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andyalan10's happy year of underperformance

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andyalan10
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andyalan10's happy year of underperformance

#108670

Postby andyalan10 » January 8th, 2018, 1:00 am

OK so this is going to be something of a stream of consciousness post as we are already a week into the new year, and I feel that market moves and the passage of time make my thoughts on 2017 less accurate/relevant so here goes.

Situation - 56 years old, downsized the job about 4 years ago, just about covering current expenditure with current income. Very risk averse partner, sufficient pensions and savings between us to meet probable requirements.

My Portfolio - Two thirds in various UK/Europe/US/World equity trackers in company DC pensions, one third self managed in a HYPish manner in SIPP and ISAs. Although there is also a dormant DB pension and a mortgage free house as well.

The self managed bit is the bit I analyse.

31 holdings, 17 trades in 2017, 7 sales, 10 purchases using the proceeds of the 7 sales and the dividends received.

Against the FTSE-100 my capital value has underperformed by about 3%, as alluded to in the title. My happiness with that result is for two reasons:-

My running yield is around 5%, so that is about 1.25-1.5% of the 3% removed on a total return basis.

I have increased the historical yield on the portfolio by about 10%, partly by re-investing dividends, partly by top slicing now low yielding gainers and purchasing/topping up high yielding shares.

Highlights:-

Strong gains on Man Group (EMG) Berkeley Group (BKG) and Easyjet (EZJ), with top slicing on the first 2 late in the year. Easyjet has just come back into profit for me.

Selling BT and reducing First Group and Barclays on rises from the beginning of the year, which have subsequently vanished.

Topping up RIO early in the year.

Lowlights:-

Buying back into BT way too soon, many of the other high yield purchases/top ups have yet to move far - Imperial Brands (IMB), Lloyds, National Grid (NG). I'm actually reasonably confident in all 4 of those shares so hence my general comfort level.

Current situation:-

I'm happy that I have about 10% in cash for bargain shopping. I'm happy that I am overweight in oils.

Looking forwards:-

With a substantial share of my assets in trackers I think I can afford to concentrate risk further in the self-selected portfolio, maybe with more room for smaller companies, special situations, so the plan will be to make that part of the portfolio more focused, and less evenly weighted. Not necessarily what one would expect when future contributions to the pot are likely to be minimal, but I am extremely risk tolerant and we are pretty well provided for elsewhere.

Any comments welcome, and thanks to those others who have given us an insight into their 2017 performance.

Andy

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Re: andyalan10's happy year of underperformance

#108672

Postby Breelander » January 8th, 2018, 1:36 am

andyalan10 wrote: Against the FTSE-100 my capital value has underperformed by about 3%, as alluded to in the title...
Any comments welcome...


A HYPish portfolio? If so, that seems par for the course....
Breelander wrote:Capital: The HYP rose in value over the year. The Income Unit value rose by 4.96% compared to a rise of 7.57% for the FTSE100

Re: Bree's HYPish Portfolio - Christmas Review 2017

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Re: andyalan10's happy year of underperformance

#108677

Postby YeeWo » January 8th, 2018, 7:12 am

andyalan10 wrote:Any comments welcome, and thanks to those others who have given us an insight into their 2017 performance.
Any chance you can provide a list of your portfolio? Really hard to comment based on the limited information you've provided! Good Luck for '18.

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Re: andyalan10's happy year of underperformance

#108697

Postby tjh290633 » January 8th, 2018, 9:12 am

Andy, you have done a fair bit of portfolio adjustment this past year. 17 trades is not unusual for me, with 37 holdings, but 7 sales are more than I would expect. As you probably know, I trim back overweight holdings when required, but total disposals are rare. The usual reasons are a high share price leading to a yield less than half that of the FTSE, or ceasing to pay dividends for the foreseeable future, and those being taken over.

Indivior and Carillion are two that I ought to sell. However I'm in no hurry. The measure of how I am doing is the rate at which dividends received increase. IMB is one which helps, because it has been increasing dividends by 10% each year. As long as that continues, no need for concern.

