Cutting our losses on Dominos Pizza and Dignity

[Charlottesquare]

What happens to discretionary spending (Pizzas) if Brexit really is a No Deal mess, if household disposable incomes suffer surely so do all fast food type operations

In the last recession takeaway food sales generally rose. People cut back on going out and substituted takeaway meals. Dominos saw sales rise substantially in 2009

"The company has always recognised that the pizza business does well when times are hard, and has taken full advantage of the drop in advertising rates to continue to promote its discounts and deals to a cash-strapped public"

https://www.theguardian.com/business/20 ... -recession

Interesting, so the first strike risk will possibly be higher quality eating experiences with the low end producers (no offence Dominos) actually possibly receiving trickle down benefits in hard times.

It is my kids (large kids) who tend to order in pizzas etc, not sure they even use Dominos, I think other labels appear more often; I should really pay more attention.

[GoSeigen]

I try not to average in on downmoves but rather see how the company performs and buy more if operational performance improves and the price is about the same or worse.

Do you make good returns this way? Any bad mistakes?

I'm trying to trade like this more, but psychologically it's difficult for me. I'm trying to develop it into a habit...

GS

[Lootman]

I try not to average in on downmoves but rather see how the company performs and buy more if operational performance improves and the price is about the same or worse.

Do you make good returns this way? Any bad mistakes? I'm trying to trade like this more, but psychologically it's difficult for me. I'm trying to develop it into a habit...

I suspect that you know this but there are some cheap ways to execute loss repair strategies using options:

http://www.optionstrading.org/strategie ... ck-repair/

The problem with individual UK names is a lack of liquidity in options, at least versus the US.

[Spet0789]

Any thoughts on XPP? I know we both hold RSW and there are similarities I think.

I've never looked at XPP so have nothing useful to say, sorry.

Yes, I hold Renishaw as well. Purchased in October 2011, its share price has gained 386.2% for a CAGR in the share price of 21.9%. The dividend has grown 7.7% CAGR and reached a 6.9% yield on book cost: dividends received amount to 37.5% of book cost.

Operating margin averaged over 20% since 2000 and was 25.1% in 2018. Return on capital employed similar. One to hold for the long term and add to when its out of favour, such as 2009 or 2011.

Best wishes

Mark.

I’d suggest you take a look as a dividend growth candidate.

[Spet0789]

I try not to average in on downmoves but rather see how the company performs and buy more if operational performance improves and the price is about the same or worse.

Do you make good returns this way? Any bad mistakes?

I'm trying to trade like this more, but psychologically it's difficult for me. I'm trying to develop it into a habit...

GS

I’m not a trader so I don’t really track the contribution my execution strategy makes to returns. I rarely sell unless a stock has reached nosebleed levels or my initial reasons for purchase become invalidated. I try and buy in meaningful starting clips (1.5% of my liquid net worth) and then double the position after a few years of following the company if I am still happy with the operational performance and the price is still reasonable.

[ADrunkenMarcus]

I’d suggest you take a look [at XPP] as a dividend growth candidate.

The dividend yield looks fairly decent. I see it also has (from Sharepad):

ROCE: 24.4%
CROCI: 14.8%
EBIT margin: 19.4%

Best wishes

Mark.

[Lootman]

I’d suggest you take a look [at XPP] as a dividend growth candidate.

The dividend yield looks fairly decent. I see it also has (from Sharepad):

ROCE: 24.4%
CROCI: 14.8%
EBIT margin: 19.4%

I have held XP Power for a few years and it has performed well for me.

Note that the dividends count as overseas income, for tax purposes.

[Spet0789]

I’d suggest you take a look [at XPP] as a dividend growth candidate.

The dividend yield looks fairly decent. I see it also has (from Sharepad):

ROCE: 24.4%
CROCI: 14.8%
EBIT margin: 19.4%

I have held XP Power for a few years and it has performed well for me.

Note that the dividends count as overseas income, for tax purposes.

London-listed so no issues if held in an ISA/SIPP as I understand it.

[monabri]

Latest on DOM

https://www.londonstockexchange.com/exc ... 14400.html

"Domino's Pizza Group PLC faces a growing rebellion from its UK franchisees, who claim they don't receive a fair share of profit, The Times reported Sunday. According to the newspaper, almost all of the franchisees are believed to be refusing to open stores for the first half of this year."

