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Smith (DS) Finals.

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88V8
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Re: Smith (DS) Finals.

#323371

Postby 88V8 » July 2nd, 2020, 7:28 pm

Arborbridge wrote:I discovered to my surprise that Smith's was in the account with cash in, so I've taken the opportunity of a small topup.

I've noticed before that your accounts seem like lobster pots. Can you really not move cash out and then into another account? It seems a bit tail/dog.

I'm in a bind now. I knew it would happen. I bought Smiths in March when they were in the 270s, and I find it hard now to top them up at a much higher price. I do seem to have this psychological block that makes it hard to top up a share which I could have bought cheaper.
That's going to be a problem over the coming months.

V8

Itsallaguess
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Re: Smith (DS) Finals.

#323374

Postby Itsallaguess » July 2nd, 2020, 7:45 pm

88V8 wrote:
I'm in a bind now. I knew it would happen. I bought Smiths in March when they were in the 270s, and I find it hard now to top them up at a much higher price.

I do seem to have this psychological block that makes it hard to top up a share which I could have bought cheaper.


I know exactly what you mean, as I used to have the same problem.

The way I found to get out of this thought-pattern was to satisfy myself that generally, most such rises are accompanied by large parts of my existing income-portfolio also having risen in price, and thus I am now able to see any potential 'additional costs' when looking to buy something that's subsequently gone up like that, as being 'paid for' by other areas of my portfolio that have often risen during the same time...

Just to be clear - I don't actually sell anything else to pay for it, but just see it as an 'internal transfer' mentally, and as luck would have it, the 'trick' works, and the mental hurdle that you're describing completely disappears...

I'm quite aware that the above might seem an incomprehensibly stupid feat of mental engineering to use as a 'solution' to the sort of problem you're describing, but I am mentioning it here because all I know is that I used to have the same problem, and now I don't, so I offer these thoughts just in case such a trick might help others with this particular problem too...

I've long given up trying to make too much sense of these types of mental tricks that we allow ourselves to partake in. We all do it to some degree or other, and often in much wider areas of our lives too, and I now just think that the single most important thing is just to find the ones that work for you...

Cheers,

Itsallaguess

Arborbridge
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Re: Smith (DS) Finals.

#323388

Postby Arborbridge » July 2nd, 2020, 8:48 pm

88V8 wrote:
Arborbridge wrote:I discovered to my surprise that Smith's was in the account with cash in, so I've taken the opportunity of a small topup.

I've noticed before that your accounts seem like lobster pots. Can you really not move cash out and then into another account? It seems a bit tail/dog.


V8


I couldn't do it with ISAs or SIPP - well not most of the time. If I've made the full SIPP contribution for the year (I have) I can't put any in and wouldn't want to draw extra out as it gets taxed. And as to the ISAs, yes, I could take money from one and put it into this year's active one, but the HMRC rules wouldn't allow my to do it the other way round.

The other are self imposed restrictions - which I am happy to live with. Two broker accounts just happen to more or less account for my "Safety Margin" so I've just left them be. In fact, it was one of these which had the cash in whicvh I mentioned using today.

I'm happy with this simple imposition - it doesn't amount to much inconvenience. In anycase, I couldn't be doing with swapping cash in and out and would rather live with the restriction.

Arb.

tjh290633
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Re: Smith (DS) Finals.

#323508

Postby tjh290633 » July 3rd, 2020, 12:09 pm

88V8 wrote:I'm in a bind now. I knew it would happen. I bought Smiths in March when they were in the 270s, and I find it hard now to top them up at a much higher price. I do seem to have this psychological block that makes it hard to top up a share which I could have bought cheaper.
That's going to be a problem over the coming months.

V8

I've lost count of the number of times that the price of a share has fallen after I had bought it. What is more worrying is the number of times that I bought a share back after top-slicing, as the price fell, only to see it disappear in a puff of smoke at the hands of rougue management. Marconi is the prime example.

TJH

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Re: Smith (DS) Finals.

#323648

Postby starter » July 4th, 2020, 6:16 am

pyad wrote:
Arborbridge wrote:Join the Chancer's Club :) Some will immediately criticise us both bot being "irrational", "unhyp" - or as one poster put it recently, he found us HYPers "insincere". Well, all I can say is: "Am I bovvered?"
I'll admit I've made san un-HYP off the wall decision based on what only amounts to a hunch - it won't improve my income position at the moment (to that extent it's a bad purchase), but hopefully it will next year.

