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What's in your portfolio and why?

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
absolutezero
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What's in your portfolio and why?

#447618

Postby absolutezero » October 4th, 2021, 12:05 am

I spent some time over the weekend, not only giving some thought as to WHAT was in my portfolio, but also WHY I was holding it.
I thought this a useful mental exercise and I now have some doubts about one or two holdings and I may make some changes.
Astra Zeneca in particular has a question mark hanging over it. Low yield. Not very high ROCE.

Anyway, I was thinking maybe others would like to try a similar activity and post their portfolios here and we can offer our thoughts. It seems to be quite a common activity on the HYP board so it might be interesting to try it here.
Don't over think your reasoning too much.

I guess people might say 'What's the aim behind your portfolio? What's your strategy?'
In my case, some dividend income and some capital growth, and some inflation protection.
Basically a better return compared with leaving cash to rot in the bank.



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Re: What's in your portfolio and why?

#447629

Postby Dod101 » October 4th, 2021, 7:51 am

That is a very useful exercise and I have been practising it for a long while, although usually on 1 January when the exercise is included in my yearly review. It is to mind essential to keep the portfolio sharp and focussed. I do not think I am going to have time this week to do this because i find that it needs a certain frame of mind and some time.

Dod

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Re: What's in your portfolio and why?

#447630

Postby moorfield » October 4th, 2021, 7:56 am

absolutezero wrote:
I guess people might say 'What's the aim behind your portfolio? What's your strategy?'



I am aiming to grow my overall SIPP portfolio income by +7.2% per annum through reinvestment of dividends of HYPish holdings. +7.2% was a semi-arbitrary choice (*) inspired by the "rule of 72": ie. to double the income each decade. In practice it is intended to aim for the ballpark of and hold in line with inflation "roughly what a higher rate tax payer earns" (~£50k in today's money) in retirement which would be quite satisfactory.

(*) Further explanation of that here viewtopic.php?p=390906#p390906

Last progress update here: viewtopic.php?p=433003#p433003

As I get closer to that target I am starting to realize that I may not need to be holding so many individual shares and higher yield ITs can do the job for me. For the next 3-5 years I am planning to start building up some IT holdings also.

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Re: What's in your portfolio and why?

#447633

Postby scrumpyjack » October 4th, 2021, 8:30 am

sensible to do this, but I think it is also worthwhile to have a column for the negatives - 'Why should I consider getting rid of it?'

Dod101
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Re: What's in your portfolio and why?

#447636

Postby Dod101 » October 4th, 2021, 9:00 am

scrumpyjack wrote:sensible to do this, but I think it is also worthwhile to have a column for the negatives - 'Why should I consider getting rid of it?'


I agree but I cover it by writing in the right hand column something like 'Why indeed?'

Dodr

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Re: What's in your portfolio and why?

#447691

Postby dealtn » October 4th, 2021, 11:31 am

Top 10 holdings

LLOY Macro play on UK economy, combined with view that margin "jaws" widen on interest rate rise.
TET High ROCE and growth plans to expand capacity (coming on stream soon).
BVXP High ROCE and Operating Margin
BLND Macro play on UK economy, combined with interest rate and inflation view (and contrarian nature suggesting oversold).
WJG UK Property Play, model of pre-selling assets and securing ongoing management income.
CTO Niche company in busy industry with record order book.
GYM Self funding roll out story in Covid recovering sector of the economy.
MKS UK High Street turnaround story boosted by Ocado deal and Pension contrarian play.
LGEN Well run company with portfolio inflation hedge. Pension "problem solving demand" unlikely to fade and perhaps accelerate in overseas markets.
VTU Asset backed contrarian play in motor industry. Plenty of demand in servicing and second hand cars, despite consensus view on switch to BEV.

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Re: What's in your portfolio and why?

#447701

Postby absolutezero » October 4th, 2021, 12:24 pm

scrumpyjack wrote:sensible to do this, but I think it is also worthwhile to have a column for the negatives - 'Why should I consider getting rid of it?'

I did consider this but was:
1 - bothered the table would be too wide for most screens
2 - bothered that I would end up with a load of 'highest ever price' and there is nothing to stop a share that has increased in price increasing further.

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Re: What's in your portfolio and why?

