| How To Win Even In Bear Markets. Buy Quality At Bargain Prices. It Works!

13th Nov '23 by ken mitchell

138 comments 10679 reads

This time last year I posted the following on Mike Walters website at the height of the Truss chaos and when advice there and more generally was to stay away from the stock market. It has been very difficult if only investing in Uk small companies, but if widening the spread of investments to quality shares and Investment Trusts, like those included in the post below at what look to be bargain prices, then it is possible to win:-

“MARKETS.

As sevenccc has just posted, this is the second of 2 big up days in the US. Reasons include increasing signs that inflation might have peaked there AND the possibility that we might be near the end game in Ukraine.

Key big worry is risk of Putin resorting to nuclear.

I’ve started adding to some of my holdings. It might be too soon but the shares and Trusts below have either fallen a long long way with bad news priced in, OR have held up well. There is extraordinary value out there. AND all of these could well go up a LOT when markets turn up. There’s a chance it could be soon. Or started here today.

There’s no detail on each share or Trust. That’s because there is info on nearly all of them in past BARG posts. Also viewing figures and recommendations for posts on BARG shares and Investment Trusts are much lower than they were. That could be because we’re in a bear market, but also reflects that there is more interest here, including Mike, in early stage smaller Companies. A lot of small investors prefer those.

Anyway here they are. Most pay very big dividends to provide invaluable income while we wait for big share price gains.

ABERDEEN. ABDN. 142p. Low 137p. Year to date DOWN 43%. Dividend 10.5%

AVIVA AV. 407p. Low 378p YTD DOWN 29%. Dividend 7.5%

B&M retail. 326p. Low 306p. YTD DOWN 48%. Dividend 5%.Discounter ideal in my opinion for hard times. Note the big share price rise for Greggs today after their update!

CHESNARA CSN 272p. Low 256p YTD DOWN only 3%. Dividend 8.5% …it’s been increased every year for years!…

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ken mitchell

29th Mar

Good to see you posting here and on the Investment Trust thread too, Brucie.

Not sure the following is much use because no longer are some of the following 6 obvious extreme bargains after useful gains for 4 of them where the obvious bargain buy opportunity has now passed. But it might not be too late if at last shares like AVIVA and Phoenix are going to re-rate to more sensible levels.

AND even now the very big dividend yields are at levels where in normal times those yields would be a warning that the current dividend is unsustainable. Yet far from seeing cuts all 6 have either held the dividend or increased it even more!! And yields from 8% to 10% are good annualised returns even with flat share prices!

Anyway……to what I call my “big 6” because they are big Companies paying, even after some recent share price gains, still extraordinarily big dividends. AND all 6 have now issued their Results and dividend updates. I hold all 6.

Legal & General (LON:LGEN) 256p. I’m UP 63% EXCLUDING the big dividends, The dividend has been increased as promised and the final is 14.63p (about 5.75%) Yield now is about 8%. Goes ex the 14.63p dividend on April 25th and pay day is 6 June. “D Day.”

Aviva (LON:AV.) 496p. I’m UP 37% (again excluding dividends) with most of that gain recent. Again final dividend increased from 20.7p to 22.5p so about 4.5% for that dividend. Goes ex dividend on 11th April and pay day 23rd May.

M&G (LON:MNG) 220p. I’m UP 28% excluding dividends. New buyers have missed the almost unchanged 13.2% dividend (nearly 6%) as it went ex dividend yesterday and pay day 9th May. Annual yield is 9%.

Phoenix group (LON:PHNX) 553p. I’m DOWN 2% (excluding dividends) even after the recent share price gains. Can’t fathom why the share price was weak ahead of results considering their VERY bullish Trading update at the beginning of February.

Here’s that trading update:-

https://www.stockopedia.com/sh...

Phoenix group (LON:PHNX) increased the dividend again. Goes ex that 26.65p final dividend on 11th April and pay day 22nd May. Full year dividend is 53p to give an annual yield of 9.5%.

Chesnara (LON:CSN) 263p. I’m DOWN 9% excluding dividends and share has done nothing for ages so is still worth checking out in case investors wake up…….or a bidder wakes them up too late. They issued Results yesterday. Dividend up AGAIN for 19th year in a row. Final is 15.61p and a tad under 6%. Annual yield 9.5%.

Abrdn (LON:ABDN) 141p. I’m DOWN 15% and the huge 70%+ share price fall from £5 is thoroughly deserved with some of the reasons why it is covered by other posters here. Dividend maintained and has already gone ex 7.3p dividend with pay day April 30th.

