GoSeigen million challenge!

[GoSeigen]

The last year has generated about £900 of interest and dividends, including a large special dividend in Sep 2022 due to a NATW corporate action. I've decided to top up NATW, partly to reinvest the dividend and partly because it is one of the smaller bank positions and has performed better than LLOY. Hence the following purchase this morning:

Trade   Symbol   Unit Price   Quantity    Fees     Value  
BUY     NATW       235.8698         382   £16.46   £917.48

Total portfolio value at present is a disappointing £18,500, growth has been nowhere near the 30%pa required to match ukpoker's original challenge. Inflation is also an irritant given my own aim is to beat 3% net of inflation, fees and tax. Nominal IRR since inception is about 13.5%.


GS

[GoSeigen]

I'll try to sell the Liverpool bonds again over the next few days, perhaps leave them to be worked by the MMs. The broker is HL so if anyone has ideas how to motivate them to sell for me I'd welcome them.

GS

Just an update on the Liverpool bonds. I haven't been able to find any buyers or even an indicative quote for these bonds. However, I did a good deal of sleuthing and finally discovered that they are still managed and paid by Liverpool City Council's treasury department. Might contact them to see what chance of selling, expecially having read this very informative column today on Bloomberg:

https://www.bloomberg.com/opinion/artic ... ket-in-u-k


Especially interesting to read that practically the first municipal bond in decades has been issued in the UK this year. The article implies that the issued yield was a spread of c100bp over gilts. If applied to the Liverpool bonds I hold, it would value them at 1.5%/200p which, if I could sell at that price or even close would be wonderful considering I bought them just a few years back at 65p!

Astonishing that long gilts yield <0.5% today. That's quite a middle finger to all the gilts bashers...

In 2020, in the wake of the COVID crash, I attempted to sell the Liverpool 3.5% irredeemable bonds (ISIN:GB0005200810) held in this account; I was hoping for close to 200p which is a bit below the price 4.25% 2055 gilts were trading at the time. Alas it wasn't to be as I was too lazy to find a buyer for what admittedly is extremely illiquid stock.

There has now been some very good news for holders: a tender offer announced at par, i.e. at a yield of 3.5%. Given that the 2055 gilts are trading at over 4% yield currently and are more liquid, a better credit, and dated, I think the tender offer is irresistible. One could trade immediately into the gilts and if yields plunged again there would be no difficulty in realising the gain.

I will therefore accept the tender offer for all the 4500 Liverpool bonds held in this account. The return they earned over the 6 years holding period is something like 12%CAGR which, although a bit of a brake on the required performance of 30% CAGR to reach our £1 million on time, is still a decent return for a municipal bond and quite gratifying given my goal of managing risk in this live money account. (See points 5,6,7 in the OP):

I will update on the value of the fund when the tender is complete.


GS

[GoSeigen]

11 Nov 2021:

[...]Meanwhile dividends and interest had brought the cash balance to £979.47 by yesterday and I decided to increase exposure to Bank of Ireland with the following purchase:

Description  Symbol  Unit Price  Quantity    Fees      Value    
BUY         BKIR        447.44        214  £21.53   £ 979.05

The stamp and commission are painful but after years of doing nothing I'm impatient!

My view of banks' business hasn't much changed. Last year at their lows people were bashing them and saying things like they would never make a profit. Well they are already showing strong profits and I am grateful this is not my only portfolio: I was actively buying bank stocks elsewhere following the crash.

Reagrds the market in general, people are calling a crash. There has been a crash already! It was last March or April, and it took the S&P 500 to 50% below its current price. That was the time to be buying IMO. Hoping for another crash now barely a year on is futile IMO. Yields and interest rates are still low and falling, monetary stimulus has not been withdrawn, fiscal stimulus is massive and many markets are still depressed. The FTSE has barely moved in 20 years and after such a long consolidation, and especially following the Brexit and COVID headwinds of recent years, it's surely due a long and steady bull market.