#447712

Postby absolutezero » October 4th, 2021, 12:47 pm

dealtn wrote:Top 10 holdings

LLOY Macro play on UK economy, combined with view that margin "jaws" widen on interest rate rise.
TET High ROCE and growth plans to expand capacity (coming on stream soon).
BVXP High ROCE and Operating Margin
BLND Macro play on UK economy, combined with interest rate and inflation view (and contrarian nature suggesting oversold).
WJG UK Property Play, model of pre-selling assets and securing ongoing management income.
CTO Niche company in busy industry with record order book.
GYM Self funding roll out story in Covid recovering sector of the economy.
MKS UK High Street turnaround story boosted by Ocado deal and Pension contrarian play.
LGEN Well run company with portfolio inflation hedge. Pension "problem solving demand" unlikely to fade and perhaps accelerate in overseas markets.
VTU Asset backed contrarian play in motor industry. Plenty of demand in servicing and second hand cars, despite consensus view on switch to BEV.

Some interesting ones in here that I wouldn't touch with a bargepole! But that's what makes a market!
LLOY (banks are a minefield- the numbers looks good but it never seems to deliver), BLND (does it still have a lot of office space and retail parks?), MKS (good food but frumpy knickers - again looks good but never seems to deliver.).
I did hold CTO for a while (several times) but it went through my stop loss. The numbers look good but it never seems to deliver for me. Again!

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Re: What's in your portfolio and why?

#447714

Postby absolutezero » October 4th, 2021, 12:49 pm

moorfield wrote:
absolutezero wrote:
I guess people might say 'What's the aim behind your portfolio? What's your strategy?'



I am aiming to grow my overall SIPP portfolio income by +7.2% per annum through reinvestment of dividends of HYPish holdings. +7.2% was a semi-arbitrary choice (*) inspired by the "rule of 72": ie. to double the income each decade. In practice it is intended to aim for the ballpark of and hold in line with inflation "roughly what a higher rate tax payer earns" (~£50k in today's money) in retirement which would be quite satisfactory.

(*) Further explanation of that here viewtopic.php?p=390906#p390906

Last progress update here: viewtopic.php?p=433003#p433003

As I get closer to that target I am starting to realize that I may not need to be holding so many individual shares and higher yield ITs can do the job for me. For the next 3-5 years I am planning to start building up some IT holdings also.

I am moving more into ITs as well.
What's your rationale for holding AZN? That's the one that is causing me most headache. I sold most of it recently. It was once my biggest holding.

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Re: What's in your portfolio and why?

#447726

Postby dealtn » October 4th, 2021, 1:22 pm

absolutezero wrote:Some interesting ones in here that I wouldn't touch with a bargepole! But that's what makes a market!


I am very happy being contrarian so my preference (particularly with large caps) is when others are on the other side (especially when the reasons are "obvious").

absolutezero wrote:LLOY (banks are a minefield- the numbers looks good but it never seems to deliver),


Impossible Balance Sheets to read, they are so different to normal companies. A large reason for holding is for the increased margin (and perception that bad debt reserving will reverse) should interest rates rise. They haven't delivered (for me) yet as this hasn't yet happened! If it does, and I am right in what that will mean, it will offset the increased cost of variable debt I hold.

absolutezero wrote:BLND (does it still have a lot of office space and retail parks?)


Yes, and for me a good reason for holding! Not sure what you might expect a large Commercial REIT to hold if not a lot of office space and retail parks. See the above on contrarianism. I am very happy holding a property company when so many have worries about its "old economy" assets, yet is NAVP is well above the share price. I like the development potential in its Canada Water park particularly. There has been a lot of churn into newer economy assets anyway such as technology parks.

absolutezero wrote:MKS (good food but frumpy knickers - again looks good but never seems to deliver.).


Delivered well over the last year or so. The losses contain a large number of non cash (hopefully) one-off adjusting items. The cash flow report looks better than the P/L. The transition to online, and Ocado in particular, are pleasing. Pension is in surplus, and much of the debt is "overstated" under IFRS rules (in my opinion). Debt and Pensions the two biggest concerns for many shareholders generally and reasons why I want to be on the other side of this asymmetry.

absolutezero wrote:I did hold CTO for a while (several times) but it went through my stop loss. The numbers look good but it never seems to deliver for me. Again!


I never have stop losses. You might have been unlucky here as its been a riser over 5 years so it has consistently delivered for others. I might be out of this one at some point as it has broadly done the job, and has lower margins and ROCE than I would prefer.

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Re: What's in your portfolio and why?

#447729

Postby Dod101 » October 4th, 2021, 1:33 pm

Contrarianism has brought a lot of grief to many an investor, professional and otherwise. I have given up on it these days, preferring what I suppose might be called more instant gratification. I have never made anything on B land and long ago gave up on it and Land Securities, Segro and Primary Health Properties are I think my only REITs.