TJH

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Re: andyalan10's happy year of underperformance

#108853

Postby andyalan10 » January 8th, 2018, 7:22 pm

Hi Terry

Thank you for pushing me into re-examining my sale decisions!

The sales were as follows:-

BT @ 399p, then yielding 3.6%, but I regretted not selling at around 500 in late 2015/early 2016, particularly when they subsequently fell to 350. Recovery to 400 on no significant news was enough for me to get out.

BARC reduced at 231 then yielding 1.3% due to dividend cut and share price rise.

FGP reduced at 142, no yield and again a strong price rise on no material news

HAS sold at 167, then yielding 1.67% due to share price rise.

HSBC sold when yielding c5%, but sold from an unsheltered account to revive the current account, subsequently rebought some in the SIPP.

Man Group (EMG) and Berkeley Group (BKG) reduced on yields of 4 and 3.2% after substantial gains on purchase price. Not as scientific as your method Terry, as neither were particularly overweight, but sold on capital gains of 57% YTD/100% from purchase and 47% YTD/69% from purchase. Both have subsequently moved even higher, but I'm happy with that as I am still holding some.

So in summary I'd say Barclays/First Group/Hays well justified on the basis of yield. BT, EMG, BKG less so. HSBC a bit of a special case, the only significant share held in an unsheltered account.

Andy

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Re: andyalan10's happy year of underperformance

#108857

Postby andyalan10 » January 8th, 2018, 8:07 pm

And for YeeWo and any others:

The portfolio as it stood at the end of 2017. Note that yield is historic yield in %, not a percentage share of total income, and is taken from 4/1/18 when I happened to update my yield spreadsheet.

In a previous post I have mentioned my sells and reductions, some of those appear below as "increased" as they have subsequently been re-purchased or topped up.

Raven Russia yield is implied from the tenders they run in lieu of cash dividend payments.

Overall portfolio yield at 4/1/18 was 4.96%

Code: Select all

Code | Name                     | Action    | % Capital | Yield %
BP   | BP                       | Held      |     8.50% |    5.85
AV   | Aviva                    | Held      |     8.34% |    4.79
GSK  | GlaxoSK                  | Held      |     6.38% |    5.88
NG   | National Grid            | Increased |     6.29% |    5.13
RIO  | Rio Tinto                | Increased |     5.77% |    4.64
SIA  | Soco Intl                | Increased |     5.04% |    4.46
EMG  | Man Group                | Reduced   |     4.00% |     3.5
VOD  | Vodafone                 | Held      |     3.97% |    5.49
RDSB | Shell B                  | Held      |     3.94% |    5.74
UU   | United Utilities         | Held      |     3.35% |    4.79
SBRY | J Sainsbury              | Held      |     3.16% |    4.02
SSE  | SSE                      | Held      |     2.97% |     6.9
LLPD | Lloyds Pref.             | Held      |     2.95% |    5.29
GNK  | Greene King              | Increased |     2.90% |    5.74
RUS  | Raven Russia             | Held      |     2.59% |    3.07
TALK | TalkTalk                 | Held      |     2.46% |    5.17
SLA  | Standard Life Abdn         | Held      |     2.37% |    4.76
RUSP | Raven Rus. Pref          | Held      |     2.29% |    8.22
FGP  | First Group              | Reduced   |     2.23% |       0
IMB  | Imperial Brands          | Bought    |     2.15% |    5.21
DNA  | Doric Nimrod Air 1       | Held      |     2.14% |    8.78
HSBA | HSBC                     | Reduced   |     2.01% |    5.21
BGLF | Blackstone GSO Loan Fin. | Bought    |     1.83% |   10.04
BKG  | Berkeley Group           | Reduced   |     1.76% |    3.24
LLOY | Lloyds                   | Bought    |     1.71% |     4.7
BARC | Barclays                 | Reduced   |     1.70% |    1.51
DRX  | Drax                     | Held      |     1.58% |    1.88
EZJ  | Easyjet                  | Held      |     1.56% |    3.56
BT   | BT                       | Increased |     1.42% |    5.68
RKH  | Rockhopper                | Increased |     1.37% |       0
BLND | British Land             | Held      |     1.27% |    4.39
HAS  | Hays                     | Sold      |     0.00% | N/A   
   

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Re: andyalan10's happy year of underperformance

#108867

Postby ADrunkenMarcus » January 8th, 2018, 8:43 pm

Thanks for sharing Andy.