Well, my view of banks' business still hasn't changed. However market values have, and the Bank of Ireland shares I bought in Nov 2021 have doubled in price. I think they are now close to fair value, and also recent news has been very good for BoI and banks in general and so I think a bit of caution is justified. Therefore I've decided to top-slice the Bank of Ireland position, selling about one sixth of the position, still leaves it as the largest and best performing position. I'll let the remainder run for now, and add the cash to the proceeds of the tender offer referred to in my last post.

Here is today's trade:

Description  Symbol  Unit Price  Quantity    Fees      Value    
BUY          BKIR        950.37      114   £11.95   £1,071.47

The account value stands at approximately £24,200 (valued as if tender had completed).

GS

[GoSeigen]

Here is today's trade:

Description  Symbol  Unit Price  Quantity    Fees      Value    
BUY          BKIR        950.37      114   £11.95   £1,071.47

Typo, that should be SELL of course.

GS

[GoSeigen]

Sorry a few days late reporting this trade.

Taking advantage of bank share price falls following the Credit Suisse resolution, I've recycled the proceeds of the Bank of Ireland sale into Barclays. The trade was made on 16 Mar (last Thursday):

Description  Symbol  Unit Price  Quantity    Fees      Value    
BUY          BARC      140.3734      780   £17.42   £1,112.33

The account value stands at approximately £24,200 (valued as if tender had completed).


This is tinkering but the Liverpool bonds tender hasn't completed yet and needs must!

GS

[GoSeigen]

Today the redemption proceeds of Liverpool Corp bonds arrived in this account. I am actually going to transfer the proceeds to my daughters Child Trust Fund in advance her 18th birthday. This means the investments for the million challenge will be held in two different accounts along with other assets, which will make tracking the activity a challenge! However, I will do my best to maintain a separate investment strategy and accounting for the million challenge and continue reporting in real time. I think I'm the only person still bothering to do this LOL!

After receipt of redemption proceeds the account value stands at £22,510.

GS

[Dod101]

Today the redemption proceeds of Liverpool Corp bonds arrived in this account. I am actually going to transfer the proceeds to my daughters Child Trust Fund in advance her 18th birthday. This means the investments for the million challenge will be held in two different accounts along with other assets, which will make tracking the activity a challenge! However, I will do my best to maintain a separate investment strategy and accounting for the million challenge and continue reporting in real time. I think I'm the only person still bothering to do this LOL!

After receipt of redemption proceeds the account value stands at £22,510.

GS

So you still have some way to go to reach £1 million. When do you expect that momentous event?

Dod

[GoSeigen]

Today the redemption proceeds of Liverpool Corp bonds arrived in this account. I am actually going to transfer the proceeds to my daughters Child Trust Fund in advance her 18th birthday. This means the investments for the million challenge will be held in two different accounts along with other assets, which will make tracking the activity a challenge! However, I will do my best to maintain a separate investment strategy and accounting for the million challenge and continue reporting in real time. I think I'm the only person still bothering to do this LOL!

After receipt of redemption proceeds the account value stands at £22,510.

GS

So you still have some way to go to reach £1 million. When do you expect that momentous event?

Dod

At the rate my daughter needs cash, never

At the current rate of return, about 32 years, hopefully I'll still be alive to congratulate her.

I can't remember UKPoker's requirement, I think it was thirty years in total which would make me a decade and a half behind schedule.

GS

[Dod101]

So you still have some way to go to reach £1 million. When do you expect that momentous event?

Dod

At the rate my daughter needs cash, never

At the current rate of return, about 32 years, hopefully I'll still be alive to congratulate her.

I can't remember UKPoker's requirement, I think it was thirty years in total which would make me a decade and a half behind schedule.

GS

Dod

[GoSeigen]

Today I've made a buy/sell pair of trades in Lloyds Banking Group ords in order to Bed-and-ISA the holding in this account and simultaneously increase exposure to LLoyds by about £800, since the sell is for 7600 shares and the buy for 9200 shares.

LBG shares are trading below 50p still, not as much a bargain as in 2020 but still very much near its generational lows. I anticipate cash flows of some 10% per annum for the forseeable, if inflation persists then maybe even better.

Description  Symbol  Unit Price  Quantity    Fees      Value    
SELL         LLOY      140.3734     7600   £11.95   £3,715.85
BUY          LLOY      140.3734     9200   £33.56   £4,546.62

The account value stands at approximately £23,500 with cash balance of £3,837.30.


