Smith (DS) - smoke and mirrors

[tjh290633]

Wizard wrote:
There is absolutely nothing in the HYP-P guidance that says I cannot read that board, but it is clear, to me at least that I cannot post there, it states:

The objective of this board is to be a place for investors who have decided to take, or are contemplating taking, a HYP approach to investing. Here they can discuss the practical decisions and activities involved, without those discussions being interrupted or taken over by discussions of whether a HYP approach is appropriate in the first place.

Do not post here if you are unwilling or unable to make your post comply with this objective.

I have not decided to to take an HYP approach and nor am I contemplating doing so, therefore the "Do not post here" applies to me. SO if I am not allowed to post there is it also the case that I am not allowed to post here?

If you want to make constructive comments about the particular point in question, which you have done by creating this topic, you are at liberty to do so on the original topic. All you are trying to do is be argumentative. For that reason it would be better if you said nothing.

TJH

[88V8]

I think it not unreasonable to buy shares that will eventually pay a divi. Jam tomorrow, but if one has other jam pots, that may be tolerable.

I do recall though posters on HYPP niggling at me when I bought Lloyds during its dividend freeze, I bought on the basis that they used to be a good payer and would be again. But there were moans about it at the time.

Well, when times change we HYPers must change with the times.

V8 (holds SMDS)

[Wizard]

Wizard wrote:
There is absolutely nothing in the HYP-P guidance that says I cannot read that board, but it is clear, to me at least that I cannot post there, it states:

The objective of this board is to be a place for investors who have decided to take, or are contemplating taking, a HYP approach to investing. Here they can discuss the practical decisions and activities involved, without those discussions being interrupted or taken over by discussions of whether a HYP approach is appropriate in the first place.

Do not post here if you are unwilling or unable to make your post comply with this objective.

I have not decided to to take an HYP approach and nor am I contemplating doing so, therefore the "Do not post here" applies to me. SO if I am not allowed to post there is it also the case that I am not allowed to post here?

If you want to make constructive comments about the particular point in question, which you have done by creating this topic, you are at liberty to do so on the original topic. All you are trying to do is be argumentative. For that reason it would be better if you said nothing.

TJH

In the text you have highlighted the word "they" is used. It is hard to read that "they" as other than referring to the "investors who have decided to take, or are contemplating taking, a HYP approach" referred to in the previous sentence. You may think I am being argumentative, I simply think I am following the guidance, I am rather surprised you find it so hard to understand that guidance. If you think the "they" has a different meaning please feel free to explain what it is referring to. Resorting to telling me to be quiet does not make you right, it just demonstrates you lack a coherent point.

[CryptoPlankton]

It strikes me that the relaxing of this lockdown really can't happen quickly enough for some people...

[moorfield]

The most constructive way I feel I can make any investment decisions in current times is to abandon dividends - historical, current, forecast, pretend, or whatever - and look at the underlying cash profits a company is generating, upon which those payouts rely, which does require some time and effort to read accounts and crunch numbers. In fact this will be a discipline for me in future, I've slipped on enough banana-yield skins already.

[Wizard]

What PYAD has done is speculate that at some point in the future there will be a dividend of 16.2 pence, no statement as to when. He has then taken today's purchase price as the basis for calculating what the yield will be at that point in the future. So, as I said in my post he is either using the historic purchase price to calculate the yield or is assuming the share price will stay at today's level up to the point when the dividend is resumed.

Yes, but that's always how you calculate forecast yield. Make a forecast of the dividend at some point in the future (usually this year and next year for the professional analyst) and then divide by todays price to get forecast yield. I normally look at my HYPTUSS spreadsheet to get forecast yield and calculate the historic yield myself. I'll go and look into things further if there is a marked difference between the two. If the forecast is lower than historic yield it suggests the analysts are predicting a dividend cut and I'll look at the news flow to make sure I haven't missed something before I buy.


