Massacre of the HYP

[BreakoutBoy]

Following the massacre of the HYP shares that I felt were not good LTBH bets, and the redeployment of funds to topup my collective investments, this is the current state of the portfolio. I now have roughly 55% individual shares, 20% VWRL and 20% Investment Trusts, 5% OEICs. This is a compromise between the fun I have stockpicking, the reality that the professionals (and robots!) do it better than I do, and the level of fees I am willing to pay for the privilege...

Company Name                            | Ticker  | Sector                                 | Value as % of Total
Ashley (Laura) Holding                  | ALY     | General Retailers                      |               0.96%
Aviva                                   | AV      | Life Insurance                         |               2.73%
Berkeley Group Holdings (The)           | BKG     | Household Goods & Home Construction    |               2.45%
City of London Inv Trust                | CTY     | Equity Investment Instruments          |               4.90%
Galliford Try                           | GFRD    | Construction & Materials               |               3.28%
Imperial Brands                         | IMB     | Tobacco                                |               4.00%
Legal and General Group                 | LGEN    | Life Insurance                         |               5.35%
Murray International Trust              | MYI     | Equity Investment Instruments          |               3.30%
Pearson                                 | PSON    | Media                                  |               1.57%
Royal Dutch Shell 'B'                   | RDSB    | Oil & Gas Producers                    |               3.64%
Rio Tinto                               | RIO     | Mining                                 |               4.65%
SSE                                     | SSE     | Electricity                            |               3.02%
HSBC Holdings                           | HSBA    | Banks                                  |               4.97%
Unilever                                | ULVR    | Food Producers                         |               2.01%
Henderson Smaller Companies Inv Trust   | HSL     | Equity Investment Instruments          |               5.92%
Royal Mail                              | RMG     | Delivery Services                      |               1.00%
Scottish Mortgage Inv Trust             | SMT     | Equity Investment Instruments          |               4.62%
BT Group                                | BT-A    | Fixed Line Telecommunications          |               1.73%
Inmarsat                                | ISAT    | Mobile Telecommunications              |               2.68%
Petrofac Ltd.                           | PFC     | Oil Equipment, Services & Distribution |               3.26%
Manchester & London Investment Trust    | MNL     | Equity Investment Instruments          |               2.47%
Vanguard FTSE All-World UCITS ETF (GBP) | VWRL    | Passive Global Tracker                 |              20.16%
Cash                                    | ZCASH   | Cash                                   |               3.49%
Berkshire Hathaway B                    | BRK     | Insurance & Rail Conglomerate          |               2.23%
Fundsmith Equity I Acc                  | B41YBW7 | Consumer Goods OIEC                    |               5.63%

I would be grateful for any thoughts and comments. There are a few losing positions such as Pearson that I am foolishly hanging onto to avoid crystallising a loss. I cant escape my monkey psychology on those... The last wodge of cash will probably buy more Fundsmith to be honest: Terry Smith is worth his 1% in my opinion....

[Dod1010]

It depends what you are trying to do. Long term growth it would seem, rather than going for income. In which case rather than more Fundsmith why not get exposure to Nick Train. I think the best way into him would be via Finsbury Growth and Income. I hold it and it is doing well for me, even although It has a holding of Pearson in it.

Of your individual holdings, I would imagine that many will be held in the City of London IT but no matter. You otherwise seem to have a good international spread.

HTH

Dod

[BreakoutBoy]

Thanks for the thoughts Dod. I am looking for diverse international total return really, though any income is always welcome. The running yield on that lot according to HYPTUSS is predicted at 3.7%, though there are a few dividends that are somewhat questionable (PFC, ISAT and RDSB) and one that I am convinced the company will pass on as it probably wont generate sufficient cash to write the cheque (ALY).

Despite the near market yield, I think I have given myself a few opportunities for capital growth, if the likes of SMT and HSL are able to pick a few winners. A decent oil price might give RDSB a boost, ISAT has a great product and is going to do really well with internet on planes and at sea, Petrofac may see off the SFO. RIO seems to be benefiting from Chinese demand (that probably will run and run). Fundsmith will likely carry on regardless of what the general market does with its quality blue-chips that seem impervious to assault.Unilever is on a roll unlocking shareholder value to fend off Kraft.

Even Pearson may surprise everyone by actually selling some courseware and books for once!

