Technology stocks for my pseudo-HYP?

[Newroad]

Morning, All.

I would like to find two "Technology" stocks for my pseudo-HYP, ideally from the FTSE100, worse case from the FTSE250. This is for portfolio balance purposes, rather than to achieve a strictly HYP outcome.

SGE is a candidate for the first, despite being well below mean FTSE yield. Pickings are a bit slim for a second.

I was thinking about going for BAE as a technology-like stock, being arguably the most technology-like "Industrial". Any thoughts on this?

Regards, Newroad

[dealtn]

Any thoughts on this?

Difficult to comment without knowledge of the portfolio given the selection is for "portfolio balance" purposes.

[Newroad]

Hi Dealtn.

There are 11 "sectors" (different methodologies give this grouping a slightly different name). I intend to get 22 stocks in total, 2 * 11. I currently have the first 10. These are

BP., BATS, SMDS, GSK, LAND, LGEN, RIO, SSE, TW., VOD

The next logical choice is SGE.

Regards, Newroad

[simoan]

What’s wrong with Intel? Currently yields >5% in USD terms. Why restrict your large cap universe to FTSE100 if you want a real technology share?

[SalvorHardin]

What’s wrong with Intel? Currently yields >5% in USD terms. Why restrict your large cap universe to FTSE100 if you want a real technology share?

Another one is Seagate Technology, currently yielding a bit less than 5.3%. Seagate aren't just hard drive manufacturers; they are also involved in cloud storage.

https://seekingalpha.com/symbol/STX

https://investors.seagate.com/overview/default.aspx

I looked (briefly) at Seagate last month, before deciding that technology shares are still outside my circle of competence. Also I was more tempted by some American REITs which yielded more than 10%. REITs / property companies is another sector where HYP investors could benefit from looking overseas.

[simoan]

I looked (briefly) at Seagate last month, before deciding that technology shares are still outside my circle of competence. Also I was more tempted by some American REITs which yielded more than 10%. REITs / property companies is another sector where HYP investors could benefit from looking overseas.

Haven’t looked at Seagate for several years and never looked at US REITs. As well as Intel the likes of Cisco and Broadcom are yielding around 3.5%. Must be others outside of those I keep an eye on. I never really understood why HYP as defined by TMF/TLF was restricted to UK shares in the first place, particularly in a post globalisation world.

[SalvorHardin]

I looked (briefly) at Seagate last month, before deciding that technology shares are still outside my circle of competence. Also I was more tempted by some American REITs which yielded more than 10%. REITs / property companies is another sector where HYP investors could benefit from looking overseas.

Haven’t looked at Seagate for several years and never looked at US REITs. As well as Intel the likes of Cisco and Broadcom are yielding around 3.5%. Must be others outside of those I keep an eye on. I never really understood why HYP as defined by TMF/TLF was restricted to UK shares in the first place, particularly in a post globalisation world.

One more is IBM, which yields 4.7%. I suspect that given the bashing that the tech sector has recently taken, there are quite a few American technology shares now yielding over 3%.

US REITs give access to sectors which are woefully underserved by the UK stockmarket, such as residential rentals (Equity Residential, Camden Property, Clipper Equity (New York City apartments)). And more diversification. One that straddles both technology and REITs is American Tower, which is a big owner of cellphone towers and other communications infrastructure. Yield is a bit low for HYP purists at 2.9%.

The UK restriction on what should be put into a HYP seems to be because the original "Doris" portfolio was only invested in British quoted shares and had been held for many years. What was good for Doris is good enough for everyone. Doris' original investments were made in the pre-public internet days when dealing in foreign shares (and following them) was an absolute pain (and very expensive). No investment trusts because Doris' portfolio didn't have any investment trusts.

[Newroad]

Hi All.

Thanks for the thoughts re IBM, Intel etc.

As these are outside a tax-shelter, the idea is not to induce any admin overhead or tax complexity. Hence, the decision was made for FTSE listings only and the FTSE100 ideally (thought willing to add the FTSE250 in if the case is compelling).

It is an experiment - though with real money - and in the future, a different version might entertain the ideas you guys have.

Regards, Newroad

[simoan]

US REITs give access to sectors which are woefully underserved by the UK stockmarket, such as residential rentals (Equity Residential, Camden Property, Clipper Equity (New York City apartments)). And more diversification. One that straddles both technology and REITs is American Tower, which is a big owner of cellphone towers and other communications infrastructure. Yield is a bit low for HYP purists at 2.9%.

Thanks. Not something I’ve looked at before so will do some research. Only REITs I currently hold are UK based Urban Logistics and Tritax Eurobox.

[simoan]

Hi All.

Thanks for the thoughts re IBM, Intel etc.

As these are outside a tax-shelter, the idea is not to induce any admin overhead or tax complexity. Hence, the decision was made for FTSE listings only and the FTSE100 ideally (thought willing to add the FTSE250 in if the case is compelling).

It is an experiment - though with real money - and in the future, a different version might entertain the ideas you guys have.

Regards, Newroad

The FTSE350 is probably the worst index on the planet for technology sector coverage. I can only think of Computacenter (CCC).

[Newroad]

Indeed, Simoan.

Hence the OP and the suggestion it contained.

Regards, Newroad

[Arborbridge]

Indeed, Simoan.

Hence the OP and the suggestion it contained.

Regards, Newroad

It's entirely possible you need to look outside the HYP idea for the best technology. Buying US stocks or an IT laced with them would probably be better than trying to "force it" within a HYP.

Most of us run a HYP, but other portfolios in addition.

Arb.

