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Confession
Forum rules
Tight HYP discussions only please - OT please discuss in strategies
Tight HYP discussions only please - OT please discuss in strategies
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- Lemon Slice
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Confession
Today, after holding them for over ten years, I have sold all my shares in Electrocomponents.
I'd like to say it was triggered by hard and fast HYP rules that have been honed over the years, that it was a sentiment-free transaction resulting from masses of data gathering and carefully crafted algorithms. I could try to justify it on the grounds that the yield has dropped below 2.5% or that the capital value had risen to x% above median - which could indeed be grounds for "trimming" in some people's books.
But no, I sold because I just fancied it!
I don't tinker very much at all these days, I've learned that it really doesn't pay dividends (chortle) in the long run. But for some reason I just felt the need to go with my gut on this one. The shares are up nearly 150% in a year and are now at a price not seen since their retreat from the dotcom days. I know they have been trumpeting excellent growth in profits, but the historical PE is now 37+ and they are talking about improving dividend cover (which has been woeful) so I can't see a startling increase coming in the divi.
Perhaps trimming was the way to go, but the meteoric (by their standards) rise in sp, allowing me to bank a profit of well over twenty years worth of payouts at the current dividend, proved irresistible.
I'm tempted to use half the proceeds to replace the lost income and treat myself to something nice with the rest. I've had a few rude reminders about the brevity of life lately and my HYP income requirements are lower than initially expected.
Still, I feel like a bit of a heretic...
I'd like to say it was triggered by hard and fast HYP rules that have been honed over the years, that it was a sentiment-free transaction resulting from masses of data gathering and carefully crafted algorithms. I could try to justify it on the grounds that the yield has dropped below 2.5% or that the capital value had risen to x% above median - which could indeed be grounds for "trimming" in some people's books.
But no, I sold because I just fancied it!
I don't tinker very much at all these days, I've learned that it really doesn't pay dividends (chortle) in the long run. But for some reason I just felt the need to go with my gut on this one. The shares are up nearly 150% in a year and are now at a price not seen since their retreat from the dotcom days. I know they have been trumpeting excellent growth in profits, but the historical PE is now 37+ and they are talking about improving dividend cover (which has been woeful) so I can't see a startling increase coming in the divi.
Perhaps trimming was the way to go, but the meteoric (by their standards) rise in sp, allowing me to bank a profit of well over twenty years worth of payouts at the current dividend, proved irresistible.
I'm tempted to use half the proceeds to replace the lost income and treat myself to something nice with the rest. I've had a few rude reminders about the brevity of life lately and my HYP income requirements are lower than initially expected.
Still, I feel like a bit of a heretic...
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- Lemon Quarter
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Re: Confession
Confession is good for the soul.
However, you are going to HYP-hell.
Seriously, I can see the temptation with a 150% increase. I think I would have avoided this simply because I don't track that closely the performance of individual shares in my portfolio.
However, you are going to HYP-hell.
Seriously, I can see the temptation with a 150% increase. I think I would have avoided this simply because I don't track that closely the performance of individual shares in my portfolio.
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- Lemon Quarter
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Re: Confession
TRADER!
As you say 20 years income in capital appreciation does make one think. I try not to sell, holding on for the increasing income. I have been in your position with rapidly increasing capital sums, I held on and saw some of the shares fall back and other keep growing, in most instances the effect of appreciating share price leading to lower yield still gives an increase in per share income my key metric.
As you say 20 years income in capital appreciation does make one think. I try not to sell, holding on for the increasing income. I have been in your position with rapidly increasing capital sums, I held on and saw some of the shares fall back and other keep growing, in most instances the effect of appreciating share price leading to lower yield still gives an increase in per share income my key metric.
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- Lemon Quarter
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Re: Confession
CryptoPlankton wrote:Today, after holding them for over ten years, I have sold all my shares in Electrocomponents. ...for some reason I just felt the need to go with my gut on this one. The shares are up nearly 150% in a year and are now at a price not seen since their retreat from the dotcom days..