[TheMotorcycleBoy]

Latest on DOM

https://www.londonstockexchange.com/exc ... 14400.html

"Domino's Pizza Group PLC faces a growing rebellion from its UK franchisees, who claim they don't receive a fair share of profit, The Times reported Sunday. According to the newspaper, almost all of the franchisees are believed to be refusing to open stores for the first half of this year."

And I'm sure they are justified in that claim. Why is the CEO squeezing them so hard? Presumably it's not quite the $$$ for nothing business model that some would claim.

[TheMotorcycleBoy]

Perhaps I should have posted this to "Investment Strategies" instead of "Share Ideas", since I wanted to discuss the whole concept of "cutting one's losses" really more so than the exited positions themselves, since our DOM and DTY sales were our first and only (so far) sales at a loss.

It definitely seemed like crossing a bridge, i.e. transition from procrastination to action.

Since we sold at the general FTSE low (early December) we quickly re deployed our capital recovered from the losing sales into Spirax-Sarco (SPX) and Burford Capital (BUR), which we feel (definitely at the time, both were trading with very depressed prices) was a better investment decision.

So I'm curious what folk here make of the quick sale to preserve some value and redeploy tactic. As opposed to "hold and hope" ??

Matt

[dspp]

I'm not sure on your main question.

But wrt to Spirax Sarco, I've never known them to charge a low price for anything they've quoted me on !

regards, dspp

[Spet0789]

Perhaps I should have posted this to "Investment Strategies" instead of "Share Ideas", since I wanted to discuss the whole concept of "cutting one's losses" really more so than the exited positions themselves, since our DOM and DTY sales were our first and only (so far) sales at a loss.

It definitely seemed like crossing a bridge, i.e. transition from procrastination to action.

Since we sold at the general FTSE low (early December) we quickly re deployed our capital recovered from the losing sales into Spirax-Sarco (SPX) and Burford Capital (BUR), which we feel (definitely at the time, both were trading with very depressed prices) was a better investment decision.

So I'm curious what folk here make of the quick sale to preserve some value and redeploy tactic. As opposed to "hold and hope" ??

Matt

My view is that you should never ever sell solely on the basis that the price has fallen. Obviously some swear by stop-losses. I don’t. There is a natural limit on the downside (zero) but none on the upside. If the business has weakened, different story. To me this differentiates investors (easy to make money over time) from traders (hard to make money legally).

From what you have said, you sold just because the price had fallen. Personally I don’t do that, ever.

[simoan]

So I'm curious what folk here make of the quick sale to preserve some value and redeploy tactic. As opposed to "hold and hope" ??

Matt

It depends over what time scale you want to judge this switch trading to be successful, or not? If you can manage to come out on the right side on more than 50% of such trades you have generally made the right decision and it will have a positive benefit, if less than 50% you've made the wrong decision with a negative effect to your overall performance. I suspect in the long run you will average 50% and your broker will be a little bit richer.

Some people are good at such trading but I suspect they are in a very small minority. If you don't keep a log of all your trades (I do) you will never know and are more than likely to suffer from some kind of psychological bias to convince yourself that you're an ace trader, when in actual fact you're not. I find the idea of "hold and hope" strange. If you buy good quality companies there should be no need to hope.

All the best, Si

[TheMotorcycleBoy]

From what you have said, you sold just because the price had fallen. Personally I don’t do that, ever.

No I sold those holdings because I decided that their businesses were not really as lucrative (or as well managed) as I'd originally perceived.

In the case of DTY it was after the regulation people CMA had been called into look at the funeral care provision industry, so it became clear that death rates aren't (hopefully!) going to change much, but DTY revenues would reduce, hence that their profitability would suffer. That's why we flogged these. (But TBH we probably shouldn't have picked this one in the first place!).

I sold DOM for reasons previously iterated earlier in this thread. I became more aware that DOM's model relies on screwing over it's franchisees. Yes, I agree I should maybe have researched them more earlier on!! The franchisees are now rebelling and refusing to open new stores.....and generally being wreckers. That aside, I'd read other tales about how poorly the rest of DOM is run (yes I guess some might be media spin! But we have to get our information from somewhere...), for example, poor systems integration and often different stores using different back office (i.e. ordering, staff control etc) systems. Plus, whilst all this has been occurring the company DOM continue to buyback their own shares. I genuinely think that they should be making the right investments in their operations base before spending £££ on their own stock (but I imagine that they are not alone in this characteristic....perhaps I'm being a tad naive?).

