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Sector Classifications

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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Maylix
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Sector Classifications

#462426

Postby Maylix » December 1st, 2021, 7:51 pm

Hi, looking for some guidance on this, if anyone can help........
I'm trying to do some analysis on my HYP to understand the level of diversification it has. 4 of the shares in my HYP are: GENL, DEC, BP. & RDSB. HYPTUSS classifies the first 2 as Energy Producers and the second 2 as Oil and Gas Producers, but to my mind all 4 are in very similar businesses. What do others think?
TIA
May Lix

csearle
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Re: Sector Classifications

#462440

Postby csearle » December 1st, 2021, 8:59 pm

Maylix wrote:Hi, looking for some guidance on this, if anyone can help........
I'm trying to do some analysis on my HYP to understand the level of diversification it has. 4 of the shares in my HYP are: GENL, DEC, BP. & RDSB. HYPTUSS classifies the first 2 as Energy Producers and the second 2 as Oil and Gas Producers, but to my mind all 4 are in very similar businesses. What do others think?
TIA
I think it is a question of abstraction. If so then it is a question of how diversified you wish to be. I think that diversification follows a law of diminishing returns. Chris.

idpickering
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Re: Sector Classifications

#462488

Postby idpickering » December 2nd, 2021, 5:25 am

csearle wrote:I think it is a question of abstraction. If so then it is a question of how diversified you wish to be. I think that diversification follows a law of diminishing returns. Chris.


An interesting later comment Chris. I have 28 holdings on board my HYP, as discussed here; viewtopic.php?p=443590#p443590 . In that thread I was cautioned to not "stamp collect", which I was wary of anyway, but very glad of the input. So how many holdings is to many? Each to their own and all that though I guess. For me, 28 is enough I think, although I'm tempted to bring a bank and house builder on board too? I know that other HYPers hold more shares than me, not that that will cause me to act of course. So where does one draw the line between diversification and diworsification?

Ian.

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Re: Sector Classifications

#462516

Postby funduffer » December 2nd, 2021, 8:53 am

To answer the OP, I had to look up GENL (Genel Energy), and DEC (Diversified Energy Company) as I had never heard of them.

GENL produce oil from 4 sites in Iraqi Kurdistan.

DEC produce oil and Gas from a number of mature sites in the USA.

I agree it is difficult to see why they are not classed as 'Oil and Gas' like BP. and RDSB.

From a HYP point of view, I would classify all these as in the same sector. You need to have a look and see what the company actually does to understand the level diversification in your portfolio. I find official sector classifications sometimes very confusing, particularly in the energy industry.

GENL and DEC look interesting, if a little small and risky for my taste!

FD

Maylix
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Re: Sector Classifications

#462576

Postby Maylix » December 2nd, 2021, 11:10 am

funduffer wrote:To answer the OP, I had to look up GENL (Genel Energy), and DEC (Diversified Energy Company) as I had never heard of them.

GENL produce oil from 4 sites in Iraqi Kurdistan.

DEC produce oil and Gas from a number of mature sites in the USA.

I agree it is difficult to see why they are not classed as 'Oil and Gas' like BP. and RDSB.

From a HYP point of view, I would classify all these as in the same sector. You need to have a look and see what the company actually does to understand the level diversification in your portfolio. I find official sector classifications sometimes very confusing, particularly in the energy industry.

GENL and DEC look interesting, if a little small and risky for my taste!

FD


Thanks FD, I've had GENL and DEC in my HYP for a while so assumed that others would be familiar with them as well, sorry about that. I can't remember how they got in there, but I'm sure some (maybe only a few) other HYPers will have them as well, so if anyone else wants to proffer an opinion, feel free to pitch in. At the moment I'm leaning towards treating them as being in the same sector as BP and RDSB. (In which case I'm overweight in that sector!)
Thanks again
May Lix

tjh290633
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Re: Sector Classifications

#462579

Postby tjh290633 » December 2nd, 2021, 11:13 am

Maylix wrote:Hi, looking for some guidance on this, if anyone can help........
I'm trying to do some analysis on my HYP to understand the level of diversification it has. 4 of the shares in my HYP are: GENL, DEC, BP. & RDSB. HYPTUSS classifies the first 2 as Energy Producers and the second 2 as Oil and Gas Producers, but to my mind all 4 are in very similar businesses. What do others think?
TIA
May Lix

I assume that HYPTUSS uses some official classification and I find these often perverse.

Support services is a sector where many wildly different companies get lumped together, so I use my own discretion.

TJH

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Re: Sector Classifications

#462584

Postby moorfield » December 2nd, 2021, 11:25 am

funduffer wrote:To answer the OP, I had to look up GENL (Genel Energy), and DEC (Diversified Energy Company) as I had never heard of them.

GENL produce oil from 4 sites in Iraqi Kurdistan.

DEC produce oil and Gas from a number of mature sites in the USA.

I agree it is difficult to see why they are not classed as 'Oil and Gas' like BP. and RDSB.

From a HYP point of view, I would classify all these as in the same sector. You need to have a look and see what the company actually does to understand the level diversification in your portfolio. I find official sector classifications sometimes very confusing, particularly in the energy industry.

GENL and DEC look interesting, if a little small and risky for my taste!

FD



I don't use it, but guess that some of the HYPTUSS classifications may be a little out of date. The ICB "Industry" classification recently renamed itself from Oil & Gas to Energy and all four are listed under that on the LSE website.

DEC incidentally is chiefly a gas (rather than oil) producer from end-of-life wells disposed of by the majors. It has an interesting business model/derivatives portfolio (I can't get my head around) which hedges its future cashflows (and thus dividend payments). I bought a small holding of earlier this year.

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Re: Sector Classifications

#462655

Postby kiloran » December 2nd, 2021, 3:13 pm

tjh290633 wrote:
Maylix wrote:Hi, looking for some guidance on this, if anyone can help........
I'm trying to do some analysis on my HYP to understand the level of diversification it has. 4 of the shares in my HYP are: GENL, DEC, BP. & RDSB. HYPTUSS classifies the first 2 as Energy Producers and the second 2 as Oil and Gas Producers, but to my mind all 4 are in very similar businesses. What do others think?
TIA
May Lix

I assume that HYPTUSS uses some official classification and I find these often perverse.

Support services is a sector where many wildly different companies get lumped together, so I use my own discretion.

TJH

I think Itsallaguess used sector classifications from Digital Look when HYPTUSS was created 9-10 years ago. Digital Look evolved, moved to Webfg and then to Sharecast. I think sector definitions have changed over time, but as new shares have been added to the Company Data Sheet, the old sector definitions have been perpetuated.
I've sometimes wondered whether to update the HYPTUSS sector to something more up-to-date such as the ICB definitions, but I think that will be welcomed by some but will annoy others. Maybe I should create a poll to get user feedback. It would be quite simple to change.

Of course, HYPTUSS users can overwrite the HYPTUSS sector with their own definitions

--kiloran

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Re: Sector Classifications

#463076

Postby moorfield » December 4th, 2021, 1:28 pm

I would simply treat all four under Oil, Gas and Coal sector and were I to hold all of them (I don't) use their combined value for computing a (ICB) sector average across a whole portfolio, aiming not to exceed that regardless of how many holdings are classified within that sector.


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