I cannot say that banks have done much for me in recent years. I hold only HSBC for its well known conservatism and keep hoping that it will come good but it has not in the last 20 years or so.

Dod
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Re: What's in your portfolio and why?

#447744

Postby moorfield » October 4th, 2021, 2:13 pm

absolutezero wrote:What's your rationale for holding AZN? That's the one that is causing me most headache. I sold most of it recently. It was once my biggest holding.



The portfolio's overall forecast income has already beaten its target set for this year, so I am now "hands-off", no tinkering needed. Or, "if it ain't broke, don't fix it". If next year's income target is missed, then AZN may well be in the frame for "upcycling" in fifteen months' time, we'll see.

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Re: What's in your portfolio and why?

#447762

Postby absolutezero » October 4th, 2021, 3:20 pm

dealtn wrote:
absolutezero wrote:Some interesting ones in here that I wouldn't touch with a bargepole! But that's what makes a market!


I am very happy being contrarian so my preference (particularly with large caps) is when others are on the other side (especially when the reasons are "obvious").

absolutezero wrote:LLOY (banks are a minefield- the numbers looks good but it never seems to deliver),


Impossible Balance Sheets to read, they are so different to normal companies. A large reason for holding is for the increased margin (and perception that bad debt reserving will reverse) should interest rates rise. They haven't delivered (for me) yet as this hasn't yet happened! If it does, and I am right in what that will mean, it will offset the increased cost of variable debt I hold.

absolutezero wrote:BLND (does it still have a lot of office space and retail parks?)


Yes, and for me a good reason for holding! Not sure what you might expect a large Commercial REIT to hold if not a lot of office space and retail parks. See the above on contrarianism. I am very happy holding a property company when so many have worries about its "old economy" assets, yet is NAVP is well above the share price. I like the development potential in its Canada Water park particularly. There has been a lot of churn into newer economy assets anyway such as technology parks.

absolutezero wrote:MKS (good food but frumpy knickers - again looks good but never seems to deliver.).


Delivered well over the last year or so. The losses contain a large number of non cash (hopefully) one-off adjusting items. The cash flow report looks better than the P/L. The transition to online, and Ocado in particular, are pleasing. Pension is in surplus, and much of the debt is "overstated" under IFRS rules (in my opinion). Debt and Pensions the two biggest concerns for many shareholders generally and reasons why I want to be on the other side of this asymmetry.

absolutezero wrote:I did hold CTO for a while (several times) but it went through my stop loss. The numbers look good but it never seems to deliver for me. Again!


I never have stop losses. You might have been unlucky here as its been a riser over 5 years so it has consistently delivered for others. I might be out of this one at some point as it has broadly done the job, and has lower margins and ROCE than I would prefer.

Must admit, being contrarian is in my nature - but for some reason not when it comes to shares.
I'm starting to consider one of the momentum investing 'rules'. Chris Dillow in Investors' Chronicle likes to dig into academic papers and he has found 'sell when a share goes below the 10 month moving average' (and the opposite for buying) works as a strategy to avoid losing money.

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Re: What's in your portfolio and why?

#447763

Postby absolutezero » October 4th, 2021, 3:22 pm

moorfield wrote:
absolutezero wrote:What's your rationale for holding AZN? That's the one that is causing me most headache. I sold most of it recently. It was once my biggest holding.



The portfolio's overall forecast income has already beaten its target set for this year, so I am now "hands-off", no tinkering needed. Or, "if it ain't broke, don't fix it". If next year's income target is missed, then AZN may well be in the frame for "upcycling" in fifteen months' time, we'll see.

So not an actual positive reason, more an 'it'll do' than anything else?

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Re: What's in your portfolio and why?

#447765

Postby 77ss » October 4th, 2021, 3:24 pm

absolutezero wrote:.......
What's your rationale for holding AZN? That's the one that is causing me most headache. I sold most of it recently. It was once my biggest holding.


I can't answer for moorfield of course, but for me it is quite simply performance.

Like you, I am interested both in a bit of income and some capital growth. I am not too bothered about the precise balance.

I bought AZN nearly 11 years ago, when the yield was 5.38%. Since then, the dividend hasn't budged - 280c year in, year out. Not exciting, but the share price has almost tripled and my XIRR is about 18%. Works for me. Looking to the future rather than the past, I keep an eye on its oncology division.

I have topped up twice so far this year and AZN now forms 3.4% of my holdings.

