Stage 1 - Identify Potential Investment Stocks

[AsleepInYorkshire]

Plan A
Objective

1. Reinvest my current private pension(s) into a SIPP. (See note 1 below)
2. Including tax relief add £20K p.a. to SIPP (See note 2 below)
3. Fund will augment my state pension (See note 3 below)
4. Draw down will not exceed 4% pa. (See note 4 below)
5. Partner will retire at 66-67 with retirement income slightly in excess of final salary

Note 1

1. Identify how to open and manage a SIPP
2. Identify provider/platform
3. Understand process completely - can it be done gradually?

Note 2

1. Amount may increase. 20K is minimum

Note 3

1. State pension due in 10 years

Note 4

1. Need minimum £300K in pension
2. Current value is approx. 50%
3. Large annual commitment reduces risk of low returns, increases [potential] to retire early & insures against [potential] health issues
4. Highly likely not retiring at 67. Partner is 6 years younger. Probable will work to occupy myself and increase pension fund if health permits.

Sipp Investment Strategy

1. UK Stocks
2. Long term buy and hold
3. Review each stock annually or upon negative announcements
4. Reinvest dividends
5. Diversification by number and sector
6. Keep it simply stupid - purchase only stocks I understand the business model for (flexible if fundamentals are robust)

Stage 1 - Identify Investments Stocks

1. Renishaw
2. Associated British Foods
3. Dart Group
4. Sabre
5. Cranswick
6. Bellway
7. ICG
8. International Workspace Group
9. Howdens
10. Big Box
11. Electrocomponents
12. Shaftesbury
13. International Public Partnerships
14. IG Group
15. Hays
16. John Laing
17. Softcat
18. Dunelm
19. A J Bell
20. Big Yellow
21. Diploma
22. Assura
23. Games Workshop
24. Page Group
25. Hastings
26. FDM
27. Ibstock
28. One Savings
29. Polypipe
30. Berkeley

Stage 1 - Action Plan

1. Thoroughly research identified stocks. Remove unwanted
2. Identify value and purchase price (see note 1.3 - time stock purchases fundamentally?)
3. Prepare reasons for purchase for each stock (eg. growth, dividend, recovery, newsflow, macro-economic events, punt)

Whilst I am not going to retire a millionaire I am going to retire. As some of you are aware, serious long term health issues have really denied me the opportunity to both plan for and look forward to that time. I would welcome any constructive thoughts please and in particular if there are any real dogs in my "first filter" list above I'd warmly welcome a nudge

AiY

[AleisterCrowley]

Do you really want to go down the stock picking route?
There's a fair amount of evidence suggesting that, for most people, a simple tracker (or several) is the most effective investment.
Much easier to manage, unless you enjoy the research etc.
Plus ...consider frictional costs buying lots of individual shares

[AsleepInYorkshire]

Do you really want to go down the stock picking route?
There's a fair amount of evidence suggesting that, for most people, a simple tracker (or several) is the most effective investment.
Much easier to manage, unless you enjoy the research etc.
Plus ...consider frictional costs buying lots of individual shares

I've not ruled this option out yet [Plan B?] The problem I have with trackers is I am not convinced they will perform as well as my own "picks". My private pension (which I've not been able to contribute to for a substantial period of time) has grown, but not greatly. It's with Standard Life and the fund is a managed fund. I'm guessing that the fees I've paid have been substantial, restricting the growth. They continue to take 1% pa (reduced to .5% by giving me "free stock"). I've not looked too closely at costs of buying stocks and assume this will vary dependant upon where I have my SIPP. But I'm not looking to buy and sell. Just buy once. And the recent Woodford news has tempered my appetite for paying others to do what I should be able to cope with. The dichotomy as you so rightly point out is that 80% of investors cannot beat the market. I'm not looking to beat it, but hold that door open if I can. Again appreciating greatly the risk that comes with that is it could be downside I suck up.

I'm not an accountant. I have spent 40 years in the construction industry in a commercial role and at the age of 32 was running a department with the equivalent turnover in todays money of £120m with a gross margin exceeding 18%. I hasten to add, even at that time, my undiagnosed condition was a "nuisance". I have run my own small business and made a profit - I had to cease that due to my health.