Finally in the dip in the market in Nov-Dec, we did see other holdings of ours falling more (or at least same) percentage-wise e.g. zytronic, bodycote, trifast, persimmon, but we've kept hold of these stocks (and will keep holding and topping up). Zytronic ZYT were down 45% at one stage in our folio...and had we not been spending £££ on other things at the time, would have topped them up.

Matt

[TheMotorcycleBoy]

Some people are good at such trading but I suspect they are in a very small minority. If you don't keep a log of all your trades (I do) you will never know and are more than likely to suffer from some kind of psychological bias to convince yourself that you're an ace trader, when in actual fact you're not. I find the idea of "hold and hope" strange. If you buy good quality companies there should be no need to hope.

Yes we do record all trades, and cash inputs to our ISAs. Pretty meticulously.

And regards "trading" the behaviour reported in this thread, is not something we wish to repeat. Definitely buying to hold long term, only to "top slice" sell and redistribute those monies into other stocks etc.

Matt

[EssDeeAitch]

I try not to average in on downmoves but rather see how the company performs and buy more if operational performance improves and the price is about the same or worse.

Do you make good returns this way? Any bad mistakes? I'm trying to trade like this more, but psychologically it's difficult for me. I'm trying to develop it into a habit...

I suspect that you know this but there are some cheap ways to execute loss repair strategies using options:

http://www.optionstrading.org/strategie ... ck-repair/

The problem with individual UK names is a lack of liquidity in options, at least versus the US.

The options strategy is interesting reading. I know its off topic but is this a ploy that you use at all, are there really no downsides to it?

[Spet0789]

Do you make good returns this way? Any bad mistakes? I'm trying to trade like this more, but psychologically it's difficult for me. I'm trying to develop it into a habit...

I suspect that you know this but there are some cheap ways to execute loss repair strategies using options:

http://www.optionstrading.org/strategie ... ck-repair/

The problem with individual UK names is a lack of liquidity in options, at least versus the US.

The options strategy is interesting reading. I know its off topic but is this a ploy that you use at all, are there really no downsides to it?

The downside to it is that you will pay large amounts of bid-offer (commission) especially so for most U.K. stocks where options are illiquid compared with in the US. Furthermore, you give up any appreciation in your position beyond a certain point.

Given it’s hard enough to say whether a stock will go up or down, I’d argue it’s even harder to be sure it will go up a bit but not a lot.

Keep it simple. Don’t feed the financial services bonus pool.

[simoan]

Some people are good at such trading but I suspect they are in a very small minority. If you don't keep a log of all your trades (I do) you will never know and are more than likely to suffer from some kind of psychological bias to convince yourself that you're an ace trader, when in actual fact you're not. I find the idea of "hold and hope" strange. If you buy good quality companies there should be no need to hope.

Yes we do record all trades, and cash inputs to our ISAs. Pretty meticulously.

And regards "trading" the behaviour reported in this thread, is not something we wish to repeat. Definitely buying to hold long term, only to "top slice" sell and redistribute those monies into other stocks etc.

Matt

It's good that you log all trades. I hope you also provide a comment with each trade to explain your thought process at the time and reason for the trade. This is something I failed to do for many years and so I never really learnt my lessons from mistakes and was unable to correct faulty thought processes. You will never get all decisions correct but if you are right on 60% of your investments you will make a lot of money over time.

These days I have an Excel spreadsheet that logs all trades with buy and sell prices against the current price (using eventide's very excellent tfl plug-in) so that I can check my thought processes are correct and see where I have gained or lost money on each trade. If the overall total is positive it shows I am adding value to my portfolio with my trades, if it's not then I need to give myself a kick where it hurts and closer examine all the buy and sell decisions where I gave up gains by selling or bought stupidly into losers. However, it is not something I look at on a daily basis - that way madness lies - maybe only every 2 or 3 months.

All the best, Si

[EssDeeAitch]

I suspect that you know this but there are some cheap ways to execute loss repair strategies using options:

http://www.optionstrading.org/strategie ... ck-repair/

The problem with individual UK names is a lack of liquidity in options, at least versus the US.

The options strategy is interesting reading. I know its off topic but is this a ploy that you use at all, are there really no downsides to it?

The downside to it is that you will pay large amounts of bid-offer (commission) especially so for most U.K. stocks where options are illiquid compared with in the US. Furthermore, you give up any appreciation in your position beyond a certain point.

Given it’s hard enough to say whether a stock will go up or down, I’d argue it’s even harder to be sure it will go up a bit but not a lot.

Keep it simple. Don’t feed the financial services bonus pool.

Agreed - it's not something for me at all.