Split the HYP

[yopyop]

Hi,
Not posted here, but I have had a HYP for 5 years, mainly because I only transfered my DB pension to a SIPP in 2016.

I just did a review, splitting the HYP between fallers and static/risers in terms of SP. I used CTY as the balance of positives versus negatives. Coincidentally , it worked out as about 50% investment each, over and below the CTY investment %. In other words each "block' is more or less equal in terms of original investment

Interesting , but not sure what to do with it.

Let's start with the positives - up 15% in share price and an average dividend of 5,5% with a current forecasted dividend of 5,3%

Negatives - down 39% and an average divi of 3,7% based on the current share price, not the original SP (full of cutters such as banks and oil and gas, oh and REITs). No idea what the forecasted Divis might be, too hard to guess.

What would you do with this info - ignore it?

Just thoughts
Carl

[yopyop]

Sorry if it off topic
Maybe it should be in strategies
sorry

[kempiejon]

What would you do with this info - ignore it?

Probably.

[idpickering]

What would you do with this info - ignore it?

Probably.

I agree, ignore it.

Ian.

[Dod101]

Hi,
Not posted here, but I have had a HYP for 5 years, mainly because I only transfered my DB pension to a SIPP in 2016.

I just did a review, splitting the HYP between fallers and static/risers in terms of SP. I used CTY as the balance of positives versus negatives. Coincidentally , it worked out as about 50% investment each, over and below the CTY investment %. In other words each "block' is more or less equal in terms of original investment

Interesting , but not sure what to do with it.

Let's start with the positives - up 15% in share price and an average dividend of 5,5% with a current forecasted dividend of 5,3%

Negatives - down 39% and an average divi of 3,7% based on the current share price, not the original SP (full of cutters such as banks and oil and gas, oh and REITs). No idea what the forecasted Divis might be, too hard to guess.

What would you do with this info - ignore it?

Just thoughts
Carl

There are thoughts you need to have. Having held on to your banks until now you might as well wait and see what the half year results are looking like particularly in terms of the dividends. I think you should expect decent dividends at this half year stage but more importantly watch what they say about future dividends. Work out a prospective yield and see if you are happy with that. As for oil and gas, you ought to try to take a strategic view of the future and see what the future looks like for profits because these are the basis of dividends. FInally, if your REITs are not looking good it presumably means that you are holding the wrong ones because many REITs have done well in recent years. Do you mean British Land and Land Securities by chance? If so I would get rid of them. Even in good times I have never got much from them and currently their market is in a state of flux. I would be buying into other REITs such as those that MDW mentions. I hold Segro and Primary Health Properties. Both have done well for me, Segro very well so you need to try to judge if now is a good time to be buying into them.

I am no arbiter of HYP rules but I cannot see what is wrong having this sort of discussion here but iuf this is deemed off topic maybe some mod will move the thread to Strategies.

Does that help?

Dod

[Padders72]

Well the common sense thing to do would be to put the donkeys out to pasture and run your winners. I think even zealous HYP adherents would accept that there can be a time to let a holding go once it stops performing as some of yours surely have. As noted above the picture with the banks is a little complex so I wouldn’t rush to action there but where there is little hope of imminent improvement, personally I’d get rid.

[kempiejon]

Perhaps we could have a look at the portfolio but as a default position, not knowing the prospect of the income of any individual picks, a collective let it be still suits me most of the time.

[dealtn]

What would you do with this info - ignore it?

(re)assess whether HYP was for me.

And to be perfectly clear that isn't an anti-HYP statement. I would proffer exactly the same advice for whatever strategy I was pursuing if I were reviewing it after 5 years. HYP works for many, many people who are happy with it, and it certainly beats many alternatives. This is just literal advice to someone asking what I would do.

(Which is why it probably belongs on Investment Strategies and not HYP-P. Unless confirmation bias isn't important to you).

[moorfield]

What would you do with this info - ignore it?

Throw away that review and ask yourself a different set of questions:

How much is your overall portfolio worth today?
What overall income do you want/need it to be generating?

and, if you are a "builder"

When do expect you will need to start drawing that income and what overall income will you want/need it to generating then?


From those answers you can extract some very useful metrics to plan for the future, none of which worry too much about which particular shares are up or down from month to month.