Looking at your holdings, I would be much more inclined to trim ULVR. I hold this (2.6%), but am starting to wonder whether it is worth the candle.

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Re: What's in your portfolio and why?

#447774

Postby Dod101 » October 4th, 2021, 3:44 pm

I divide my holdings very broadly in to Held for Yield and then Held for Growth. That helps me very broadly to judge individual shares whether they are ITs or individual shares. They need in my book to fit into one or the other category, although some will sit rather in the middle which I do not mind.

However after my rather sad experience with the two tobaccos I want Held for Yield shares to show some growth as well, which is why I have ditched HFEL for instance. I still hold the tobaccos but should get rid of Imperial Brands.

As I said, I look at this sort of thing at the year end.

Dod

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Re: What's in your portfolio and why?

#447775

Postby monabri » October 4th, 2021, 3:51 pm

I've re-arranged the cards. The portfolio is income focussed (80%) with growth elements (20%) - numbers don't tally to 100% (close) but that's because of rounding in the original presentation.

The question for me would be, where do I concentrate on next - carry on increasing the income bearers (perhaps adding international ITs such as MYI) or growth? If "growth", would one adopt passive investment or active ?

Image

edit: I guess that this is what Dod is saying.

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Re: What's in your portfolio and why?

#447779

Postby moorfield » October 4th, 2021, 3:58 pm

absolutezero wrote:
moorfield wrote:
absolutezero wrote:What's your rationale for holding AZN? That's the one that is causing me most headache. I sold most of it recently. It was once my biggest holding.



The portfolio's overall forecast income has already beaten its target set for this year, so I am now "hands-off", no tinkering needed. Or, "if it ain't broke, don't fix it". If next year's income target is missed, then AZN may well be in the frame for "upcycling" in fifteen months' time, we'll see.

So not an actual positive reason, more an 'it'll do' than anything else?



On the contrary. My AZN is contributing to an income stream which is on target to meet my retirement objective - I'd say that is quite a positive reason!

I don't have much time or inclination to analyse all of my holdings regularly to try and find reasons to sell. I buy pretty much as Stephen Bland prescribed - FTSE350, high yield, track record of paying dividends - and am happy to leave alone until a problem shows up at the "macro" level, ie. overall income vs. target. AZN was on the block for the chop earlier this year, but survived as there were a few other zero/low yielders that needed "upcycling" first in my post-covid clearout.
Last edited by moorfield on October 4th, 2021, 4:06 pm, edited 2 times in total.

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Re: What's in your portfolio and why?

#447783

Postby simoan » October 4th, 2021, 4:03 pm

Interesting. This is pretty much a constant exercise for me, however rather than just consider the positive reasons for why you hold an investment you really also need to consider the negative aspects; it's possibly even more important to consider these because there is always something i.e. for several of the companies you list there is an obvious regulatory risk, which is something I always try and avoid.

All the best, Si

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Re: What's in your portfolio and why?

#447797

Postby tjh290633 » October 4th, 2021, 4:54 pm

Here are my top 10 ranked by wseight:

Value                               
Rank EPIC Weight IRR of Holding Why?
1 IMI 3.76% 44.52% Bought at low price, still giving performance.
2 DGE 3.52% 15.58% Bought when yield was 4.37%. Keeps increasing dividend.
3 AV. 3.44% 5.38% Bought when yield was 6.53%, recovering after Covid shock
4 S32 3.43% 8.02% Spun out of BHP, recovering from Covid shock
5 BP. 3.35% 7.79% Held since privatised.
6 LGEN 3.18% 11.49% Bought on a yield of 6.2%, keeps increasing dividend.
7 BA. 3.13% 11.15% Spun out of GEC, Dividend keeps increasing.
8 PSON 3.13% 3.21% Dividend recovering gradually after change of focus.
9 ADM 3.11% 16.96% Keeps on giving
10 SGRO 3.05% 10.47% Dividend keeps on increasing, proxy for on-line sales.


Probably better to ask why do I still keep the 10 lowest yielding shares?

Yield                
Rank EPIC Yield
27 LLOY 2.74% Recovering
28 PSON 2.73% See above
29 S32 2.66% See above
30 AZN 2.30% Static dividend but price on a roll
31 DGE 2.05% See above
32 SGRO 1.87% See above
33 IMI 1.39% See above
34 MKS 0.00% Recovery in price, needs dividend resumption
35 MARS 0.00% Its day will come
36 CPG 0.00% Recovery in price, needs dividend resumption


Note the presence of 5 shares in both lists.

TJH


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