I hold Barclays and I am considering eliminating it. I note you reduced your own holding.

Best wishes


Mark.

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Re: andyalan10's happy year of underperformance

#108878

Postby andyalan10 » January 8th, 2018, 9:49 pm

ADrunkenMarcus wrote:Thanks for sharing Andy.

I hold Barclays and I am considering eliminating it. I note you reduced your own holding.

Mark.


Indeed I did, and I would have been better off if I had exited completely. I liked the story of cheap Investment Banking assets picked up from Lehmann's, international exposure, but they seem to have stalled on the execution. I hold LLOY and HSBA, giving me domestic and international exposure with a substantial dividend stream, would consider adding to both on weakness.

Andy

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Re: andyalan10's happy year of underperformance

#108910

Postby ADrunkenMarcus » January 9th, 2018, 7:55 am

andyalan10 wrote:Indeed I did, and I would have been better off if I had exited completely. I liked the story of cheap Investment Banking assets picked up from Lehmann's, international exposure, but they seem to have stalled on the execution. I hold LLOY and HSBA, giving me domestic and international exposure with a substantial dividend stream, would consider adding to both on weakness.


I think things may come to a head for me around the February results. They are due to give an update on their capital policy in terms of any distributions to shareholders. Consensus estimates seem to envisage a 5.3p dividend for 2018, which is *below* the 6.5p they were paying from 2012 to 2015, and an 8p+ dividend in 2019 represents a c.4% yield on today's price.

Mr Staley seems keen on deploying capital into the investment bank and investing in the bank's technological infrastructure. I am certainly not opposed to companies reinvesting profits to grow in future - I think it's essential - but I remain to be convinced of the investment banking strategy. They have a solid retail and corporate bank, as well as Barclaycard, so it looks unabalanced.

The period from 1998 to 2007 was great for Barclays shareholders. At its peak early in 2007, the share price had risen some 225% for me from October 1998 and dividends had grown strongly, representing a 14% yield on cost. However, how much was from riding a credit boom and leveraging up? Of course, the share price today is below what it was in October 1998 even on a nominal basis and the dividend per share is back to late 1980s levels. At least it wasn't RBS, but then it's beaten Lloyds handsomely.

I do hold Standard Chartered as well, which should resume dividends soon.

Best wishes

Mark.

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Re: andyalan10's happy year of underperformance

#109092

Postby dspp » January 9th, 2018, 9:20 pm

ADrunkenMarcus wrote:I do hold Standard Chartered as well, which should resume dividends soon.
Mark.


Would you buy more of Standard Chartered today ? I hold them and a larger HSBC holding, but am not buying at present (money is elsewhere).
- dspp

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Re: andyalan10's happy year of underperformance

#109143

Postby ADrunkenMarcus » January 10th, 2018, 7:45 am

dspp wrote:Would you buy more of Standard Chartered today ? I hold them and a larger HSBC holding, but am not buying at present (money is elsewhere).


I'd be comfortable with buying more of Standard Chartered, yes. However, I did top up earlier and participate in the rights issue back in 2015 which was at a much lower share price. I don't think theirs is a fundamentally broken bank, but it's certainly one that has been through a rough time recently - making some nice old fashioned mistakes which I hope they have learnt from! They operate in attractive markets and there is potential top line growth.

Best wishes

Mark.

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Re: andyalan10's happy year of underperformance

#109196

Postby YeeWo » January 10th, 2018, 10:58 am

ADrunkenMarcus wrote:I don't think theirs is a fundamentally broken bank, but it's certainly one that has been through a rough time recently - making some nice old fashioned mistakes which I hope they have learnt from!
As you may recall StanChart was my biggest loser, before I finally sold?! If you look at history StanChart has a track record of making "old fashioned mistakes"........