[MDW1954]

Moderator Message:
Let's just stick to the HYP Practical aspects of the OP's question, and put aside any consideration of if it's on the right board or not. As long as replies are focused on practical HYP management decisions, then that's fine. --MDW1954

[yopyop]

Thanks for all the comments.
Banks, I will hold for a while and see what happens. One of the REITs is BLAND but not a large investment - will probably swap it for another. The oils are a bit overweight in the porfolio, so I'll probably cut a little and look for alternative energy options.
Thanks everyone
BTW the other half of the HYP is doing great, given the situation we are in

[tjh290633]

You will find that the order varies each year. Last year's losers become this year's winners quite often. Here is the annual change in SP for my portfolio:

.          2014       .      2015               2016      .      2017       .       2018             2019             2020
Epic     Change     Epic    Change    Epic     Change    Epic   Change    Epic    Change     Epic   Change    Epic   Change 
UU.        36.41%   TW.      47.39%   S32      207.62%   INDV    37.81%   PSON      27.50%   SGRO    52.43%   WMH*    43.29%
AZN        27.44%   REX      33.21%   BLT       71.91%   TW.     34.46%   AZN       14.68%   TW.     41.94%   ADM     25.86%
INDV @     24.50%   IMT      26.46%   PFL *     67.45%   DGE     29.15%   GSK       12.76%   MARS    35.25%   KGF     24.61%
TW.        23.59%   INDV     25.70%   INDV      57.72%   IMI     28.17%   BHP        8.48%   TSCO    34.25%   RIO     21.47%
BLND       23.53%   ADM      25.49%   RDSB      52.56%   SGRO    28.14%   CPG        3.13%   SSE     33.01%   BHP      8.34%
IMT        21.30%   SMDS     23.20%   BP.       43.95%   SMDS    26.81%   DGE        2.57%   LGEN    31.17%   PSON     6.81%
SSE        18.39%   RB.      20.56%   RIO @     42.12%   S32     25.54%   ADM        2.25%   AZN     29.52%   RB.      6.74%
NG.        16.51%   BT.A     17.48%   TSCO      38.36%   ULVR    25.30%   SGRO       0.27%   BATS    29.26%   SGRO     5.62%
CPG        13.75%   SGRO     15.96%   CPG       27.74%   RIO     24.81%   ULVR      -0.41%   SMDS    28.37%   SSE      4.28%
SGRO       10.87%   MARS     15.95%   BATS      22.55%   VOD     17.59%   BP.       -5.12%   UU.     28.14%   ULVR     0.95%
MKS        10.68%   ULVR     11.36%   IMI       20.72%   BLT     16.53%   RIO       -5.38%   IMI     24.89%   PHP@     0.67%
RB.         8.70%   WMH       9.24%   BA.       18.39%   AZN     15.40%   TATE      -6.12%   NG.     23.57%   S32     -1.15%
BA.         8.51%   BATS      7.74%   TATE      18.11%   WMH     10.96%   RDSB      -6.72%   BA.     23.00%   IMI     -1.19%
BATS        8.09%   CPG       6.71%   LGEN @    15.33%   LGEN    10.38%   INDV*     -8.87%   WMH     21.58%   SMDS    -2.50%
AV.         7.74%   AV.       6.50%   GSK       13.77%   BLND     9.85%   TSCO      -9.15%   RIO     20.72%   AZN     -3.72%
RSA *       6.74%   BA.       5.85%   DGE       13.65%   ADM      9.58%   S32       -9.25%   LLOY    20.61%   UU.     -5.13%