Other posters disagree about Abrdn (LON:ABDN) looking WELL worth buying, even if only with a half stake, at this bombed out share price. Diabolically incompetent Managements can get replaced. Bidders might see that their range of businesses might well be worth a lot more than the current share price. AND the last time Abrdn (LON:ABDN) fell to current level it bounced strongly on dashed recovery hopes. That too could happen again.

Note too the money wasted by Abrdn (LON:ABDN) on buybacks even when the share price was in free fall. They’ve spent about £3 billion on buybacks over the last 5 years ….while share price falls were relentless. But isn’t it all priced in?

ShoeShineBoy

1st Apr

Not sure where to post the following so I will go for Ken's BARG thread. Enjoyed reading Cockney Rebel's Easter weekend post. There are now a number of quality free pieces of material that hit my inbox, I would probably cancel my IC subscription if it wasn't for John Rosier, Jon Baron and BearBull which I all enjoy reading.

https://tinyurl.com/4v88cwen

The piece that stood out for me was as follows:

I was looking at various Twitter posts recently, where people have complained about their performance of late. We all invest differently and have to invest how best we feel comfortable and what gives us the best results. I’m pretty happy with the return I get. I expect to beat the FTSE250 and the Small Cap Index by double what these indexes rise at, at least over the year. I also expect to lose less than half the rate they lose at over a year, in poor years. Sometimes I’ll do a lot better than that, but I have never done worse than that, annually, since turning pro. Anyone doing this professionally should be beating the indexes by some way in my opinion, after all, you should know what you are doing if you do it for a living, you should have eliminated all the likely dross and you should be avoiding the sectors that have the least best outlooks. That on its own should mean you beat the index average.

I've got a well paid full time job so limited to spend on investing. As a result, I am largely happy with large caps for dividends and investment trusts for bargains. But the above does make 100% sense. Thought is was worth sharing.

SSB

Timoteo

2nd Apr

Where was the CR post ? He used to have an interesting thread on advfn but closed it because of trolls

Hi Timoteo,

CR closed both his ADVFN board and also his web site because he found he spend most of his time posting back and forth rather than looking at his own trades.

He now posts only on his Substack web site (see link in my previous post) where people can sign up for a free weekly newsletter sent direct to email inbox! It’s always a highlight of my weekend although maybe I’m easily pleased :-)

Thanks, SSB. I’ll do that. He was often interesting on advfn - maybe I’m easily pleased also !

Rusty2

Well worth reading. Robbie Burns blog, every 2 or 3 weeks is a good read, quite funny. Both are successful investors.

Sorry, Rusty, but I’m afraid I disagree with you about Burns !

The Phoenix

Interested in why you say that Timoteo I've found him always to be good value and helpful plus his money management cutting losses is second to none imho.

Regards Andy

Thanks, SSB. I signed up and it is indeed very interesting. One thing I have always agreed with him about is the fact that PIs can be more nimble than institutional investors. I think there are a number of positions that Smith for example would have got out of sooner had he been free to do so.

Andy, I would prefer not to go into detail here, but, apart from anything else, I don’t find his analysis terribly rigorous. Clearly others here disagree but I really can’t see how he can qualify for “guru” status when his “methodology” can’t be quantified and turned into a successful screen.

The screen is nothing like his current trading. I would disregard that screen. I don't care about some Stockopedia guru status, I don't find that relevant at all. Very few shares on the screen are his actual holdings. Maybe you should be questioning whoever made the screen up. Years ago I queried why that screen was so different from his actual trading.

Some of the Warren Buffett screens have poor performance.

Sorry, but I have no interest in questioning who made the screen up, although I can only presume that Stockopedia think it is worth pandering to Burns because they benefit from his endorsement! If the screen doesn’t reflect his stock selections, that is an issue for him if he wants to take it up, not for me. I really have no dog in this fight. Like many here I arrive at my own decisions based on data from various sources. If you find him useful, use him. I have no problem with that.

You can't really set up a screen for that type of trading. He uses stop losses and sells at certain targets or holds, if momentum is still strong. . Stocko screens don't use stop losses and hold the stocks for a quarter. The performance is not bad, better than many other guru screens.

No problem I've been on a couple of his training days and found them very useful, his screening is done fairly simply and quickly but it does throw up quality mid caps he screens out dross and illiquid micro caps .

As I mentioned his real skill is if the trades don't work quickly he will cut for a small loss, only a handful of traders seem able to master this and he's had 3-4 huge winners that he has managed to ride nearly all the way up.

