Thursday 19 September 2013

Tending the Garden - Portfolio Sale Smiths News (LSE:NWS)

My portfolio?
I have been thinking about the similarities between DIY Income Investing and gardening. Not that I am a particularly good gardener - in fact my gardening also reflects my investing style: both are based on minimising effort!

Both investing and gardening require a lot of patience, some research and require occasional decisions - a visit to the garden centre, cutting the lawn, hacking back the brambles.

I have also taken the secateurs to the portfolio...

My gardening style can be summarised as:
  • as organic as possible - no pesticides or harsh chemical fertilisers (I dig out most weeds by hand)
  • feeding the compost heap with kitchen and garden waste
  • using perennial plants, herbs and bulbs that don't require a lot of attention
  • letting things take their course (cottage garden style) but cutting back when the plants get a bit boisterous
  • using pot plants to provide some variety 

The main work I have seems to be mowing the lawn and cutting back the laurel hedges. I've recently been to the garden centre to buy some cheap end-of-season left-overs which I am in the process of potting up - hopefully most of them will recover. Come to think of it, that described my typical portfolio candidates.

Not exactly hectic, as you can see - much like my investing, which is done mostly in the morning, in bed on my laptop.

So, back to the similarities between my gardening and investing styles. To put it very simply, an investor has three basic decisions:
  • what to buy, in terms of investing style and portfolio construction
  • when to buy it (the key decision)
  • when to sell it 

This is very similar to the decisions that a gardener must make:
  • what to plant, which will depend mainly on where I want to plant it: shade or sun
  • when to plant it (autumn is good for many perennials, bulbs can go in any time)
  • when to dig it up (hopefully to move it or give it away - less successful plants go on the compost heap)

But here's the main difference: a gardener will usually leave successful plants where they are happy but a DIY Income Investor does not get too sentimental about the securities he owns and will happily (and figuratively) dig them up and sell them when they have blossomed.

My latest successful planting, Smiths News (LSE:NWS) has required a lot of patience. I sold some of this in January 2013 but this portion I have held since May 2007 - that's over 6 years and it is one of my oldest holdings. During that time the fortunes of the company have waxed and waned with the seasons and the price has grown and retreated but there has always been a nice dividend blossom to brighten up the portfolio.  Now the price growth has achieved my 'sell' criteria of a capital gain equivalent to over 5 years' current income and a relatively low yield (just over 4%) - and the sale crystallises a 35% gain.

Now to get the plant catalogue out...

[Sale price: £2.08]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.


  1. How about an investment in the Royal Mail? The IPO is due to launch in October.

    The Chief Executive, Moya Greene, is well regarded and has a great track-record. There is talk of a 6% dividend return and I think the business should perform well at least in the medium-term.

  2. Not sure I agree with you on this sale - still on a good p/e and forecast yld 4.8, no broker sell recs. But I was with you on Phoenix!