your investment goals?
Using it in the same sense as with Gilts and Corporate Bonds, in other words how long before it matures and is disposed of for cash. Is there an intent to run it down towards zero, or is it intended to be a perpetuity? These are shares in individual ownership rather than corporate. The holder will eventually die, what would or should the shares be worth when passed on to those who inherit?
Surely the whole point of running a portfolio is that you intend to use it for meeting your needs, when you are still alive, and then pass what is left on to your heirs and successors at the end. If you have none, then maybe your favourite charities.
If it is big enough, then there may be no need to draw on capital. The income may be sufficient to fund your care, if required. The wife of a friend was in care for 15 years, having got dementia at 60. Nobody expected it to last that long.
TJH
Re: Value Investing
Posted: August 30th, 2018, 9:55 pm
by Walrus
Hmm Vodafone is now firmly on my radar. I think if it fails to 160 I'll struggle to ignore it.
Re: Value Investing
Posted: August 30th, 2018, 10:12 pm
by TUK020
tjh290633 wrote:Regarding VOD and RIO, I view Vodafone as a share which is undervalued, for various reasons. RIO, on the other hand has already risen considerably since I first bought. I have not added since that first purchase, at about median value, and the holding ranked first by value before it went XD. A lot depends on commodity prices, but there may well be more value to come.
Right at the bottom of my holdings, ranked by value, are TSCO, KGF, LLOY, S32, BATS, TATE and BLT. I reckon that all those have a lot of value to come. Apart from TSCO, all have yield above 4%., and TSCO I hold for recovery prospects.
TJH
Terry,
You could argue that BT, IMB, NG and VOD are all priced for a dividend cut, and "unloved by the city".
If you had to pick one of these as a potential value opportunity, which would you go for, and why?
tuk020
Re: Value Investing
Posted: August 30th, 2018, 10:45 pm
by tjh290633
TUK020 wrote:tjh290633 wrote:Regarding VOD and RIO, I view Vodafone as a share which is undervalued, for various reasons. RIO, on the other hand has already risen considerably since I first bought. I have not added since that first purchase, at about median value, and the holding ranked first by value before it went XD. A lot depends on commodity prices, but there may well be more value to come.
Right at the bottom of my holdings, ranked by value, are TSCO, KGF, LLOY, S32, BATS, TATE and BLT. I reckon that all those have a lot of value to come. Apart from TSCO, all have yield above 4%., and TSCO I hold for recovery prospects.
TJH
Terry,
You could argue that BT, IMB, NG and VOD are all priced for a dividend cut, and "unloved by the city".
If you had to pick one of these as a potential value opportunity, which would you go for, and why?
tuk020
Of those four, I think my choice would be IMB. A good cash flow, innovation in new methods of using tobacco, and a global spread. The price has been depressed for illogical reasons, in my view.
BT.A has the potential hiving off of Openreach to complicate matters. I'm not convinced about its efforts to become a triple play participant.
NG. has an increasing dependance on its US activities, and increasing regulatory pressure in the UK.
VOD has a lot of irons in the fire in many countries. There seems to be continual worries about one or another of them.
So for me, IMB would be the choice.
TJH
Re: Value Investing
Posted: August 31st, 2018, 6:57 am
by TUK020
Thank you Terry,
why is the NG growth in the US an issue?
Does the Openreach separation present an opportunity to BT to hive off some of its pension millstone?
TUK020
Re: Value Investing
Posted: August 31st, 2018, 7:57 am
by Walrus
I hold Imp and NG in my value port and will most likely be adding Got this morning. Order placed at 165.
Re: Value Investing
Posted: August 31st, 2018, 8:57 am
by tjh290633
TUK020 wrote:Thank you Terry,
why is the NG growth in the US an issue?
Does the Openreach separation present an opportunity to BT to hive off some of its pension millstone?
TUK020
Sorry, the US growth is a good thing, because it is not subject to our regulator
Presumably Openreach will take its fair share of BT.A's pension obligations. Don't forget that a small rise in interest rates could well eliminate the deficit.
TJH
Re: Value Investing
Posted: August 31st, 2018, 1:29 pm
by PinkDalek
Walrus wrote:Part of my portfolio is somewhat a hybrid HYP/Value investment. ...
For those who enjoy Polls and don't read the Biscuit Bar, Clariman has set up a Poll here:
POLL Would you like to see these additional investing boards?
viewtopic.php?f=21&t=13388#topIncluding "The site would benefit from a "Value Shares" Board" and "The site would NOT benefit from a "Value Shares" Board". There are many replies over there ...
Re: Value Investing
Posted: August 31st, 2018, 7:15 pm
by Walrus
PinkDalek wrote:Walrus wrote:Part of my portfolio is somewhat a hybrid HYP/Value investment. ...
For those who enjoy Polls and don't read the Biscuit Bar, Clariman has set up a Poll here:
POLL Would you like to see these additional investing boards?
viewtopic.php?f=21&t=13388#topIncluding "The site would benefit from a "Value Shares" Board" and "The site would NOT benefit from a "Value Shares" Board". There are many replies over there ...
That made me laugh, having been told I'm not welcome to comment on Vodafone re non HYP they moan that I'm talking about it on this board. Crazy