ADrunkenMarcus wrote:They operate in attractive markets and there is potential top line growth.
........The reason being the "attractive markets" are dominated by State Owned incumbents which have all the low-hanging-fruit to themselves. Therefore StanChart ends up with riskier business which is transacted by risker people. StanChart is a shrinking business, CET1 requirements keep rising squeezing profitability while "Too-Big-to-Fail" realities have severely constrained Industry consolidation.

I like the history and pluckiness of StanChart, and I'd love to be proved wrong, but I place StanChart firmly in trading-stock category!

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Re: andyalan10's happy year of underperformance

#109362

Postby ADrunkenMarcus » January 11th, 2018, 7:39 am

YeeWo wrote:
ADrunkenMarcus wrote:I don't think theirs is a fundamentally broken bank, but it's certainly one that has been through a rough time recently - making some nice old fashioned mistakes which I hope they have learnt from!
As you may recall StanChart was my biggest loser, before I finally sold?! If you look at history StanChart has a track record of making "old fashioned mistakes"........


I've held Standard Chartered since 1998. Even at current depressed levels, last time I did the figures it had matched the FTSE 100 on a total return basis and had handily beaten what I think was the banks or financials sector. I think sailing through the global financial crisis was bad, in hindsight, because they then had a rights issue in 2010 to pursue further growth and I don't think the proceeds were wisely invested. They forgot some of the basics, making big loans to individuals and concentrating risk exposure in particular sectors such as commodities.

There are certainly issues to monitor in the future but what Bill Winters is doing makes sense to me. I don't expect growth to be what it was in the boom years but slower and, hopefully, more sustainable. Ultimately, it needs to fix itself or be fixed.

Best wishes


Mark.

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Re: andyalan10's happy year of underperformance

#109990

Postby YeeWo » January 12th, 2018, 7:14 pm

ADrunkenMarcus wrote:I think sailing through the global financial crisis was bad, in hindsight, because they then had a rights issue in 2010 to pursue further growth and I don't think the proceeds were wisely invested.
The RI was used to fund Write-Offs, period! StanChart took RI money to pay for the Sins of the Past! Understandable but not a good use of my/or your(!) hard earned........
ADrunkenMarcus wrote:They forgot some of the basics, making big loans to individuals and concentrating risk exposure in particular sectors such as commodities.
Reinforcing my previous point. The "Good" business in EM is in the hands of SOE banks. StanChart therefore has to massively up the risk to participate. Please google and read the story of StanChart's "entrepreneurial" attempts at cornering the Diamond market, shambolic!
ADrunkenMarcus wrote:There are certainly issues to monitor in the future but what Bill Winters is doing makes sense to me. I don't expect growth to be what it was in the boom years but slower and, hopefully, more sustainable. Ultimately, it needs to fix itself or be fixed.
The last sentence "fix itself or be fixed" is, far and away, the most potent comment relating to StanChart. In most other industries it would be "fixed" but those options have gone in banking for the moment. Please google Francine Lacqua's Bloomberg interview with Bill Winters, he's a wee-bit smarmy but is undoubtedly defusing the more radioactive parts of StanChart's book. The Big Strategic Question will be what then? As above a Trading Stock........
In retrospect John Peace's lack of Banking experience and the Resignation of (the excellent) Richard Meddings should of been Red Flag warning signs. Good Luck to All!

Apologies to andyalan10 for hogging His Post with StanChart.

http://www.livemint.com/Companies/wp4Pz ... tered.html

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Re: andyalan10's happy year of underperformance

#112253

Postby ADrunkenMarcus » January 21st, 2018, 11:17 am

YeeWo wrote:
ADrunkenMarcus wrote:I think sailing through the global financial crisis was bad, in hindsight, because they then had a rights issue in 2010 to pursue further growth and I don't think the proceeds were wisely invested.
The RI was used to fund Write-Offs, period!


I think that's the case for 2015, but not necessarily 2010.

Andy, as it happens I sold BARC a bit earlier than expected at 201p and put the proceeds into topping up Rotork at 287p. Rotork promptly rose to over 300p. Pure luck!

Best wishes

Mark.


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