ULVR        5.88%   UU.       2.13%   ULVR      12.51%   BATS     8.58%   UU.      -11.25%   BLND    19.80%   NG.     -8.40%
BT.A        5.82%   NG.       2.11%   PSON      11.21%   LLOY     8.41%   BT.A     -12.37%   GSK     19.30%   TSCO    -9.33%
MARS        0.00%   AZN       1.34%   ADM       10.13%   CPG      6.60%   NG.      -12.67%   TATE    15.18%   DGE    -10.08%
RDSB       -2.06%   BLND      1.16%   RB.        9.63%   RDSB     6.56%   RB.      -13.09%   CPG     14.55%   TATE   -11.29%
SMDS       -3.01%   DGE       0.43%   SGRO       6.68%   AV.      4.13%   LGEN     -15.48%   DGE     14.51%   LGEN   -12.15%
LLOY       -3.88%   GSK      -0.22%   KGF        6.31%   BP.      2.57%   MARS     -16.40%   ADM     12.80%   BA.    -13.46%
VOD        -6.05%   TATE     -0.66%   REX *      4.90%   TSCO     1.16%   SSE      -18.07%   AV.     11.50%   TW.    -14.27%
DGE        -7.58%   VOD      -0.74%   SMDS       2.87%   RB.      0.48%   BA.      -19.86%   BHP      7.58%   BATS   -16.20%
WMH        -9.80%   KGF      -3.23%   SSE        1.64%   TATE    -0.64%   MKS      -21.47%   ULVR     5.89%   VOD    -17.59%
PSON      -11.26%   LLOY     -3.63%   NG.        1.50%   BA.     -3.13%   BLND     -22.89%   KGF      4.58%   IMB    -17.84%
KGF       -11.49%   MKS      -5.51%   IMB       -1.23%   KGF     -3.60%   LLOY     -23.86%   RB.      1.93%   AV.    -22.33%
ADM       -12.39%   SSE      -5.80%   UU.       -3.69%   UU.     -7.94%   IMB      -24.92%   VOD     -4.02%   BLND   -23.45%
REX       -14.46%   BP.     -13.87%   AZN       -3.88%   NG.     -8.04%   AV.      -25.86%   RDSB    -4.29%   GSK    -24.56%
GSK       -14.61%   TSCO    -20.90%   AV.       -5.74%   MKS    -10.06%   IMI      -29.18%   BP.     -4.91%   CPG    -27.88%
BP.       -15.79%   RDSB    -30.90%   VOD       -9.57%   PSON   -10.08%   TW.      -33.99%   MKS    -13.63%   BT.A   -31.28%
IMI       -17.18%   IMI     -31.79%   LLOY     -14.08%   IMB    -10.63%   VOD      -34.94%   BT.A   -19.18%   MKS    -36.16%
PFL       -20.76%   PSON    -38.15%   MARS     -18.32%   SSE    -15.00%   KGF      -38.55%   IMB    -21.37%   MARS   -40.57%
TATE      -25.46%   PFL     -44.32%   BLND     -19.91%   GSK    -15.33%   SMDS     -42.16%   S32    -23.37%   LLOY   -41.70%
BLT       -25.71%   BLT     -45.26%   CLLN @   -20.03%   MARS   -17.28%   BATS     -50.18%   PSON   -32.12%   RDSB   -43.76%
TSCO      -43.47%   S32 @   -49.52%   BT.A     -22.22%   BT.A   -25.95%   WMH      -51.86%                    BP.    -45.97%
                                      MKS      -22.63%   CLLN   -92.69%   CLLN*   -100.00%                                  
                                      TW.      -24.42%                                                                      
                                      WMH      -26.72%                                                                      
                                                                                                                            