I hope you don't think I am being dismissive of your genuine advice. I can assure you I'm not and I appreciate your feedback greatly. Thank you

AiY

[AleisterCrowley]

I started out with trackers then moved into individual shares.
If I'm honest with myself I would have probably been better off investing in cheap global trackers (but it wouldn't have been as 'exciting')
I've never sat down and done the sums for my portfolio vs. cheap tracker. Possibly because I wouldn't like the answer

Having read round the subject a bit, I'm now gradually moving into stuff like VWRL but it's unlikely I'll sell my individual shares.
Particularly the 'underwater' ones ,as we never like to crystallise a loss do we ?!


(Just got the 2nd edition of 'Investing Demystified* from the library, which is worth a read even if you are set on the stock picking route)
cheers
AC
https://www.amazon.co.uk/Investing-Demy ... th=1&psc=1

[Dod101]

AiY has a number of very interesting shares in his list, many of whom I do not know much about, but there are a number which have a good record as well. The absence of MegaCaps is obviously deliberate and may well prove to be a good thing. As to individual shares, I think I have only actually held ABF which I sold because it was not doing a lot but it is very well run, although for me I think it was just becoming too dependent on Primark. Assura is a company similar to PHP and I would think good. In fact the last time I looked at it it was on a modest discount to assets.

I know quite a few others names but cannot comment on them. A number have got good reputations.

It makes a refreshing change in approach.

Dod

[SalvorHardin]

Of the ones on the list the only one I know to any great extent is Shaftesbury, a share which I have owned for many years.

Shaftesbury is a property company, both owner and developer, with a highly concentrated portfolio in London’s West End (everything is within 15 minutes’ walk of its head office). Amongst its portfolio is Carnaby Street and much of Chinatown. In addition to shops, restaurants and offices, Shaftesbury rents out quite a bit of residential property.

Shaftesbury is a REIT so some (or all) of its dividends are paid gross, with 20% tax deducted, and if the shares are held in an ISA this tax can be reclaimed.

Share price as I type this is 807.5p. Most recent net asset value (NAV) was 995p as of 31st March 2019 (half-year results), a discount of 18.8%. Dividend of 17.2p (most recent interim dividend plus final dividend) so the shares yield 2.1%. Shaftesbury is conservatively financed, with borrowings of just 23.5% of its most recent gross asset value (25.3% of its properties).

Shaftesbury’s shares used to trade at a premium to their NAV (I have seen as high as 33%), in part because NAV calculations are very poor at capturing the value of developments in progress (and there are takeover rumours – see below). Several factors have combined to create a big discount; in particular uncertainty over Brexit and the well documented problems of the retail sector. However, the West End is the premier location for retail in Britain so Shaftesbury’s shares trade at a much lower discount to NAV than the shares of most other property companies / REITs which are exposed to the rest of the country.

Shaftesbury has two major shareholders; Hong Kong billionaire Samuel Tak Lee owns 26% and Norges Bank (the Norwegian Central Bank on behalf of Norway's Sovereign Wealth Fund) which has 25%. Mr. Lee has been at loggerheads with the board and he is currently suing Shaftesbury over a share placing last December. There have been rumours for many years about Mr. Lee making a takeover bid, possibly in combination with Norges Bank.

https://www.cityam.com/west-end-landlor ... l-tak-lee/

https://www.shaftesbury.co.uk/en/invest ... tions.html

Most recent results
https://www.investegate.co.uk/shaftesbu ... 00066174Z/

FWIW I’ve recently topped up my Shaftesbury holding (and two other Central London property companies; Derwent London and Great Portland Estates) as I believe that when Brexit is resolved (however that is) that this will boost Central London property by removing some or all of the uncertainty. Also I have a very positive opinion of the benefits that the Crossrail development will produce when it is finally completed.

[gbjbaanb]

Theres' a lot fo "interesting" shares in that list. And thats a worry to me. What i learned is that some stocks are boring and just keep on ding well, while others come and go, and many don't do well at all.

So here's a modified list:

Royal Dutch Shell
Next
GlaxoSmithKlein
Diageo
Relx
Unilever
Compass Group

add a few really boring ones:

National Grid
Severn Trent

What you find is that these kind of companies are the ones that people like Nick Train buy and hold. Finsbury Growth and Income (for example) has them, and his funds are constantly outperforming.