For SMDS HPTUSS is predicting 4.5% forecast yield this morning, so the analysts are either predicting that the dividend will be restored next year, haven't updated their forecasts to account for todays results or, more likely, some combination of the two. The forecast on HYPTUS is predicting an ~ 13p dividend for next year (4.5% yield on todays price of 291p).

I do not know where HYPTUSS sources forecasts as I do not use it. You may be articulating a logical process, but the point is that is not what PYAD did, he merely said one day DS Smith will start paying a dividend again and there is no reason it won't be at the level they paid in 2019. That is not a forecast. The FT website is currently showing a consensus dividend forecast for DS Smith's dividend of 14 pence for 2020, I struggle to see how anyone is forecasting that now with the board as good as saying it will be zero. Surely a forecast yield is normally based on the reasonably anticipated dividend in the next 12 months, it is the cash flow you are buying in the next 12 months for a certain price today.

That is not what PYAD did, he simply speculated that there may be a dividend of a certain level at some point in the future, next year, the year after, ten years time? So what is that forecast yield telling us, the yield next year, 2021, later? The current share price reflects the current zero dividend, that is likely to be part of the reason the shares fell today, because the board made clear the dividend will not restart imminently. As and when the dividend is restarted there is likely to be a reaction in the share price, so in this situation it seems to me as good as useless to take a possible future dividend amount, at an unknown point in the future and use the share price today as the basis for calculating the yield.

[Wizard]

It strikes me that the relaxing of this lockdown really can't happen quickly enough for some people...

I guess you must be shielding as for most people there has not been much of a lock down for some time now.

[PinkDalek]

So no excuses at all then.

[Lootman]

So no excuses at all then.

Although I never agree with CryptoPlankton, I do find myself wondering with him here whether (what I perceive as) the growing erosion of civility on TLF is a function of people being stuck at home with too much time on their hands.

I have noticed it particularly in the last few days, and on a range of boards. It seems to be getting less fun here, with people out to take cheap shots at each other.

Obviously off topic here, but contextually appropriate somehow nonetheless.

[CryptoPlankton]

So no excuses at all then.

Although I never agree with CryptoPlankton, I do find myself wondering with him here whether (what I perceive as) the growing erosion of civility on TLF is a function of people being stuck at home with too much time on their hands.

I have noticed it particularly in the last few days, and on a range of boards. It seems to be getting less fun here, with people out to take cheap shots at each other.

Obviously off topic here, but contextually appropriate somehow nonetheless.

Never?! I wish I could say the same, but it pains me to admit to the occasional (albeit rare) nod when I read one of your posts.

[Arborbridge]

Please explain with detailed reference to the guideline text, as opposed to snarky comments about taking a lie down in a quiet corner because you cannot make a substantiated point.

I thought the comment was emminently sensible rather than sarky.
Arb.

[Wizard]

Please explain with detailed reference to the guideline text, as opposed to snarky comments about taking a lie down in a quiet corner because you cannot make a substantiated point.

I thought the comment was emminently sensible rather than sarky.
Arb.

In which case, given your view on the reasonableness of his comments, as TJH has not given any justification that I have ever said I am not allowed to read HYP-P or suggested the guidelines say this, maybe you could provide something to support his statement? It's easy to post such statements without any support.

[Alaric]

Buying shares that used to pay substantial dividends but have now cancelled is an interesting if perhaps risky recovery ploy. It's a partly a punt on the attitude of their directors that they would be prepared to propose a reinstatement to previous levels.

There may be enough funds and private investors who are income seekers in the shorter term and therefore such shares might be cheap.

As regards funds, we have seen that ETFs and presumably other trackers show an almost immediate fall in dividend income distribution whilst ITs are prepared to use their reserves to maintain payouts. Perhaps OEICs are in the middle. If they only pay half yearly, there's a deferral of the full effect, whilst the actively managed ones have possible tricks to maintain payout levels. One would be to shovel money into ITs. Another might be to manufacture dividends from capital by having a float that buys cum dividend and sells ex dividend.

