HYP and selling (part of) the runners

[Heathy128]

Hi all,

I have a HYP portfolio following Pyad's 2019 portfolio and I have ten investment trusts with a focus on income with a bit a growth.

I can see some shares such as IBST are up 40%. I am wondering whether a good strategy of selling the breakouts and reinvesting in other picks that are not doing so well. in other words, sell on the highs and buy on the lows. I have even wondered whether to buy a new share with profits to help the portfolio.

I know the above views are interfering and an anathema to the Paydians out there, but I would just like to gauge some thoughts on this strategy. Is there anybody using a similar approach and if not, why not?

Thanks and happy investing.

[Dod101]

As one who thinks that a pyadian HYP has had its day at least for now, I have come to the same conclusion and am indeed trying to take advantage of some decent growth shares in the way you describe.

Dod

[staffordian]

I tend to agree but with one proviso.

You (the OP) say reinvest in shares not doing so well.

This is the crux IMHO. It's obviously unwise to invest in a poor share, but a share temporarily in the doldrums may well be a good buy, especially one with a decent yield if it's income you are focussing on.

Terry (TJH of this parish) has, as you may be aware, expounded this view and formulated a scheme for doing so in an objective manner.

[dealtn]

This is the crux IMHO. It's obviously unwise to invest in a poor share, but a share temporarily in the doldrums may well be a good buy, especially one with a decent yield if it's income you are focussing on.

Well it's easy to tell in hindsight which of the two camps such a share falls into, but how easy is that to do in advance?

[77ss]

Hi all,

I have a HYP portfolio following Pyad's 2019 portfolio and I have ten investment trusts with a focus on income with a bit a growth.

I can see some shares such as IBST are up 40%. I am wondering whether a good strategy of selling the breakouts and reinvesting in other picks that are not doing so well. in other words, sell on the highs and buy on the lows. I have even wondered whether to buy a new share with profits to help the portfolio.

I know the above views are interfering and an anathema to the Paydians out there, but I would just like to gauge some thoughts on this strategy. Is there anybody using a similar approach and if not, why not?

Thanks and happy investing.

I hardly ever sell a 'winner' completely - but I do regularly top-slice them. Keeping my overall exposure to any given equity within limits that I am comfortable with.

Where to put the proceeds is always the question - I put a lot of them into ITs, as that's the way I'm gradually headed. It also avoids being seduced by a plausible turkey!

Personally, I don't pay that much attention to yield these days - focusing more on total return, but if you want to persist with an HYP-like portfolio, keeping your overall income up (or increased) then you could do worse than look at the systematic approach used by tjh290633 - see his posts on the HYP board.

Good luck!

[kempiejon]

I think we've had a discussion and demo on another board arguing that growth shares will continue to be growth shares and are not normally high yielding shares, now that Ibstock has delivered a great slug of growth why minimise any further growth buy selling any of it. HYP is an income strategy not a traders capital profit strategy and although I don't know Ibstock but I'd wager it's income is still delivering if you were lucky enough to buy it when it was unloved and high yielding relish that fact. Some of my big gainers have been trimmed back to extract at least my initial investment and I've watched them grow more since then.
Still it's what helps you sleep that counts isn't it and if a holding gets too big for your comfort then take the profit, if you can redeploy for more income then all the better.

[tjh290633]

I tend to agree but with one proviso.

You (the OP) say reinvest in shares not doing so well.

This is the crux IMHO. It's obviously unwise to invest in a poor share, but a share temporarily in the doldrums may well be a good buy, especially one with a decent yield if it's income you are focussing on.

Terry (TJH of this parish) has, as you may be aware, expounded this view and formulated a scheme for doing so in an objective manner.

Having had my name taken in vain, my comment is that everything is relative. Consequently I make my comparisons with the median value of the individual shares in the portfolio. According to the number of shares in the portfolio, I would take action if any one share rose above my limit, which for 20 shares or fewer would be 10% of the total value, or about twice the medianm for 20 or more. Once you get up to 30 shares, the limit can be reduced provided that the sum involved makes for an economical sale. My own limit is 1.5 times the median value.