These are the kind of companies to buy for retirement. but a better way would be to buy them via investment trusts, so you also get a fairly reasonable bit of diversification which also helps for safety. Add a few bond blocks, a property doodah and the odd foreign thingy, and you should be set to forget all your investments.

The AIC has a great tool for picking trusts by income.

If the trusts route, I'd suggest starting with:
IPE, TRIG, SMT, EGL, RGL, IBT and FGT. Add Aberdeen Asian Income or Emerging Markets, or Apax Global Alpha for a bit of "excitement". Proportion your funds as you feel necessary, then sit back and wait.

[Dod101]

Rather than repeat the post I will simply comment on gbjbaanb's post.

The first thing to say is that of the megacaps that he quotes, Finsbury only holds three of them out of the seven quoted, These are Diageo, Unilever and Relx. Shell ought I suppose to be in most portfolios but of course it depends what the investor is looking for. It is and has been a great income share but not so good on the capital front. Next is a retailer and although seems better than some retailers are not on the whole much good at the moment. Glaxo is a bet on the future because although not a bad income share the income has been unchanged for some years and the share price has gone nowhere. Compass may be fine. I do not know a lot about it.

At this time I cannot understand why anyone would recommend National Grid or Severn Trent. they are not just boring they are bordering on dangerous. National Grid because of the threat of nationalisation as well as the regulator and Severn Trent ditto.

It is a pity that the gbj has quoted the EPIC only for his IT picks, but of those I recognise (Scottish Mortgage and Finsbury Growth and Income) neither are exactly income trusts.

I would not argue with the principle of what the gbj is saying, although it depends what AiY is actually aiming for and also his definition of 'ding (sic) well'

Dod

[Alaric]

Compass may be fine. I do not know a lot about it.

Compass has a similar price and dividend profile to Diageo and Unilever. The dividend increases every year, but so usually does the price at a faster rate.

Currently according to dividenddata

Compass dividend yield 1.96%, dividend growth rate over 5 years 9.2%, over 10 years 12%

Unilever for comparison 2.81%, 7.6% and 7.5%
Diageo 1.97%, 6.3%, 6.6%

Wiki describes it as "British multinational contract foodservice company"

https://en.wikipedia.org/wiki/Compass_Group

In its history, one part of it was the catering arm of the Granada group.

[Pendrainllwyn]

If you enjoy selecting your own stocks and feel you know what you are doing why not?

The only selection I own is John Laing which I think is a very good company and is in my view a far better way to play construction than the other usual suspects which suffer from terrible margins. It's not without risk but I think it has a good business model.

I have owned Dart Group and Renishaw in the past to good effect. Renishaw is another very good company and I see it has traded down a lot in the last 12 months. I will take a new look. Dart Group is well managed and trading well north of where I sold it.

I took a long hard look at Shaftesbury 2 years ago and did well not to invest at that time but agree with earlier comments that it has good assets and would think this would make a good long term holding unless you were completely pessimistic on the UK which your other selections suggest you are not. I might take another look at that too.

One of my larger UK holdings is Croda International. I mention because it is a Yorkshire based company which might give it added appeal.

Best of luck,
Pendrainllwyn

[gbjbaanb]

WRT the threrat of nationalisation - its an irrelevance. If Corbyn gets in, we'll be screwed anyway, and if he nationalises any public company (without paying the market value) the entire stock market will be screwed. And even he knows he'll probably be threatened in the courts, lose and have to pay market values in the end. So I ignore that kind of reasoning, it short-term blip that hasn't even made that much of an impact. In the meantime, they are boringly cash generative shares with little to no speculative risks. That's why I suggested them.

You could try Ecofin Global Utiltiies instead, same kind of utilities but without the risk of Corbyn. Or one of the renewable trusts like TRIG or JLEN which are roughly the same area.