I can see the temptation, I must admit I was taken aback somewhat when preparing my Christmas review. I have held ECM since 2011, this year they were my largest holding at 6.9% of my HYP by capital. A year ago they were only 14th at 3.7% - the strongest rise in a HYP that is unchanged over the year.
I don't think I'm tempted though. The one time I deliberately trimmed my top holding (BT in 2014) hasn't worked out well - I'd have done better (for income and capital) by sitting on my hands.
Let's hope your luck is better...
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- 2 Lemon pips
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Re: Confession
In a 20 share HYP that capital appreciation is likely equivalent to an entire year of dividend income (assuming a 5% yield). Perhaps you could purchase a median holding in something else, add the profits to your income reserve and reinvest all dividends over the coming year?
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- Lemon Half
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Re: Confession
I chose Premier Farnell over ECM in January 2008, mainly because ECM seemed to stagnate and had very low dividend cover. I see that I was able to trim back twice, in June 2008 and April 2010, when it went overweight. I added more in September 2011, June 2012, July 2014 and July 2015 before selling out in advance of the takeover in June 2016. Until the dividend was reduced in 2015 the yield was usually topside of 5%.
The following table compares its price with the movements in the FTSE100 on the dates when I dealt:
My IRR was 10.5%, and it can be seen that it outpaced the Market unitl the very last moment. That coupled with an above average yield encouraged me to hang on to the shares. I have had ECM on my watchlist as a potential replacement, but the yield has never been high enough. I don't blame you for selling up.
TJH
The following table compares its price with the movements in the FTSE100 on the dates when I dealt:
Date PFL FTSE100 Rebased Ratio
17-Jan-08 £1.4196 5,879.80 £1.4196 100.0% Bought
16-Jun-08 £1.8373 5,625.90 £1.3583 135.3% Trimmed
07-Apr-10 £2.3798 5,553.29 £1.3407 177.5% Trimmed
12-Sep-11 £1.5456 5,548.62 £1.3396 115.4% Bought
15-Jun-12 £1.6064 5,478.81 £1.3227 121.4% Bought
14-Jul-14 £1.9499 6,746.14 £1.6287 119.7% Bought
14-Jun-16 £1.6410 6,775.08 £1.6357 100.3% Sold
My IRR was 10.5%, and it can be seen that it outpaced the Market unitl the very last moment. That coupled with an above average yield encouraged me to hang on to the shares. I have had ECM on my watchlist as a potential replacement, but the yield has never been high enough. I don't blame you for selling up.
TJH
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- Lemon Half
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Re: Confession
You have to sell sometime - you bought cheap and sold high - "way to go".
I would look at it as "I have cashed in several years of 2.5% dividend in advance".
Now watch as the share price goes even higher........... (or is that just me it happens to!).
I would look at it as "I have cashed in several years of 2.5% dividend in advance".
Now watch as the share price goes even higher........... (or is that just me it happens to!).
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- Lemon Quarter
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Re: Confession
CryptoPlankton wrote:treat myself to something nice
Enjoy!
Confession may be good for the soul, but a nice treat is good for the spirit.
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- Lemon Slice
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Re: Confession
kempiejon wrote:TRADER!
As you say 20 years income in capital appreciation does make one think. I try not to sell, holding on for the increasing income. I have been in your position with rapidly increasing capital sums, I held on and saw some of the shares fall back and other keep growing, in most instances the effect of appreciating share price leading to lower yield still gives an increase in per share income my key metric.
LOL!
I know, I know, I know! I really don't make a habit of it, but something told me this had to be done. I can't see ECM suddenly becoming a star dividend grower and the soaring SP just seems unsustainable given their track record. Even if I'm wrong, it won't cause me to lose any sleep while I'm lying on a sunny beach somewhere. But it is very poor form for someone professing to run a HYP so I shall undertake to remain tinker-free (barring purchases and any forced actions) for the rest of the year...
Thanks for all the replies !
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- Lemon Pip
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Re: Confession
monabri wrote:You have to sell sometime ...
Although, depending on circumstances, it may be necessary or desirable to sell, you don't HAVE to sell ... ever.
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