@        Addition                                                                                                           
*        Disposal

Sorry if it is a bit wide.

TJH

[yopyop]

Totally readable, not wide, thanks

[chris]

Last year's losers become this year's winners quite often.

You have mentioned this a couple of times and whilst I agree with it when a sector is hit by either one company's bad results or an incident that causes the sector as a whole to be down rated, then an individual company which was not the cause of the problem may very well rebound strongly.

When the fall is down to the company results or issues specific to that company, I completely disagree. One year's bad results are more likely to be followed by another year of falling share price and there are a few examples of that in your list which back that up.

There is a problem with looking at it in terms of yield, the price falls when the market gets wind of poor results, and then when results are announced, the dividend is cut and you get a period of higher yield before the cut and then the cut is announced and the resulting yield is only marginally lower than it was before the initial price cut. Repeat over several years and you get a Centrica, BT etc. The real issue is how to know when to get out as the yield from initial investment is falling.

[tjh290633]

Last year's losers become this year's winners quite often.

You have mentioned this a couple of times and whilst I agree with it when a sector is hit by either one company's bad results or an incident that causes the sector as a whole to be down rated, then an individual company which was not the cause of the problem may very well rebound strongly.

When the fall is down to the company results or issues specific to that company, I completely disagree. One year's bad results are more likely to be followed by another year of falling share price and there are a few examples of that in your list which back that up.

There is a problem with looking at it in terms of yield, the price falls when the market gets wind of poor results, and then when results are announced, the dividend is cut and you get a period of higher yield before the cut and then the cut is announced and the resulting yield is only marginally lower than it was before the initial price cut. Repeat over several years and you get a Centrica, BT etc. The real issue is how to know when to get out as the yield from initial investment is falling.

You have quoted BT.A as an example there. Currently expected to resume dividends early next year, the price is now joint second, up 39% since the start of the year after several years of falling prices. Now, does one buy when the price is falling, or when the price is rocketing? I see that I last trimmed my holding in 2015, when the price was 479p. Since then I have topped it up 7 times until 2019, and the holding is still below my median value. Why did it rise to a peak in 2015? Admittedly I have held since privatisation in 1984 at 130p and a lot of water has flowed under the bridge since then. My IRR is about 10%. Currently I have 22 times my original holding. What is my "initial investment"?

TJH

[Gengulphus]

Not posted here, but I have had a HYP for 5 years, mainly because I only transfered my DB pension to a SIPP in 2016.

I just did a review, splitting the HYP between fallers and static/risers in terms of SP. I used CTY as the balance of positives versus negatives. Coincidentally , it worked out as about 50% investment each, over and below the CTY investment %. In other words each "block' is more or less equal in terms of original investment

Interesting , but not sure what to do with it.

Let's start with the positives - up 15% in share price and an average dividend of 5,5% with a current forecasted dividend of 5,3%

Negatives - down 39% and an average divi of 3,7% based on the current share price, not the original SP (full of cutters such as banks and oil and gas, oh and REITs). No idea what the forecasted Divis might be, too hard to guess.

What would you do with this info - ignore it?

Well, in future I would aim to answer that question before gathering the info - and not bother gathering it at all if the answer is "Ignore it"! ;-)

Having said that, I don't think it's the most useful way of starting a HYP review, but I also don't think it's useless. As a general rule, I would regard it as indicating that a review is unlikely to indicate that the 'positives' should be topped up or completely sold, but some of them might have grown too big for comfort (*) and be worth trimming back. But "unlikely" means what it says - topping up or selling completely are possible verdicts from a review of a 'positive' holding, just ones that don't happen very often in my experience because a 'positive' holding is usually already fairly highly weighted in the portfolio and at least pulling its weight in income terms.

A review is more likely to indicate action on the 'negatives' - though whether that action should be selling them because one reckons the company has become a basket case or topping up because one reckons that it's out of favour with the market for no very good reason can be a good question! (**) And I should add that "more likely" does not mean "more likely than not" - most times that I review a 'negative' company in my HYP, I end up deciding to leave it as it is. It just means "more likely than deciding that a 'positive' holding needs some action taken".

So basically, what I would do with the information is use it to guide me to the main questions I should investigate about each holding, and if short of time, to investigate the questions about the 'negative' holdings first. Having said that, what I actually do is keep a spreadsheet listing of all my holdings and sort it various ways - some simple, like highest-yield-to-lowest-yield or highest-capital-value-to-lowest-capital-value; some combined measures like a HYPTUSS-style 'top-up ranking' (which basically combines those two simple ones); some a bit more esoteric such as what percentage of my total holdings of each company are in tax-sheltered accounts, and of the tax-sheltered holdings, what the ratio is of ISA holdings to SIPP holdings. Then I tend to concentrate my reviewing on the 'outlier' holdings by those measures - are the especially high yields sustainable? are the especially low yields significant? are the especially high capital-value holdings too big for my comfort? etc. So I don't really use a 'positives' vs 'negatives' split of my holdings at all in my reviewing, and the above answers aren't about what I actually do, just what I would use such a split for if I was given it for free.

Finally, that's all generalities, not specifics about particular shares. If you want the latter, post a list of your HYP's shares and their capital weightings in your HYP, plus any other information you're happy supplying such as what you consider their sectors to be or dividend yields (though I appreciate that dividend yields are awkward at the moment - historical yields are likely to be misleading because of short-term pandemic effects, forecast yields are a lot more difficult to obtain than they used to be...).