Arb.


I don't regard it as unHYP to buy or top-up suspenders in the current rather extraordinary climate. It's a risk of course cos we cannot know when they will resume divs and at what level, but it may well be a risk worth taking for HYPers who don't need the income immediately, given the depressed state of many potential HYP share prices and thus the potential good yields on resumed payouts.

Looking at SMDS results which weren't bad in the circs., it may be reasonable to assume that when payouts restart they will be at least held to the most recent year. That was 30/04/19 when they paid 16.2p. Thus on my assumption the potential future yield at 295p is 5.5% which looks adequate for an HYP share.

You could say that with their continued div suspension, following the fashion and precedent set by many other leading companies, SMDS is thinking inside the box.


This is interesting. I've realised that I should sort out my holdings* been buying a lot of shares recently and I'm coming to the odd situation that if having not exactly run out of FTSE 100 high dividend paying shares, I'm running out of sectors where there are FTSE 100 high dividend paying shares and am considering whether to buy FTSE 100 shares that have suspended dividends, those that are in the FTSE250 or foreign large cap dividend payers.

This is not exactly the subject of the original question, I realise.

My thought is to look into the suspended dividend payers to find force majeur while ignoring those that have used this as an opportunity to in effect cut the cost of equity capital.

Arborbridge
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Re: Smith (DS) Finals.

#323649

Postby Arborbridge » July 4th, 2020, 6:20 am

tjh290633 wrote:V8

I've lost count of the number of times that the price of a share has fallen after I had bought it. What is more worrying is the number of times that I bought a share back after top-slicing, as the price fell, only to see it disappear in a puff of smoke at the hands of rougue management. Marconi is the prime example.

TJH[/quote]

Similarly, I often find my whole portfolio has dropped more than the new capital I've put in on the day :oops:

Arb.

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Re: Smith (DS) Finals.

#323650

Postby Arborbridge » July 4th, 2020, 6:28 am

starter wrote:This is interesting. I've realised that I should sort out my holdings* been buying a lot of shares recently and I'm coming to the odd situation that if having not exactly run out of FTSE 100 high dividend paying shares, I'm running out of sectors where there are FTSE 100 high dividend paying shares and am considering whether to buy FTSE 100 shares that have suspended dividends, those that are in the FTSE250 or foreign large cap dividend payers.

This is not exactly the subject of the original question, I realise.

My thought is to look into the suspended dividend payers to find force majeur while ignoring those that have used this as an opportunity to in effect cut the cost of equity capital.


We are, I believe, in new territory, and we may have to "take a view" on some companies - which is what I've done with SMDS. But I wouldn't advocate pushing this too far - my HYP-defying topup was a fraction of a percent of my whole HYP, so it does not violate the whole: it's rare a concession to a hunch.
There are companies which I think are either being super cautious, or have been held back by regulators, and one could be forgiven for topping up such companies. However, I couldn't go as far as saying we should buy new holdings on this basis - to my HYP mind, that seems a bridge too far.

Arb.

idpickering
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Re: Smith (DS) Finals.

#323656

Postby idpickering » July 4th, 2020, 7:55 am

Arborbridge wrote:
We are, I believe, in new territory, and we may have to "take a view" on some companies - which is what I've done with SMDS. But I wouldn't advocate pushing this too far - my HYP-defying topup was a fraction of a percent of my whole HYP, so it does not violate the whole: it's rare a concession to a hunch.
There are companies which I think are either being super cautious, or have been held back by regulators, and one could be forgiven for topping up such companies. However, I couldn't go as far as saying we should buy new holdings on this basis - to my HYP mind, that seems a bridge too far.

Arb.


I agree with the gist of your post Arb. I think this whole sad tale re COVID19 and company dividend cuts/suspensions has taught us all to be more cautious in our investing. In a way not such a bad thing, we’re all still learning how to adapt to this new situation, and how it affects our HYP management.

As for new shares, they always were a rareity, and I think we’d probably have them on board anyway.

Back to SMDS though, I’ve invested enough on them already, and am happy to continue to hold.

Ian.

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Re: Smith (DS) Finals.

#324013

Postby monabri » July 6th, 2020, 9:42 am

Just wondering what the increasing "intangible assets" might be? They seem quite large relative to the size of SMDS.

https://www.hl.co.uk/shares/shares-sear ... nd-reports

Image

dealtn
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Re: Smith (DS) Finals.