[SalvorHardin]

US REITs give access to sectors which are woefully underserved by the UK stockmarket, such as residential rentals (Equity Residential, Camden Property, Clipper Equity (New York City apartments)). And more diversification. One that straddles both technology and REITs is American Tower, which is a big owner of cellphone towers and other communications infrastructure. Yield is a bit low for HYP purists at 2.9%.

Thanks. Not something I’ve looked at before so will do some research. Only REITs I currently hold are UK based Urban Logistics and Tritax Eurobox.

A good place to start IMHO is at Seeking Alpha. Look at REIT articles written by Brad Thomas (link below).

https://seekingalpha.com/author/brad-thomas

He's a real estate professional investor, 30+ years of experience and he also writes for Forbes.

[tjh290633]

Morning, All.

I would like to find two "Technology" stocks for my pseudo-HYP, ideally from the FTSE100, worse case from the FTSE250. This is for portfolio balance purposes, rather than to achieve a strictly HYP outcome.

SGE is a candidate for the first, despite being well below mean FTSE yield. Pickings are a bit slim for a second.

I was thinking about going for BAE as a technology-like stock, being arguably the most technology-like "Industrial". Any thoughts on this?

Regards, Newroad

I have had BAE Systems since it demerged from Marconi/GEC in 1999. My IRR has been 12.6%, although a single share held from the start would have given an IRR of 6.4%. I have trimmed my holding back on 3 occasions, and topped it up on 6 occasions. Currently the yield is 3.2%, which is a little low. Incidentally my holding cost is now very low, such that the interim dividend exceeds it. Average cost is now 9.58p, so the yield on cost is now about 250%.

Another is IMI, which I bought in 2009 at 265p. Current yield is 1.7%, which rules it out of consideration for a new HYP, but my IRR has been 42.2%, or for a single share bought in 2009, 8.5%. That has been trimmed 3 times and there was also a return of capital in 2014. I have topped up on 4 occasions along the way, and the average cost is now 14.9p, having been negative for quite some time.

You have to catch them at the right time.

TJH

[Newroad]

Thanks all for the further input.

[Arb] The Pseudo-HYP (experiment) is only a small part of the Mr & Mrs Newroad holdings - around 3% currently. The rest is 60% plus in global equities, the balance in global bonds and cash (slightly more in the bonds than cash).

On the technology (actually, for the pseudo-HYP in general) it's not stock-picking to try and shoot the lights out, it's a structured approach. To be honest, I could ignore the Technology sector and just run with 2 * 10. In terms of the source material re the theory behind the diversification, most of the benefit is allegedly achieved once you hit 8 sectors, with reducing improvements (in Geometric Mean outcome and Sharpe Ratio) thereafter.

[Terry] Thanks for the specific input re BAE. It's not clear to me whether you or anyone else thinks it would be reasonable to consider it for a technology-proxy role, but there is no reason why you must.

[Simoan] I believe MONY is regarded as a Technology stock in the FSTE250/350 - that is one of my current alternate options. But as alluded to before, I would prefer FTSE100 if possible (for this particular purpose).

Regards, Newroad

[Itsallaguess]

I would like to find two "Technology" stocks for my pseudo-HYP, ideally from the FTSE100, worse case from the FTSE250.

This is for portfolio balance purposes, rather than to achieve a strictly HYP outcome.

Just in case it might throw up something you've not considered before, here's a couple of 'Techmark Index' constituent links -

https://en.wikipedia.org/wiki/FTSE_techMARK_100

https://www.ii.co.uk/indices/ftse-techmark-100-index

https://www.investments.halifax.co.uk/research-centre/markets/?csid=50149&region=UK

Note that the third link contains two 'pages' of constituents, where you've got to click the 'Next' arrow under the initial table to see the rest of the constituent list.

Also, a recent 'Top 10 UK Tech Stocks' article, with good descriptions of the underlying companies, from June of this year -

https://www.ig.com/uk/news-and-trade-ideas/shares-news/top-uk-tech-stocks-181212#top

'Technology' is a very broad remit in UK investment terms, so the above lists probably cover some areas that we might not consider to be 'Tech' in some senses, but hopefully there's something of interest there just to try and cover a few more bases for you.

Cheers,

Itsallaguess

[Newroad]

Thanks, IAG.

That's very helpful - and at some level validates my line of thinking

Regards, Newroad

[simoan]

[Simoan] I believe MONY is regarded as a Technology stock in the FSTE250/350 - that is one of my current alternate options. But as alluded to before, I would prefer FTSE100 if possible (for this particular purpose).

Regards, Newroad

The FTSE sector definitions are, quite frankly, ridiculous and I personally do not pay any attention to them. It’s clearly absurd that the likes of MoneySupermarket and Next are in the Technology sector.

[Newroad]

That's perhaps slightly harsh on MONY, Simoan.

Though I don't have a particular issue if you want to regard them as something else - a media stock perhaps?

On other matters, my unrealised P&L losses on the pseudo-HYP have just dropped below £1000 for the first time in quite a while

Regards, Newroad

[simoan]

That's perhaps slightly harsh on MONY, Simoan.

Though I don't have a particular issue if you want to regard them as something else - a media stock perhaps?

On other matters, my unrealised P&L losses on the pseudo-HYP have just dropped below £1000 for the first time in quite a while

Regards, Newroad

MONY is a financial services company providing its service through a website. The website is based on technology (obviously) but the product or service they provide is not technology. For me, the main product or service provided by a company must be "technology", not something else that uses technology. That's where I draw the line. Next is clearly a retailer and clearly does not provide a technology based product. Only some weirdo at the LSE would consider it a "technology" company. Which sector a company is in is the last thing I take into consideration when stock picking. Totally irrelevant. I want to own the best companies possible, so why select them based on such an arbitrary metric.