Should I top-slice any of our Marshalls holdings?

[moorfield]

Any advice appreciated,
Matt and Mel

(BTW we are investing for growth and income, i.e. not pure HYP etc. in case that effects people's advice)

My first thought would be to dilute your MSLH holding by topping up elsewhere over time. I've sometimes felt regular top-slicing a la TJH is overkill for builders who are investing regularly (both growth and income or HYP), and suspicious of its hidden costs. For example, to top-slice your £2789 holding may cost you some 3.3% of the £697 tinkered:


(*) AJ Bell rates: 1 x sell £9.95 + 1 x buy £9.95 + 0.5% stamp duty

So don't get carried away with top-slicing for the sake of top-slicing, and keep an eye on your costs.

[TheMotorcycleBoy]

Many thanks, TJH, for taking the time to do this!

Assuming that "MRKT" is the current value of each holding, then sort on that column to rank holdings by value. I think that you have 30 holdings, excluding "Cash", and so the median is the average of the value of the 15th and 16th holdings. You can also get the value using Excel's MEDIAN() function, applied to your list.

Ah ha..... I kinda knew the concept of a median, but your example of application to our foli makes it's use crystal clear. To be honest, though, I'm still not 100% sure about how exactly we wish to weight our holdings at this stage in our investment "career". To be honest I am fairly content with the World Index tracker and the FTSE100 stocks being quite heavily weighted, and the reasoning for BUR(AIM) being currently quite heavy is because, after scrapping two losers late last year (2xDominos and Dignity) I used those released funds to top up Spirax Sarco and due to opportunity, and the way my multiple choice limit buys came in two extra Burford top ups.

MSLH(FTSE250) is obviously relatively heavy and amongst the FTSE100s in our foli, due to reasons mentioned earlier on, it was my pet analysis project come good (so far!!).

So in conclusion, I'm probably not at the stage yet to think of regularly balancing a foli, but rather that we saw the potential of redeploying surplus capital from a possibly over-valued winner to another stock which is still promising but is currently yielding higher.

Matt

[TheMotorcycleBoy]

So don't get carried away with top-slicing for the sake of top-slicing, and keep an eye on your costs.

Thanks for this Moorfield. We are fortunate (?) in that our broker only charges £5 per trade (and then 0.5% stamp). But still you are right about the costs, and it is a concern of mine. I think were I to topslice MSLH it would have to be at least £800 (0.625%) worth of stock. And the only place I'd be considering putting that kind of (small) sum into would be an AIM one where we'd see another 0.625% loss due to fees.

The only possible AIM recipient in our foli I can think of right now to deploy this cash would be ZYT (Zytronic) which currently yielding 7-8% and is a cash rich firm. However, then (in the case of ZYT) there is the challenge of liquidity, since there seems to be a big spread on stock price......I've frequently put in limit-buy orders at the quoted market price (i.e. middle of the spread) for them (ZYT) for them not to get triggered for a day or so.

So this outlines your earlier point that:

My first thought would be to dilute your MSLH holding by topping up elsewhere over time.

is probably the way to go. In other words save our pennies!

Matt

[tjh290633]

Any advice appreciated,
Matt and Mel

(BTW we are investing for growth and income, i.e. not pure HYP etc. in case that effects people's advice)

My first thought would be to dilute your MSLH holding by topping up elsewhere over time. I've sometimes felt regular top-slicing a la TJH is overkill for builders who are investing regularly (both growth and income or HYP), and suspicious of its hidden cost

So don't get carried away with top-slicing for the sake of top-slicing, and keep an eye on your costs.

You are quite correct in saying that there should be no real need to trim holdings in the building phase. Just bring underweight holdings up if you are not adding new holdings.

Nevertheless, if a holding does run away, you may be obliged to do something about it.

TJH

[TheMotorcycleBoy]

Any advice appreciated,
Matt and Mel

(BTW we are investing for growth and income, i.e. not pure HYP etc. in case that effects people's advice)

My first thought would be to dilute your MSLH holding by topping up elsewhere over time. I've sometimes felt regular top-slicing a la TJH is overkill for builders who are investing regularly (both growth and income or HYP), and suspicious of its hidden cost

So don't get carried away with top-slicing for the sake of top-slicing, and keep an eye on your costs.

You are quite correct in saying that there should be no real need to trim holdings in the building phase. Just bring underweight holdings up if you are not adding new holdings.

Nevertheless, if a holding does run away, you may be obliged to do something about it.

Ok, sure. So what you are saying is that regardless of being at a building or drawing phase, be prepared to act if a holding value changes markedly in either an up or down direction?