#324022

Postby dealtn » July 6th, 2020, 10:13 am

monabri wrote:Just wondering what the increasing "intangible assets" might be? They seem quite large relative to the size of SMDS.



They will show up in the Full Accounts when the Annual Report is made available.

Last year there is Note 10 to the accounts here, detailing the composition and amortisation policy. It will broadly be the same, and arise principally from acquisitions, being the accounting difference of goodwill between the purchase price and the accounting value of assets acquired.

https://www.dssmith.com/investors/annual-reports

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Re: Smith (DS) Finals.

#324115

Postby Gengulphus » July 6th, 2020, 3:40 pm

monabri wrote:Just wondering what the increasing "intangible assets" might be? They seem quite large relative to the size of SMDS.

https://www.hl.co.uk/shares/shares-sear ... nd-reports

Image

That shows intangible assets decreasing by £65m (or about 2%) between 30/04/2019 and 30/04/2020, so don't expect anything major about them in this year's results or annual report. The big increases were in the previous two years, from 30/04/2017 to 30/04/2018 and from 30/04/2018 to 30/04/2019. I've taken a quick look at the relevant annual reports and found the following:

30/04/2017 to 30/04/2018: The increase in intangible assets is mainly due to acquisitions of £638m of goodwill and £297m "customer related" intangible assets (note 10 of the 2018 annual report). The goodwill is £581m related to the following acquisition:

"On 29 June 2017, the Group entered into a conditional agreement to acquire an 80% interest in Indevco Management Resources Inc. (IMRI), the owner of Interstate Resources Inc. (Interstate Resources), from Merpas Co. Sàrl. (‘Merpas’), which completed on 25 August 2017.

Interstate Resources is an integrated packaging and paper producer based on the East Coast of the USA. It operates from 19 production sites and has approximately 1,500 employees. ...
"

and £53m related to the following acquisition:

"On 18 October 2017, the Group announced it had entered into an agreement to acquire EcoPack and EcoPaper, (collectively “the Business”) for
an enterprise value of c. €208 million, which completed on 6 March 2018.

The Business is a leading integrated packaging and paper group in Romania; family owned for many years. ...
"

plus some other small ones that aren't reported in detail and presumably produced £4m goodwill in total (note 30). Not much is said directly about the "customer related" intangible assets, just a description of them in note 1 as "Customer relationships, acquired as part of a business combination, are capitalised separately from goodwill and are carried at cost less accumulated amortisation and impairment.". Indirectly, though, they seem to be the £258m and £39m of "Intangible assets" listed in note 30 for the above two acquisitions. I think I would treat them as pretty much equivalent to goodwill, and so to regard the increased intangible assets at 30/04/2018 as mainly due to £839m and £92m of 'goodwill & similar' from the acquisitions of the Interstate Resources stake and EcoPack/EcoPaper respectively.

30/04/2018 to 30/04/2019: The increase in intangible assets is mainly due to acquisitions of £809m of goodwill and £494m "customer related" intangible assets (note 10 of the 2019 annual report). This time, there is one acquisition reported in detail, of (again in note 30):

"On 22 January 2019, the Group completed its acquisition of a 100% interest in Papeles y Cartones de Europa, S.A. (Europac), a leading integrated packaging business in Iberia and France. ...

and it accounts for £787m of goodwill and £488m of intangible assets (again presumably the 'customer related' ones), again with some other small ones making up the balances.

Goodwill is basically how much more was paid for acquisitions above the sum of the identifiable parts that can be valued, and the 'customer related' intangible assets seem to be some sort of attempt to place a value on customer relationships and so take them out of goodwill - which is something that I feel rather sceptical about and is the reason why I'm treating the 'customer related' intangible assets as more-or-less equivalent to goodwill. So the big rises in intangible assets were very largely due to DS Smith paying a lot more than the sum-of-the-identifiable-parts-that-can-be-valued valuations for Interstate Resources, EcoPack/EcoPaper and Europac. Paying more than such valuations for acquisitions is normal and does not necessarily indicate anything wrong, so don't treat those big rises as worrying in themselves. But it is possible to overpay for acquisitions, so do treat them as an indication that you might want to take a look at how good those businesses' contributions to DS Smith's overall position are, relative to what was paid for them. Or much more briefly, are Interstate Resources, EcoPack/EcoPaper and Europac pulling their weights, those weights being measured by what was paid for them?

Gengulphus


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