(*) Your comfort, that is - which isn't a matter that others can decide for you...

(**) And expect to get the answer to that question wrong from time to time. E.g. last night I stumbled across the fact that a company I'd sold from my HYP in May 2017 on the basis that I thought it had become a basket case was taken over about three years later for a price about 80% above what I got for my sale... (I won't name the company - it's decidedly off-topic here, having never met this board's standards for HYP companies and been very much a 'marginal candidate' experiment even when I acquired it for my HYP back in TMF days, and it cut its dividend pretty promptly after I acquired it! I was quite lucky to get out at about a 1% capital loss when I did...)

Gengulphus

[torata]

Hi,
Not posted here, but I have had a HYP for 5 years, mainly because I only transfered my DB pension to a SIPP in 2016.

I just did a review, splitting the HYP between fallers and static/risers in terms of SP. I used CTY as the balance of positives versus negatives. Coincidentally , it worked out as about 50% investment each, over and below the CTY investment %. In other words each "block' is more or less equal in terms of original investment

Interesting , but not sure what to do with it.

Let me make sure I've got this right. In your portfolio, roughly 50% have increased their share prices and 50% are underwater. But your total portfolio increase is around the same as City's. I'm guessing that something similar has happened in the City portfolio also, but possibly less obvious if they have a higher turnover.

To me it looks like you have three options:

- If it's the lower end dividends that are the issue, then that's a decision on a company by company basis.
- If it's that you're looking for greater SP (or maybe total) return than City, then HYP might not be the answer.
- If it's that half of your shares performed under a close benchmark that you're happy with and half above, then accept it's impossible for 80% of drivers to be above average, and use the opportunity to top up those underweight in the belief that there'll be a certain amount of rotation back to mean (or higher, as Terry has said).

It seems to me that your HYP has done what it was supposed to - although market conditions over the last few years haven't been particularly favourable to the kinds of shares chosen by HYP.

torata

[1nvest]

You will find that the order varies each year. Last year's losers become this year's winners quite often. Here is the annual change in SP for my portfolio:

Formatted into a table ...


I added a equal weighted measure to those which indicates a (less than) 6% total reward (share price only) over those 7 years.

Not saying anything, purely just a observation.

[tjh290633]

I added a equal weighted measure to those which indicates a (less than) 6% total reward (share price only) over those 7 years.

Not saying anything, purely just a observation.

My data was based on share price only, not holding value, of course.

TJH

[chris]

You have quoted BT.A as an example there. Currently expected to resume dividends early next year, the price is now joint second, up 39% since the start of the year after several years of falling prices.

I refer TJH to my initial comment about significant events which impact a sector or in this case the whole market. The events of 2020 are such that virtually every share was significantly impacted to some extent or another depending on where the start and finish points for comparison are,. Therefore I would largely ignore falls in 2020 and rebounds in 2021. In fact any share that didn't recover by at least 20% from 2020 levels is potentially problematic.

I did sell my entire holdings of Centrica, BT and British Land in the period, added significantly to my SIPP and bought 3 new share holdings:

DS Smith - currently up 34%
Rio Tinto - currently up 46.5%
Johnson Matthey - currently up 52%

I show these not to prove that I am a great stock picker, goodness knows I am not, and have residual holdings in Petrofac and Cineworld to prove it! My point is that these are not companies who have suddenly had stellar results, they are companies that were hit hard by the pandemic and have since rebounded and I am just putting the resurgence of BT in perspective - as TJH says, 'after years of falling prices'. I'm not so sure that the market now sees them as a star player because they have resumed dividends. In fact if you take the low point and high point of Centrica, even that moved 30%!

What I am trying to do is to look at how I should be reviewing my portfolio and when to sell. For TJH, it is a case of rebalancing and moving cash around to avoid concentrations of income and if it works for him, that is fine and perfectly reasonable. I am less concerned about concentration and will only sell if I feel that the company concerned is not going to give me the future revenue I need. In this respect, I would prefer a current yield that is not such high yield but is a reliable payer, than a company who may have a more chequered history. That is why, I am looking at stop losses of 25% on some more recent purchases. My portfolio tells me that, 2020 excepted, when a share falls by that sort of amount, it rarely recovers and that may be the time to sell up an move on, as it will normally have a negative impact on future dividends.