But in my current individual case with MSLH, probably due to a mix of factors, e.g. holding size, relative costs, lack of suitable alternative, and of course the fact that I don't (yet?) have a plausible way to conclude that it is significantly over-valued, then the best action seems to be to hold.

Matt

[moorfield]

Ok, sure. So what you are saying is that regardless of being at a building or drawing phase, be prepared to act if a holding value changes markedly in either an up or down direction?

I drift O/T from MSLH a little into (HYP) portfolio management; for me other metrics come into play here - changes markedly means a yield that dips below that of CTY.L is not added to (letting dilution do its work elsewhere), and a yield that then dips below half of that is sold (same income can be bought elsewhere at half the cost).

Looking at some hypothetical price changes in my portfolio last week:
UU. - a sp increase from 848p to >894p would be held and not added to
AZN, ULVR - sp increases from 6293p to >9718p and 4139p to >6149p would be sold - quite marked changes!

[TheMotorcycleBoy]

Ok, sure. So what you are saying is that regardless of being at a building or drawing phase, be prepared to act if a holding value changes markedly in either an up or down direction?

I drift O/T from MSLH a little into (HYP) portfolio management; for me other metrics come into play here - changes markedly means a yield that dips below that of CTY.L is not added to (letting dilution do its work elsewhere), and a yield that then dips below half of that is sold (same income can be bought elsewhere at half the cost).

Don't worry about going O/T. This kind of distraction is very useful still.

Looking at some hypothetical price changes in my portfolio last week:
UU. - a sp increase from 848p to >894p would be held and not added to
AZN, ULVR - sp increases from 6293p to >9718p and 4139p to >6149p would be sold - quite marked changes!

I guess you mean topslices from the last two, not outright sales i.e. position-exits?

Matt

[moorfield]

Looking at some hypothetical price changes in my portfolio last week:
UU. - a sp increase from 848p to >894p would be held and not added to
AZN, ULVR - sp increases from 6293p to >9718p and 4139p to >6149p would be sold - quite marked changes!

I guess you mean topslices from the last two, not outright sales i.e. position-exits?

An outright sale in such scenarios is envisaged. But that hasn't happened in my portfolio (yet) and in practice an exit, top-slice or even hold may be influenced by other factors. When/if it does, I'll certainly update my own thread on Portfolio Management & Review.

[tjh290633]

By changes markedly I meant to imply an upward movement, taking the holding considerably above the current median value, or above 10% of portfolio value, depending on the number of holdings that you have.

The other change, if you are income oriented, is a sharp reduction, or cessation, of dividend payments. This may lead to a perverse share price movement.


Massively overweight holdings are the main risk.

TJH

[Pastcaring]

All this wonderful crystal ball gazing and the inside invented language,the silly acronyms etc

My Cimic annual report arrived yesterday.I' ve mentioned it before ,Leighton contractors,in business since 1899 it tells me.I thought it was 1947,buying up ex world war 2 tanks to use as heavy earthmovers in Queensland.

Taken over by a Spanish firm that took over the German firm that was the major shareholder.

Now the good bit,5 year performance as required by the Corporations and various other acts.Page46.

Opening price 1/1/14 $16.28.Closing price today around $50 I think.I never bother looking so I don't really know.

All useless,but that is my spread sheet.I bought them after a fall in around 2004.Cost overruns on a project,price tanked,down from $11 to around $7.50 I think.

You beauty,dive in,a director of a company I have told me to buy them around 1996 ,he was also a director of Leighton's then.Silly me ignored his advice.

They went up to $62 by 2007,aren' t I a genius.They held up well during the GFC and then collapsed when Dubai collapsed.The $16.28 as late as 2014 surprises me.

Now all this nonsense they come up with( I' ll put it politely).Why didn' t they tell us,all these experts with the nonsense they spout.

Why didn' t they tell us,spend $162 K,use the dividends to pay the interest on the loan .

Now what do we do today,sell them because this is as high as they go,hang on to them,top slice,rebalance,ask everybody else what they think I should do.

Examine the annual report with a magnifying glass and say now I can predict the future

If the dog barks three times in the morning does it mean the share price will rise this year.If the dog barks twice does it mean the share price will fall.If the dog does not bark at all what do I do,use the fall back of. ( insert name of company here ) went bust.Panic,end of the world is nigh,sell as quick as you can.

The dog has as much chance at predicting the future as everybody else has ( probably more I think,wish I could teach the dog how to toss a coin).