[idpickering]

I've explained why I bought Smith's today: for the potential the company has for producing a reasonable income stream in the future. Note that this is but a small top up and I'm adding to a holding which I have not reason to sell for the moment, and as I mentioned was entirely "nonHYP" is the strictest sense.

If people want to spend emotional energy tilting at windmills, that's entirely their prerogative, but I won't be bothering to reason with them. Neither will it stop me being transparent open about what I'm investing in or why - for good or ill. The best thing is to take TJH's advice.

Arb.

Well said Arb. On a similar tone I did mention my interest in topping up my TW. holdings, and BA. too. imho, both are strong companies, and I have confidence that they will resume paying a dividend in due course. As for reasoning with people like you describe, I don't bother my time with them, as it seems some like to cause mayhem just for the sake of it. As for SMDS, I've spent enough there already, and am happy to just continue to hold.

I don't often come to this board, but I'm happy to do so on this occasion, if only to support your stance.

Ian.

[tjh290633]

In the text you have highlighted the word "they" is used. It is hard to read that "they" as other than referring to the "investors who have decided to take, or are contemplating taking, a HYP approach" referred to in the previous sentence. You may think I am being argumentative, I simply think I am following the guidance, I am rather surprised you find it so hard to understand that guidance. If you think the "they" has a different meaning please feel free to explain what it is referring to. Resorting to telling me to be quiet does not make you right, it just demonstrates you lack a coherent point.

All you are doing is raising spurious points to emphasise the point that you do not agree with the HYP principles. That is it, pure and simple. If you wish to comment constructively on the HYP board you are free to do so, but you have decided to construe the guidelines as an absolute ban on you posting there. You are right that nihilistic comments are not welcome on that board, but constructive comments are.

If you look at the first post in this topic, it is basically an attack on PYAD himself. Other contributors to this topic have been able to make useful comments about the possibility of investing in a currently nil-yield share as a good prospect for recovery. All you can do is pick arguments with others, who are trying to point out that your interpretation of the rules is needlessly restrictive.

I have been through every post of yours on this topic, and fail to see what your objective is, other than to attack certain people and a style of investing. The simple fact is that the discussion being held is about whether SMDS is a share which should be held for recovery. It is not about whether such a discussion should be held here or there. Maybe that word "Strategies" should be a clue to you.

TJH

[Wizard]

In the text you have highlighted the word "they" is used. It is hard to read that "they" as other than referring to the "investors who have decided to take, or are contemplating taking, a HYP approach" referred to in the previous sentence. You may think I am being argumentative, I simply think I am following the guidance, I am rather surprised you find it so hard to understand that guidance. If you think the "they" has a different meaning please feel free to explain what it is referring to. Resorting to telling me to be quiet does not make you right, it just demonstrates you lack a coherent point.

All you are doing is raising spurious points to emphasise the point that you do not agree with the HYP principles. That is it, pure and simple. If you wish to comment constructively on the HYP board you are free to do so, but you have decided to construe the guidelines as an absolute ban on you posting there. You are right that nihilistic comments are not welcome on that board, but constructive comments are.

If you look at the first post in this topic, it is basically an attack on PYAD himself. Other contributors to this topic have been able to make useful comments about the possibility of investing in a currently nil-yield share as a good prospect for recovery. All you can do is pick arguments with others, who are trying to point out that your interpretation of the rules is needlessly restrictive.

I have been through every post of yours on this topic, and fail to see what your objective is, other than to attack certain people and a style of investing. The simple fact is that the discussion being held is about whether SMDS is a share which should be held for recovery. It is not about whether such a discussion should be held here or there. Maybe that word "Strategies" should be a clue to you.

TJH

It was PYAD that made the rather odd logical leap to construct a way of suggesting investing in a share that currently has a yield of 0% is an acceptable investment in an HYP. So yes, in that sense it was his personal logic that I was challenging, but others seem to have rallied to the cause so it seems that it is a more widely held view that it is OK to buy a share that has just cancelled its dividend. Strange really as when a few weeks back I posted that I had bought IAG it was pointed out to me that the dividend had been cancelled, by you in fact.