[westmoreland]

i've done a tonne of research over the years, and i'd never bet my pension / future on my own stock picks. if i did, i wouldn't restrict myself to the UK, as that increases risk significantly, and there aren't that many great opportunities in a relatively small market.

i'd add that if we had a market crash, would you be able act calmly and rationally? i.e. continuing to read quarterly / half yearly updates, and make objective decisions? very few people have that ability, let alone when their decisions directly affect their pension. so many people dabble in buying shares in bull markets, but then sell out if and when there is a crash.

the intelligent investor always advises people in your situation to have a dummy portfolio for a year, before risking real money.

[tikunetih]

I've not looked too closely at costs of buying stocks and assume this will vary dependant upon where I have my SIPP. But I'm not looking to buy and sell. Just buy once. And the recent Woodford news has tempered my appetite for paying others to do what I should be able to cope with. The dichotomy as you so rightly point out is that 80% of investors cannot beat the market. I'm not looking to beat it, but hold that door open if I can. Again appreciating greatly the risk that comes with that is it could be downside I suck up.

Out of interest, do you perform your own dentistry?

The reason I ask is that, from what you've disclosed, it's not at all clear that you're an experienced active investor with a particular set of skills that's led to a good track record with stock-picking and outperforming.

If that's the case, why would you assume you can do this from a standing start, bearing in mind the difficulty?

Given your age, with limited human capital and compressed investment time horizon, then the right plan would be one that maximises the likelihood for success and reduces the probability of poor outcomes.

I think your views are being overtly (wrongly )swayed by your perceptions of your Standard Life investment experience and recency bias over the Woodford affair etc, and you'd be better served by going back to the drawing board and reconsidering what investment strategy and plan is most likely to deliver sufficient returns to meet your goals. Your current plan doesn't look great to me and appears too risky.

Perhaps my assumptions are wrong, but if not then I'd guestimate a >80% probability that you'd achieve better results, for far less work effort, by opting instead for collective investment vehicles, globally diversified, appropriate to your risk (volatility) tolerance.

[Dod101]

WRT the threrat of nationalisation - its an irrelevance. If Corbyn gets in, we'll be screwed anyway, and if he nationalises any public company (without paying the market value) the entire stock market will be screwed. And even he knows he'll probably be threatened in the courts, lose and have to pay market values in the end. So I ignore that kind of reasoning, it short-term blip that hasn't even made that much of an impact. In the meantime, they are boringly cash generative shares with little to no speculative risks. That's why I suggested them.

You could try Ecofin Global Utiltiies instead, same kind of utilities but without the risk of Corbyn. Or one of the renewable trusts like TRIG or JLEN which are roughly the same area.

I hold only National Grid of the utilities because at least it has some business in the US. Bear in mind that most of the megacaps and quite a few of the other FTSE100 shares derive most of their profits from abroad, in fact the utilities and only a very few others are UK dependent for profits so I do not buy your reasoning; I think it is dangerously flawed.

Dod

[AsleepInYorkshire]

I started out with trackers then moved into individual shares.
If I'm honest with myself I would have probably been better off investing in cheap global trackers (but it wouldn't have been as 'exciting')
I've never sat down and done the sums for my portfolio vs. cheap tracker. Possibly because I wouldn't like the answer

Having read round the subject a bit, I'm now gradually moving into stuff like VWRL but it's unlikely I'll sell my individual shares.
Particularly the 'underwater' ones ,as we never like to crystallise a loss do we ?!

(Just got the 2nd edition of 'Investing Demystified* from the library, which is worth a read even if you are set on the stock picking route)
cheers
AC
https://www.amazon.co.uk/Investing-Demy ... th=1&psc=1

Thank you Aleister. OK - I'm going to fess up now - and you'll like this. I've ordered the book. Hmm mm Well actually that's not my fess ... my good lady is (wait for it ... ) a librarian and she's looking for it for me .

AiY

[AleisterCrowley]

It's a good read - well the first edition was, and I doubt the second edition has changed much !
I got mine as an interlibrary loan, which costs £3 in the SELMS (South East libraries) area.
Cheaper than buying.
Tight, moi ?

Mr Kroijer writes the occasional article on Monevator

https://monevator.com/tag/kroijer/
http://www.kroijer.com/

[AsleepInYorkshire]

AiY has a number of very interesting shares in his list, many of whom I do not know much about, but there are a number which have a good record as well. The absence of MegaCaps is obviously deliberate and may well prove to be a good thing. As to individual shares, I think I have only actually held ABF which I sold because it was not doing a lot but it is very well run, although for me I think it was just becoming too dependent on Primark. Assura is a company similar to PHP and I would think good. In fact the last time I looked at it it was on a modest discount to assets.