Now on page 242 the page that I like,how many people disagree with me.That page tells me that 4,202 people in the whole of the world or Australia if you prefer own between 1000 and 5000 shares in that company.

Now I' ll be really silly here,I' m not in the slightest bit interested in asking any of them what their opinion is.

Plan A is the same as always,hands under the arts end do nothing at all and keep collecting dividends twice a year.

Use a bit of common sense.

If they knew what was going to happen they' d be buying shares,not selling advice.Who could believe that

TBH I' m even a bit dubious about the dog's ability these days,it' been wrong a few times.

[Pastcaring]

I forgot,I spent years being annoyed that they did not have a DRP,but I' m over it now,or fooling myself I am over it.

The German firm did not want to be diluted using a DRP or have the expense of buying shares to cancel to neutralise the DRP.

The Spanish firm are the same ( I' m not over the lack of a DRP actually ).

Then of course the top 4 shareholders own 90% of the shares on issue Not really a lot of trading done in it,makes it very volatile,thank god I am very patient and far too lazy to take my hands out from the arts end.I have standards to keep.

[Itsallaguess]

I forgot,I spent years being annoyed that they did not have a DRP, but I'm over it now,or fooling myself I am over it.

The German firm did not want to be diluted using a DRP or have the expense of buying shares to cancel to neutralise the DRP.

The Spanish firm are the same (I'm not over the lack of a DRP actually ).

Then of course the top 4 shareholders own 90% of the shares on issue Not really a lot of trading done in it, makes it very volatile, thank god I am very patient and far too lazy to take my hands out from the arts end.I have standards to keep.

I've never liked the idea of a dividend-reinvestment plan....

I'm also not sure that your clear fondness for them, along with your large reliance on a really small number of investments for the bulk of your dividend-income, can be a huge coincidence....

If there's re-investment of dividends to occur, I like the idea of being able to direct that investment towards existing or new holdings, with a view to being able to carry out some fairly regular portfolio maintenance at the same time as enabling me to select the most appropriate return that a given re-investment might be able to muster at that point.

When I say portfolio maintenance, I mean being able to carry out some re-balancing of either capital or income, to help alleviate what it often a natural tendency for portfolios to become 'lumpy' if this maintenance were not to occur. I don't think this would have to happen all that often for it to be a significant factor in achieving a relatively good level of portfolio-balance over a number of years, and I really don't think that it would take that much work for it to go against any real desire for continued 'laziness'....

It's clear that you don't see portfolio 'lumpiness', either in the capital or income areas, as something to worry about, but it would worry me if I were to hold your portfolio, so this is an important process for me as an individual investor to consider.

I think there's two sides to risk - the chance of something occurring, and also the consequences if something were to occur.

Personally, I think that holding a very 'lumpy' portfolio in capital and income terms would be to only perhaps look at the first part of that risk-consideration, and ignore the second....

I appreciate that we're never likely to agree on this point....

Cheers,

Itsallaguess

[TheMotorcycleBoy]

Well we are currently still holding our MSLH. It's £6 or thereabouts now.

From me and Mel's perspective it emphasises how our views on shares have changed over the last year and how unpredictable these things are. Our first holding bought last March at 449p/share spent probably the first 9-10 months languishing below this initial price. For a while the sight of all the gazillions of Marshalls lorries I pass daily on the roads, used to remind me of "that buy-at-too-high" decision. But as time went by I gradually remembered the divi, and then as I remarked earlier, I decided to "average down" last December and ride it out.

Obviously prices can go either way, but experiences recently are teaching us more about upfront research and analysis, and buying with a commitment to hold for a long term.

Matt

[PrefInvestor]

I’ve never been a lover of DRIP or SCRIP or any of those schemes. Its not that I don’t believe in dividend re-investment, I emphatically DO but I see problems with these schemes:-

1. My broker doesn’t let me take SCRIP or DRIP organised by a company, so unless I open a new account with a broker that does then this isn’t any option for me.
2. My broker wants me to use their automatic dividend re-investment scheme for which they charge 1% (£1 minimum, £10 maximum) which is admittedly much less than for a normal trade.
3. My broker decides on the timing of any such purchases which are simply done “sometime between 11th and 21st of the month with zero regard to the price of the stock at the time, which may not be good for your holding average. I have heard many complaining that their DRIP was done just when the share price peaked - not nice.
4. My holding sizes are deliberately quite small anyway as a matter of policy, so these schemes would only give me a handful of shares. So no great loss I figure.