I have also said that I am not questioning whether DS Smith is a good share to buy now, as you yourself say it is a recovery play. But that is an interesting cjoice for a strategy that is all about income with capital very much seen as secondary.

Oh and you have still not pointed out, with reference to the wording of the HYP-P guidelines, why my interpretation that I cannot post on that board is flawed. Just saying it a lot does not make you right. If you can point out whrre I am wrong then there would be no restriction on me posting on HYP-P if I wanted to.

[tjh290633]

Oh and you have still not pointed out, with reference to the wording of the HYP-P guidelines, why my interpretation that I cannot post on that board is flawed. Just saying it a lot does not make you right. If you can point out whrre I am wrong then there would be no restriction on me posting on HYP-P if I wanted to.

It is really a question of your state of mind. If you had an open mind about HYP, despite having decided that you did not wish to follow that path, then your ability to post on that board is not in question. As it is, you have a mindset that says that HYP is a a strategy with which you fundamentally disagree. If you were merely sceptical about it because of your own failed experiment, and wished to post about your experiences, then there is no problem. Others might be able to learn from your mistakes. From what I recall, you only tried it for a short period of time.

It might be a cathartic experience for you to tell the story.

TJH

[dealtn]

I don't regard it as unHYP to buy or top-up suspenders in the current rather extraordinary climate.

Regardless of the emotion and the history of the protagonists involved here, this is quite an extraordinary statement. I'm sure if anyone other than the author made it, especially on the Board he did, it would likely have been reported, and certainly not rec'd multiple times.

I'm no fan of "rules based" strategies, full stop, but I can at least acknowledge one of the strengths is having a set of known rules, that can be followed. It seems this particular strategy now has lost the certainty, or at least visibility of what the rules now are.

If it is now possible to buy a non-dividend payer (not just top up), and it not be considered unHYP, what other purchases are now allowable? Surely a previously considered "low yielder" that has maintained its dividend is ok? What about a low yielder that is likely to remain a low yielder but which can be expected to increase that dividend such as a 3% yielder in a growth sector where it might be possible to "assume" the dividend will double in the next couple of years? If its ok to use todays share price of SDMS and forecast a return to the last regular full year dividend to create its yield is that not the same as using todays share price and yield of 3%, but with a forecast doubling of dividend payments its now a forecast 6% yield?

Of course in "practical" terms all investors, following any strategy, will need to adjust to the extraordinary climate, as the author suggests, but the merits of the rules, and strategy, are now so murky it is impossible to define what is "extraordinary" or not, when that is over, what rules are allowed to be broken, which not, and when that will no longer be allowable etc.

I wish all who follow, invest, and defend the strategy all the best, but I can't get my head around the claim it is not unHYP. It would be better to admit it was unHYP, but understandable, which I think was the opinion of the original poster undertaking the purchase, than to claim otherwise.

[Lootman]

When the circumstances require it, the "roolz" will once again be massaged to fit that new set of circumstances.

It's hard for HYP to win here either way though, isn't it?

If it modifies its rules to reflect real world changes then it is accused of being inconsistent. And if it sticks faithfully to whatever was written 20 years ago it gets criticised for being rigid and inflexible.

I seem to recall that a previous version of the HYP-P guidelines allowed for shares that do not currently meet the yield criterion but look likely to in the future. They were called "potential HYP shares". Surely that would cover this case, no? Likewise a share that used to qualify but currently does not can also be discussed here.

[Dod101]

Likewise a share that used to qualify but currently does not can also be discussed here.

That is why I was not all out in criticising pyad's comments. There was for instance a discussion not that long ago re Unilever which it was decided may be discussed on the HYP -P Board as it yielded sufficient at one time to be considered suitable for a HYP. That criteria surely applies to D S Smith although as I said it has come to something when a non payer is considered suitable. These are though as they say, unusual times.

I agree with RVF though that the classic HYP is now all but dead. In the final analysis, it has failed the stress test.

Dod