GS

[GoSeigen]

Starting to deploy the proceeds of the Liverpool Corp bonds that were redeemed recently, yesterday I bought 3200 Marstons shares close to their lows at 34.324p

Marstons operate pubs and have a brewing joint venture with Heineken which has been discussed previously on TMF. To me their valuation looks absurd. If profitability returns to where I think it should be (>£100m pa) then the shares would be trading at a PE of 2. They are priced far below book and to me it seems there's not much fluff on the balance sheet. Pubs are beaten down. Famously thousands have closed. People like drinking at home. They like sitting on their devices and streaming movies or doom scrolling. Everyone is suffering inflation shock. To me these things are all very bullish for the share. And to buy shares cheaply with such a bullish backdrop is exactly what I like.

I've already been purchasing these in other accounts. Now ready to pull the trigger for the Million challenge and diversify a little from the current 100% allocation to banking sector. Get ready to laugh if they crash and burn!

Description  Symbol  Unit Price  Quantity    Fees      Value    
BUY           MARS      34.324       3200   £17.44   £1,115.81

Cash balance is £2,901.07 after the purchase.


GS

[GoSeigen]

Starting to deploy the proceeds of the Liverpool Corp bonds that were redeemed recently, yesterday I bought 3200 Marstons shares close to their lows at 34.324p
[...]
Cash balance is £2,901.07 after the purchase.

I've now carried out two more trades to invest the remainder of Liverpool corp proceeds.

Normally I'd buy gilts, given their collapse in price, but I think apart from the short end a gilts purchase i premature. The market is still full of pessimism, interests rates still in their rising phase and the pound has had a good run. As a result I still like UK shares and especially banks so have made two purchases accordingly.

INVR is a preference share but with the unconventional feature that its coupon payments track the UK BoE base rate directly. Thus I think mortgage payers' loss is this security's gain, and we all know how mortgage payers are feeling at the moment. Interest rates are back where they were before the GFC, but INVR share price is only about 60% of its 2007 issue price. That gives room for appreciation, with about 11% running yield while holders wait. A big risk of course is that the rise doesn't come and then rates collapse. I am happy to take the risk of that scenario with a modest holding, as this will represent a cash-like component of the portfolio albeit with super-charged interest payments for the time being. Sorry, made this trade in early Aug but only reporting now.

The other purchase is Barclays which is already a component of this account. Barclays has been trading sideways for years and in a tight range for the past six months. Previous purchase was in March at the bottom of that range. With the price having ticked up a bit I'm ready to add more. I still believe banks are going to receive a wall of cash from their customers, resulting in excess capital will either be returned to share holders or be used to lend at the new juicy margins available today. Add in the effect on top line of inflation and I still think the future is rosy for the banks. I love that most people are not interested in them or moan about everything they do. One day everyone will love bank shares and then hopefully we'll be sensible enough to be selling down this holding to them.

It's worth noting that BARC has been a rotten investment so far for this account, I clearly started buying way too early in 2016 but fortunately have added gradually with only a further £2800-worth added to the holding before this year. In that time the dividends have risen from 3p per share to 7p per share with an additional capital return via buyback of roughly a further 5p per share, so it's not all bad.


Here are the purchase details:

Date          Trade   Symbol   Unit Price   Quantity    Fees     Value     
07 Aug 2023   BUY     INVR            555         320   £20.83   -£1,796.83
15 Sep 2023   BUY     BARC         155.26         780   £18.01   -£1,229.04

GS

[GoSeigen]

Starting to deploy the proceeds of the Liverpool Corp bonds that were redeemed recently, yesterday I bought 3200 Marstons shares close to their lows at 34.324p
[...]
Cash balance is £2,901.07 after the purchase.

I've now carried out two more trades to invest the remainder of Liverpool corp proceeds.
[...]
Here are the purchase details:

Date          Trade   Symbol   Unit Price   Quantity    Fees     Value     
07 Aug 2023   BUY     INVR            555         320   £20.83   -£1,796.83
15 Sep 2023   BUY     BARC         155.26         780   £18.01   -£1,229.04

GS

Almost another year has passed since the last update, with some masterly inactivity! The last post recorded two purchases, since then cash has accumulated from dividends and interest and as of this morning totalled £1,353.97.