To avoid these issues I ALWAYS save up my dividends across ALL my holdings and spend them on something of my choice when I have accumulated ~£3,000 i.e enough to permit a normal trade which is not too damaged by broker commission and stamp duty and done at what I consider to be a good price (usually via a limit order).

The purchase might be a top-up to something I already hold or something completely new. Either way I will consider the effect on the balance of my portfolio before investing – that way my portfolio holdings wont drift out of balance thru automated additions being done periodically.

ATB

Pref

[PLS1nve5t]

Why not put a stop loss sell order on them, say £5.59 and lock in a chunk of gains ?
Then if they carry on up, raise the stop behind the increasing price.

If something changes (or a better opportunity occurs), you can still sell at market price whatever it is.

Regards - Pete

[TheMotorcycleBoy]

Why not put a stop loss sell order on them, say £5.59 and lock in a chunk of gains ?
Then if they carry on up, raise the stop behind the increasing price.

If something changes (or a better opportunity occurs), you can still sell at market price whatever it is.

Regards - Pete

Oh I get it, protect oneself against losing a whole bunch if it goes back down.

TBH though I'm fairly confident (FLW) about MSLH in general, so for us I think it's either a topslice when they are very high or just hold and topup if and when they next fall and I have the £££. They are now at £6.18 when I looked. I'm wondering if they are getting a boost because we have several rumoured (e.g. HS2) and ongoing (e.g. A14M and A1M upgrades) infrastructure projects happening in the country. But who knows? If I had more time I guess I should do some more research!!

Without a lot more in depth about them and a possible forecast of the exact way their market is going I think that it's impossible to call.

I've just finished a good Investing read. In a nutsheel the author reviews about 10 famous investors and describes their biggest mistakes. There's so many mixed messages that clearly there is no right answer. On the one hand we have the adage to cut losses, and on the other (Charlie Munger?) the ability for ones psyche to handle (hopefully temporary) big losses without quitting. My read of this also made me think a bit about the Anchoring concept - which I suppose works both ways, both on compounding regret (i.e. forcing us to make a lossy sale) if we sell when the current price is below our entry point, or (a lot) above our entry point and we are unsure about whether to crystallise a gain (i.e. forcing us to make a profitable sale).

FWIW we are still holding!

[PLS1nve5t]

They are now at £6.18 when I looked. I'm wondering if they are getting a boost because we have several rumoured (e.g. HS2) and ongoing (e.g. A14M and A1M upgrades) infrastructure projects happening in the country. But who knows? If I had more time I guess I should do some more research!!

FWIW we are still holding!

I'd ignore the hype (with an e ) and concentrate on the SP. Now at £6.23 I'd be raising the stop to about £5.79, give it space to breath and lock in more profit....

[TheMotorcycleBoy]

They are now at £6.18 when I looked. I'm wondering if they are getting a boost because we have several rumoured (e.g. HS2) and ongoing (e.g. A14M and A1M upgrades) infrastructure projects happening in the country. But who knows? If I had more time I guess I should do some more research!!

FWIW we are still holding!

I'd ignore the hype (with an e ) and concentrate on the SP. Now at £6.23 I'd be raising the stop to about £5.79, give it space to breath and lock in more profit....

TBH I'm keener on taking a chance that it might rise higher (and I'll miss some) by taking a slice (say 33% from one of our holdings) than setting a stop to catch it on the way down. After researching the firm I'm quite confident (currently) that the cash flow and earnings are good, so even if it does fall I'm reasonably content (i.e. may re-purchase more if low).

But now it is starting to make me dizzy at 636.50p. I calculate that's about 51% up on the holding in my ISA in the last 3-4 months. Arrgh! I'm very tempted to set a sell order tomorrow at say 642p for about £500's worth. Thing is then I lose 1% (£5 sell fee). Then I when I next add funds (April 8th) that £500 goes towards another holding in something...

I probably now need some LTBH people to chastise me and say this is silly, and if I'm really confident in the firm (I am), then I should just hang in and accept it will go up and down with the passage of time.

Help needed. Matt.

[ReformedCharacter]

I probably now need some LTBH people to chastise me and say this is silly

Yes, you do.

RC

[BusyBumbleBee]

I probably now need some LTBH people to chastise me and say this is silly, and if I'm really confident in the firm (I am), then I should just hang in and accept it will go up and down with the passage of time. Help needed. Matt.

I am not LTBH, being more of a trader but I only sell when

a) there is another share that will do better
b) the switch will increase my dividend income in the short to medium to long term
c) my trading costs are minimised

I won't chastise you either way (and I don't know Marshalls at all) but I would hang on in there as any switch you are thinking of making does not meet my 3 criteria.