I know quite a few others names but cannot comment on them. A number have got good reputations.

It makes a refreshing change in approach.

Dod

Yep. You got me. I've steered clear of Megacaps. But not forever. The list I put together was mainly stocks I filtered from the FTSE 250. I haven't ruled out any of the FTSE 100 but just haven't got there yet and suspect many will not float my boat. I could be wrong and (I believe) I have an open mind on this. In fairness I added ABF as a short term punt based on some growth from Primark. I don't actually see it being a stock I would want to hold for anything longer than [say] five years. I agree with you it does look Primark "heavy" which could turn sour. I tend to steer away from "retailers" especially clothing, albeit Primark does have a different edge I think and may not be as open to fashion failure. Indeed if there were a recession tomorrow there's a strong argument to suggest they could do well. I'm also aware that the average salary in the UK has fallen in real terms and the demand for Primark clothing will be proportionately as high. I'm not feeling the need for superstores though. It could be a huge amount of shop floor to "rent" in a recession with no way of exerting downward pressure on their cost base.

I've taken the liberty of adding your name [not Pike ] to my "little book" and will make every effort to coerce you into divulging much more of what you know, not just about Primark but other stocks too . But ... I am A devout Yorkshireman and we are always first to the bar (and last to pull our wallet out ) so I'll make sure I get the first round in

AiY

[AsleepInYorkshire]

Of the ones on the list the only one I know to any great extent is Shaftesbury, a share which I have owned for many years.

Shaftesbury is a property company, both owner and developer, with a highly concentrated portfolio in London’s West End (everything is within 15 minutes’ walk of its head office). Amongst its portfolio is Carnaby Street and much of Chinatown. In addition to shops, restaurants and offices, Shaftesbury rents out quite a bit of residential property.

Shaftesbury is a REIT so some (or all) of its dividends are paid gross, with 20% tax deducted, and if the shares are held in an ISA this tax can be reclaimed.

Share price as I type this is 807.5p. Most recent net asset value (NAV) was 995p as of 31st March 2019 (half-year results), a discount of 18.8%. Dividend of 17.2p (most recent interim dividend plus final dividend) so the shares yield 2.1%. Shaftesbury is conservatively financed, with borrowings of just 23.5% of its most recent gross asset value (25.3% of its properties).

Shaftesbury’s shares used to trade at a premium to their NAV (I have seen as high as 33%), in part because NAV calculations are very poor at capturing the value of developments in progress (and there are takeover rumours – see below). Several factors have combined to create a big discount; in particular uncertainty over Brexit and the well documented problems of the retail sector. However, the West End is the premier location for retail in Britain so Shaftesbury’s shares trade at a much lower discount to NAV than the shares of most other property companies / REITs which are exposed to the rest of the country.

Shaftesbury has two major shareholders; Hong Kong billionaire Samuel Tak Lee owns 26% and Norges Bank (the Norwegian Central Bank on behalf of Norway's Sovereign Wealth Fund) which has 25%. Mr. Lee has been at loggerheads with the board and he is currently suing Shaftesbury over a share placing last December. There have been rumours for many years about Mr. Lee making a takeover bid, possibly in combination with Norges Bank.

https://www.cityam.com/west-end-landlor ... l-tak-lee/

https://www.shaftesbury.co.uk/en/invest ... tions.html

Most recent results
https://www.investegate.co.uk/shaftesbu ... 00066174Z/

FWIW I’ve recently topped up my Shaftesbury holding (and two other Central London property companies; Derwent London and Great Portland Estates) as I believe that when Brexit is resolved (however that is) that this will boost Central London property by removing some or all of the uncertainty. Also I have a very positive opinion of the benefits that the Crossrail development will produce when it is finally completed.

Many thanks for all that information. Very enlightening. Most of the stocks that make it through my filter have little or no debt. I was prepared to let this stock "slip through" for further scrutiny because I just wanted to "sniff" a little further.

AiY