Once past the limit, I usually trim by about 20%. If your one share is truly 40% above the median or average for your portfolio, then I would bring it back to maybe 5% above that median, selling about 25%. I work on the principle that lower valued shares are usually there for some cyclical reason, but occasionally because the share is heading for trouble, so you have to make a judgment about them. Mine is based on a combination of inverse value ranking and yield ranking, i.e. the lowest value has a rank of 1 and the highest yield has a rank of 1. Add them together and that with the lowest overall ranking number is the one to top up. That said, I limit the amount which I can put into any one share and the amount of dividend income generated by any one share. My limits are 5% in either case, but for a 20 share portfolio it could be 10%.

The objective is to minimise risk from any one share going base over apex. The HYPTUSS tool will help in this respect to select shares to top up. The other factor is that often one year's poor perfomer, share price wise, is often next year's star.

Good luckm with what you do.

TJH

[Bubblesofearth]

Hi all,



I can see some shares such as IBST are up 40%. I am wondering whether a good strategy of selling the breakouts and reinvesting in other picks that are not doing so well.

Up 40% doesn't sound all that dramatic. What fraction of your total portfolio does IBST now account for? Unless this is an uncomfortable number, say over 10%, then I'd leave alone. Selling and reinvesting will be a 50/50 bet whether the new share does better or worse. But it's 100% certain you will incur costs for the move.

For a share to be even worth considering top-slicing in my portfolio it would have had to have risen many fold. The reason for this is that hold a lot of shares so only a multi-bag event can take any individual share into top-slice territory. It's only happened once in recent memory and that was with Greggs. Even then the top-slicing was as much about the fundamentals of Greggs as it was about the increased fraction of my portfolio. A UK-based fast food/cafe company on a yield of 1.5% and a P/E >30.

BoE

[Itsallaguess]

I can see some shares such as IBST are up 40%.

I am wondering whether a good strategy of selling the breakouts and reinvesting in other picks that are not doing so well. in other words, sell on the highs and buy on the lows. I have even wondered whether to buy a new share with profits to help the portfolio.

I know the above views are interfering and an anathema to the Paydians out there, but I would just like to gauge some thoughts on this strategy. Is there anybody using a similar approach?

I'm quite happy to top-slice runners if they tick one or more of the following boxes -

1. If the share-price rise has outpaced the general dividend increases over a given period. This often means that the current yield on such shares might well have dropped into sub-HYP territory, and a top-slice of capital that's re-invested into a different HYP option that's yielding more than the original share is often likely to lead to a useful increase in income.I especially like to see large share-price increases outpacing dividend returns in my single-share holdings, as that sometimes means that I can kill two birds with one stone, and rotate some single-share capital into an income-Investment Trust that's yielding more than the original share, thus delivering a useful increase in income, at the same time as achieving an improved level of diversification with that rotated capital...

2. If the current value of a share has turned it into an 'overweight' capital holding in my income-portfolio. I've got a fairly wide envelope in terms of accepting some imbalance, as there's often a natural ebb and flow to fairly large portfolios anyway, but there comes a point where I don't like to see too much invested capital sitting in one holding, and I'm then happy to rotate some capital out and into something else. Usually in these cases, I've also been able to take advantage of the first step above at the same time...

One big lesson I've learnt over the years is not to be driven by someone else's 'rules'. Take them on board, certainly, but don't put yourself in a position where you're uncomfortable doing so. If making investment decisions that suit you better 'personally' costs a little bit of capital over the years, then consider if it might actually be money well spent...

Cheers,

Itsallaguess

[Heathy128]

One big lesson I've learnt over the years is not to be driven by someone else's 'rules'. Take them on board, certainly, but don't put yourself in a position where you're uncomfortable doing so. If making investment decisions that suit you better 'personally' costs a little bit of capital over the years, then consider if it might actually be money well spent...

Cheers,

Itsallaguess

Thanks for all the comments and some food for thought.

I really like Itsallaguess comment above and one that I've heard before from investors. Finding your own mojo is rewarding and certainly does have a feeling of control even if it is at the cost of some capital (although not too much ).