Anyway will end the subject here good luck with your own trading.

As I say, if you find him useful, use him. I really have no problem with that.

Thanks, Phoenix. Likewise.I don’t really trade. Whenever I buy a stock it’s on a long term view, although I cut my losses asap if it breaks below the trend I’m buying.

6th Apr

Short BARG post....

M&G (LON:MNG) ex-dividend date was 28^th March. SP has come off from 220 pence to 208 pence for a 13 pence payout on 9^th May. Seems there was a little froth just prior to the ex-div date with the SP almost getting to 240 pence. I didn't buy M&G (LON:MNG) after my post a few weeks back but could be tempted now even though I wouldn't be eligible for the large Q1 payout (approx two-thirds of the annual dividend payout). The last time I heard John Lee speak about M&G (LON:MNG) in his monthly podcast with the IC, he said he still thinks it's a possible takeover target. This would be a shame in my view as it appears to be a quality operation and shareholders would just have to find an alternative investment (a little like when Ediston Properties got taken out last year at a very small increase to the prevailing SP).

The departing CEO and a number of others are selling shares at Record (LON:REC). I think it is this plus maybe some uncertainty around the new CEO that has seen the SP drop-off. But the trading update in late March was good and the dividend is covered. Plus the metrics are good (margin and ROCE). Stockopedia gives Record (LON:REC) 99 for quality. The share goes ex-div in early July.

https://tinyurl.com/3cmcxuss

I like the john Kingham updates. Similar to Cockney Rebel, they are free and always interesting points made.

https://tinyurl.com/4jhpj2d9

And we are coming into dividend season where hopefully SPs regain their ex-div downward movements whilst BlackRock World Mining Trust (LON:BRWM), Legal & General (LON:LGEN), Aviva (LON:AV.), Primary Health Properties (LON:PHP), Schroder Real Estate Investment Trust (LON:SREI), Schroder Oriental Income Fund (LON:SOI) and Lloyds Banking (LON:LLPC) provide healthy payouts.

Only problem is my portfolio is definitely skewed to financial stocks, commodities (BlackRock World Mining Trust (LON:BRWM)) with some variety provided by Tesco (LON:TSCO) and global investment trusts.

Charles Mitchell

ShoeShine- M&G is on my watchlist and I hold Record. I am fully invested in ISA with nothing I want to sell- now new tax year can add some more funds and will be buying M&G when price settles.

13th Apr

I know not many hold (or even like) Tesco (LON:TSCO) but the results on Wednesday were good. I know the ROCE and margin numbers are on the low side but Tesco (LON:TSCO) keep making steady improvements to their operations, net debt is coming down and they are holding their market share against the discounters. Was disappointed by the SP movements on Wed/Thu but I will continue to hold and hope for a special dividend again maybe at some point. The share buyback programme continues.... yawn.

https://tinyurl.com/443967bd

Edinburgh Investment Trust (LON:EDIN) has finally gotten back to pre-Covid levels. James DeUpaugh is handing over the mgt of this trust to Imran Sattar. Again, a large position for me. I was thinking of switching to City of London Investment Trust (LON:CTY) but I think I will stay put, the Edinburgh Investment Trust (LON:EDIN) holdings are higher quality I think.

The Aviva (LON:AV.) SP came off much more than the dividend (31 pence versus 22 pence) but Amanda Blanc is doing a great job. I'm happy to hold.

XPS Pensions (LON:XPS) issued a decent trading statement on Thursday. Hope Graham updates at some point. I don't hold but I like the look of this business and I recall a John Lee presentation where I think he said he did hold.

M&G (LON:MNG) continues to drift down. It went ex div on 28^th March with the 13.2 pence dividend being paid on 9^th May. The SP was 220 pence on 28^th March and is now down to 200 pence. The Sep/Nov interim dividend is half the amount of the dividend just gone. I don't hold but I am tempted to pick some up now. Watching for the moment. Any strong views ?either way ?

Cockney Rebel's weekend post is always a good read. He shares Paul Scott's views on Warpaint London (LON:W7L) being undervalued. Ken, I saw your post on the SCVR regarding THG (LON:THG) and this also gets mentioned in CR's weekend update.

https://tinyurl.com/3mu6yf7u

I also get John Kingham's dividend emails and hold a few of the enclosed either as individual shares or included in investments trusts. Worth a scan at the very least.

https://tinyurl.com/4uxy97zp

SSB

SSB I agree with you re M&G- been waiting to buy sub 200.

How to win even in bear markets. Buy quality at bargain prices. It works!

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Ken Mitchell

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