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