Purchase
Today news came from one of the companies held: Marston's announced that they have divested completely from their brewing business in a £206m cash transaction. This sale was worth some 50% more than the entire market capitalisation of the company and the shares have jumped 15% in trading after the news.

For me these are positive developments for the following reasons, among others:
1. MARS looks to be breaking out of its downward trend.
2. The cash is very useful to the business and significantly reduces net debt.
3. Marstons are now a pubs-only business so will be focussed exclusively on operating their pub properties.

The third point is especially bullish I think, I like the outlook for pubs and this leaves our investment maximally leveraged to that particular business.

So today I've more than doubled the MARS position in a bed-and-ISA transaction selling the previous holding and repurchasing a larger position. The two trades are:

Date         Trade   Symbol   Unit Price   Quantity    Fees     Value 
8 Jul 2024   SELL    MARS        0.34645       3,200   £11.95   £1,096.69
8 Jul 2024   BUY     MARS       0.348567       6,800   £22.84  -£2,393.10

The fees are a shame but the bed-and-ISA needed doing...


Valuation
This transaction leaves the portfolio invested as follows:

Description                 Symbol    Quantity       Cost Basis      Value     
Bank Of Ireland Group Plc   BIRG           550       £1,974.30    £4,664.00
Lloyds Banking Group plc    LLOY         9,200       £5,887.43    £5,140.96
Barclays Ord 25p            BARC         4,160       £6,730.34    £9,295.52
Investec Plc                INVR           320       £1,796.83    £1,840.00
Martsons Plc                MARS         6,800       £2,412.22    £2,352.80
NatWest Group plc           NATW         1,774       £4,489.82    £5,863.07
Total Stocks                                        £23,290.94   £29,156.35
Cash                                                                 £57.56
TOTAL                                                            £29,213.91

There's a bit of growth since the valuation of £23,500 last April but this needs to be maintained to have any hope of reaching the targeted £1 million in a reasonable timescale! Income over 12 months was £1280.64.

The allocation is still 85% bank stocks with about 15% total in Investec preference shares and Marstons ords. Banks have performed well over the past year and I am not tempted to sell yet. Practically all banks are buying back their shares so at some point if any bank gets heavily out of kilter it may be worth rebalancing or top-slicing.

For now, I'm just patiently waiting for income to arrive.

GS

[GoSeigen]

On 8 July I wrote:

The allocation is still 85% bank stocks with about 15% total in Investec preference shares and Marstons ords. Banks have performed well over the past year and I am not tempted to sell yet. Practically all banks are buying back their shares so at some point if any bank gets heavily out of kilter it may be worth rebalancing or top-slicing.

For now, I'm just patiently waiting for income to arrive.

Barclays is interesting. There are six holdings in this portfolio now so mean holding size should be 16.6%. Barclays allocation has passed 33% in recent weeks with good share-price growth. Meanwhile the company is buying back its shares which always makes me cautious. I bought the last tranche of BARC just over a year ago at 155p, now the price is over 250p. All things considered I feel it's time to top-slice this share.

That's not to say my bullish view has changed: FWIW my long-term view is that Barclays and other banks are around year five in a 40-year secular bull cycle. So at some point I'll be buying more. Barclays price action is very good with a new multi-year high just yesterday. It's the above points that slightly discomfort me: the imbalance in the portfolio, the buybacks, rapid price growth.

So while I have decided to sell, it will be a very small tranche for now. I have some housekeeping to do anyway. I want to move this holding into an ISA. It's valued at just over £11,000 now with capital gains of £4000; this comes in under the annual allowance so I decided the sale would be carried out as part of a bed-and-ISA operation.

This morning I did the following pair of trades. The resulting shareholding is reduced from 4160 shares to 3840, somewhat in line with the ongoing share buybacks.