So there are some good prospects for growth I hope. And loads of international diversification from just about everything, which after Brexit proved its worth as a good wealth preserver for me!

On the downside: ALY is in all sorts of trouble, Petrofac could get a massive fine, RIO's commodities could die a death again and the oil price could hit 20 dollars dooming RDSB to a painful dividend cut. Pearson could carry on being utterly pants and run by eejits, Royal mail is running out of snail mail, and the government could kill my nice little SSE dividend cash cow.

Hopefully the good stuff will outweigh the bad, long term!

[Dod1010]

I think the fact that you seem to have a story for each of your holdings is very helpful. I like to do that as well so that a) you know why you bought and b) you know what you are expecting from the share.

I would not hold Laura Ashley as I am avoiding all retailers for now, and in particular supermarkets but also the likes of Laura Ashley and Next. I think the only exposure I have is Primark, via ABF and it is doing well (so of course was Next until not long ago) I am not keen on Aviva. It always seems to manage to get it wrong after two or three decent years for some reason.

I recommend reading the Annual Report of Scottish Mortgage if none other as James Anderson is very good with a very broad outlook.

Good luck.

Dod

[YeeWo]

and the oil price could hit 20 dollars dooming RDSB to a painful dividend cut.

Royal Dutch has either maintained or grown the dividend since 1945. It'll be a very brave CEO indeed who makes the "cut" decision. I hold RDSB and will be as shocked as everybody else when/and or if it happens.

Pearson could carry on being utterly pants and run by eejits

I hold RELX in this sector, Mrs YW works there! I asked her about Pearson and she could see nothing that Pearson has which won't be taken away from it either by technology or competition. Pearson selling the FT (family silver!) seems to smack of Managerial Desperation. I cannot see a reason to buy Pearson, therefore I can see no reason to hold. SELL!

Royal mail is running out of snail mail

I got some Royal Mail stock via the IPO, took my carpet-bagging-proceeds and haven't seriously thought about investing in the stock since.

Hopefully the good stuff will outweigh the bad, long term!

As do we all! Good Luck........

[BreakoutBoy]

The life insurers have had a good run of late and still look cheap to me. I freely admit to taking a gamble based on PE and a decent yield here, given that that their accounts are largely opaque to a non-actuary like me. The shareholder discount perks helped make my mind up here also, and have materially bumped the value I get from the insurance shares.

[BreakoutBoy]

YeeWo, Thanks for the input,

The more I look at Pearson the nastier it gets: Pearson will be sold, I think, because there is really no unique or compelling reason to own it. I think ALY will go too. I am hoping the big Laura Ashley divorce might prompt a trade sale...

I just cant pull the trigger on RELX. A disruptor like SciHub is surely the future, and the trend towards open access is going to strain the current academic publishing business model eventually...

I am coming to the conclusion that I should avoid the media sector altogether as it seems the FANGs will swallow up all the old business models eventually.

[YeeWo]

The more I look at Pearson the nastier it gets: Pearson will be sold, I think, because there is really no unique or compelling reason to own it.

I agree!

I think ALY will go too. I am hoping the big Laura Ashley divorce might prompt a trade sale...

It's only 0.96% of your portfolio. It is best to either add or sell.

I just cant pull the trigger on RELX. A disruptor like SciHub is surely the future, and the trend towards open access is going to strain the current academic publishing business model eventually...

Brands such as The Lancet have real tangible value. Academic research needs monetising some-how, Elsevier does have a sustainable niche. I think the day of Wikipedia Doctors are a very long way off. RELX's SP does seem quite high, however the business does sustain a high ROCE which I always consider a good sign!

I am coming to the conclusion that I should avoid the media sector altogether as it seems the FANGs will swallow up all the old business models eventually.

I hold WPP also which does seem under the weather at the moment. Again, as per RELX, these are fundamentally good businesses that can maintain progressive dividends and high ROCEs because the core businesses aren't highly capital intensive.

If you're going to maintain your holding in BT it may be worth topping-up? I've recently bought and sold BT, please read the post on this site. BT does however currently tick many HYP boxes........

[Steveam]

Perhaps a bit more towards Emerging Markets and Asia Pacific? My portfolio is, like yours, not "purist" but suits me. I think the fact that you comment on enjoying the stock picking but recognise downsides to this says a lots about you understanding yourself.

Best wishes,

Steve