Date         Trade  Symbol  Unit Price  Quantity  Fees    Value     
22 Nov 2024  SELL   BARC        254.65     4,160  £12.95    10580.49
22 Nov 2024  BUY    BARC        254.67     3,840  £59.89  -£9,839.29

The resulting cash will be rolled up with accumulated dividends and I am considering one of:
-top up LLOY: it's one of the banks that has lagged recently, oversize bank allocation continues
-top up Bank of Ireland: another bank that's taken a breather. It's also the best performer to date having doubled
-top up Marstons: I'm still bullish pubs, MARS looks very cheap and the price action is excellent
-top up Invested Prefs: I'm not so keen on this but it's the smallest holding and probably somewhat uncorrellated so a decent hedge. It's also an inflation play and I'm bullish inflation.
-purchase a Platinum metal tracker: this is one of the themes in my other portfolios, one of my conviction plays


Any thoughts on those options?

Please bear in mind that the aim of this portfolio is to grow it some 30% per year so please no criticism of over-concentration or similar oddities. I am trying to apply my best ideas here.

[EDIT: Current valuation: £31,546 Cash £1,311.15]

GS

[GoSeigen]

The resulting cash will be rolled up with accumulated dividends and I am considering one of:
-top up LLOY: it's one of the banks that has lagged recently, oversize bank allocation continues
-top up Bank of Ireland: another bank that's taken a breather. It's also the best performer to date having doubled
-top up Marstons: I'm still bullish pubs, MARS looks very cheap and the price action is excellent
-top up Invested Prefs: I'm not so keen on this but it's the smallest holding and probably somewhat uncorrellated so a decent hedge. It's also an inflation play and I'm bullish inflation.
-purchase a Platinum metal tracker: this is one of the themes in my other portfolios, one of my conviction plays


Any thoughts on those options?

Funny isn't it, how someone can make a bold boast that he is going to turn £3000 into a million in twenty years and everyone loves it, they even get coverage in The Times itself -- but when one actually has to deliver and ten years have passed there is seemingly no interest whatsoever! I don't think UKPoker has shown his face here in years, he has no doubt long forgotten his challenge...


Anyway, plodding on in my pedestrian fashion, a decision had to be made and I have gone for Marstons. At £30,000 value I feel the portfolio should be a tiny bit more diversified, even if it's just two sectors -- actually this position is still more like a hedge than a serious punt!

Marstons looks to me to be trading at a silly valuation based largely IMO on pessimism about the sector in general which is still suffering net closures of pubs and also a fear that Mars will not deliver, along with it's debt load. The debt is a double-edged sword, yes, it can drag down a business, but IMV now is the time for businesses to be carrying a bit of debt--it provides leverage, and profitability is boosted as the debt declines which should benefit future multiples. There are also of course the now tired historical factors of smoking bans and supermarket competition; these along with the other points above are all profoundly bullish to me and to be able to buy the stock so cheaply at the same time is remarkable.

On the technical side, the FTSE is arguably at the start of a massive bull run. There has been a bullish breakout with a healthy pattern of higher highs and higher lows, also recent all-time highs followed by testing of support at the previous highs. So the general market is supportive albeit not moving up quite yet, so what about MARS itself? Hand on heart I can't say I'm confident MARS is out of the woods yet. The monthly MACD is still negative, though the weekly has been positive for a long time. The stock has been forming a bottom for four years now, following the panic COVID trading in early 2020, while the sector is now sixteen years past its initial collapse which to me is enough time to establish new price action. What I am prepared for is a period of waiting. Since the first purchase of this share in May 2023 we've been fortunate to be able to buy in a gently rising price environment. This gives a margin of safety and provides some comfort that the initial purchases were sound.

Hence, today I bought an additional 3200 shares. I would like to have bought a larger tranche but there was insufficient cash. It will do though, given my doubts, and I'll be happy to add more if a good opportunity arises (two possible scenarios -- the share consolidates and we can buy later into renewed strength, or alternatively, if the price makes new short-term highs on the back of solid results or general market bullishness.)

Here's the trade:

Date         Trade  Symbol  Unit Price  Quantity  Fees    Value     
27 Nov 2024  BUY    MARS        38.71     3,200  £16.18  -£1,255.91

GS