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A_S - Yes HLMA keeps on giving. From being one of my smallest holdings to now my largest. If ever there was an example on why to adopt a long term hold strategy for a quality company, this is it. And mostly forget Mr Market - just understand the business and but when Mr Market is having a hump use his madness to your advantage. Then relax during the day and sleep at night.

I still hold SHEL but mostly because I have had some personal association with the company - not a good reason for holding I know, but it does ok.

Some may like dividends over capital gain for tax reasons (e.g. basic rate taxpayers).

Others may want dividends for estate planning reasons to boost income rather than capital , as excess income can be given away to their beneficiaries without incurring a potentially exempt transfer (PET) and the possibility of 40% IHT that would occur when gifting capital. For this reason I am now a fan of dividend paying stocks - in earlier times I preferred capital growth stocks.

If you want capital gain, don’t invest in lGEN.

“Performance here has been nothing short of abysmal”

That may be one point of view. But what do you mean by performance? What return do you expect to get from a low growth company with an investment horizon of decades and one that gives back much of its free cash flow to its investors?

Personally I’m happy to get the overall total return of about 10% I have had from this investment - mostly in dividends but some capital gain. But I use the volatility in the sp to buy low when the sp is low, and it is this volatility that allows me to get a capital gain. If the sp falls to about 220p I may buy more, but otherwise not.

I am quite content with a 10% total return which is, after all, over twice the current return on low risk gilts. LGEN’s performance has met my expectations over the years I have been invested, and I expect it to continue to do so.

And yes, other similar companies have recently shown greater SP gain, but the question I pose is whether or not they will continue to do so over the long term?

Strictly: I like your approach for its novelty and I can see it working so best of luck with it.

From my point of view I’m too lazy to try and trade and invariably got it wrong when I dabbled with trying in the past. I have surplus income, so I just buy more of a well researched share when I think the market price is about 20% below intrinsic value when evaluated with my own criteria. In LGENs case this is about 220p. I then just hold unless things change or my assessment is proved wrong.

Each to their own.

To add to strictlybricks assessment, a fun, but relevant and abridged quiz by Buffett.

“A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? The questions, of course, answer itself.

“But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?

“Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the ‘hamburgers’ they will soon be buying.

“This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”

Strictlybricks - I see LGEN as a bond proxy. For a zero growth bond (i,e. the coupon doesn’t grow with time) I wish to buy when the yield is highest and the price lowest price. So, too, with a slow growth share that pays out most of its free cash flow because it has limited opportunity to use excess cash to grow the business. For high growth shares that can invest surplus income to accelerate growth the situation is quite different - and where there is often no dividend and a high SP on the expectation there will be a pot of gold some years ahead.

‘Why not £4 or £5 a share and lower yield ?”

For a low growth business. would you rather get a 10% yield on a sp of say 250p or a 5% yield on a 500p share? I know what I would choose.

“LGEN’s P/E ratio is unusually high (around 89)”

Perhaps this should read “The market does not fully understand the change in the accounting standard”. The business is complex, and very few understand the impact of the change on reported earnings. Much discussed earlier.

I fully concur with the recent views that the business performance is the factor that determines the sustainability of dividends - the business performance is often not fully reflected in the SP, so the SP itself is a poor indicator.

From my perspective, and following the deliberations of Buffett, I always ask myself, before investing in a company I have researched: “if I could, would I like to own the company outright? If the answer is “no” I move on. If “yes” then I am quite happy to be a co-owner. It is then just a question of how much I would be willing to pay of it; and how much, if co- owned, I would be willing to sell it for based upon the fundamentals. The SP is only of interest to me at those times.

At the present time I am quite content to remain a co-owner of LGEN, and would be happy to buy more at a SP in the region of 220p.

A_S . We have a similar long term investment record. I bought my first share - Shell T&T - in 1973. I had mixed results in the earlier years but after following the philosophy of Ben Graham and then Buffett/Munger most of my investments have been satisfactory.

A_S. A true buy and hold share IMO - I seldom check on how things are going. It has its ups and downs on occasion but its growth over time is relentless. Long may it keep doing so.. I suppose it is too boring for most, but it is the type of share I like for my base portfolio.

‘If you are inside a tax shelter pension or isa this is irrelevant”

For some - fortunate perhaps - tax shelters can only protect part of their wealth. Many returning expats who have earned abroad for UK companies or otherwise and are repatriating their wealth to the benefit of the UK are in this position.

“It's a tax thing”

I agree that this must be an important aspect - whether div tax or CGT is best depends on your tax band. Standard tax payers would prefer dividends I guess - higher rate tax payers would prefer CGT.

As a reminder tax rates for dividends and capital are:

Basic rate: 8.75% and 18%

Higher rate: 33.75% and 24%

Top rate: 39.35% and 24%

In my experience, and on average, the SP falls by the dividend amount on going ex-div - and this is the amount it should fall based upon the fundamentals. In this case by about 27p, but Mr Market’s antics often causes some variation above and below the dividend amount due to increased trading activity. Predicting how Mr Market will behave is a mugs game in my view, but each to their own.

Take care in interpreting bought and sold volumes - buy/sells recorded are not always what they seem!

In the automated trading system, SETS (automated “A” and auction “UT” trades), the number of shares bought at the time of the trade have to be exactly matched with the number of shares sold. Whether recorded as a buy or sell depends on the market dynamic at the time, and the rules applicable, but for each share bought there will be one sold no matter how recorded.

When the transactions are conducted through money makers (“O” trades) buys to, and sells from, mms aren’t always exactly matched in time as mms keep an inventory - but generally they keep inventories small to reduce risk - so the time different between shares being sold to the mms and then sold back to the market by the mms is usually quite short. Whether recorded as a buy or sell depends on which side of the midpoint of the bid offer spread the transaction is conducted.

So at the end of the day the number of shares actually bought and actually sold will not be very different - but recorded volumes are.

Incidentally one share sold/bought through SETs is recorded as volume 1. One share sold to a mm and sold back to the market is recorded as 2. So volumes sold through mms are recorded as twice those sold through SETS!

“im not intelligent enough, so i "invest" where i see value”

According to Ben Graham in “The Intelligent Investor” that is the intelligent thing to do.

Anon3 - I havn’t but it may, of course, be the pragmatic thing to do - my problem is that I have never got the timing right on when to exit and re-enter the market.

It is the old conundrum as shares tend to climb the wall of worry - explained by Investopedia:

“However, when you get down to the root of the concept of a wall of worry, what it ultimately means is that a bull market isn’t a peaceful place. When times are good, investors are constantly tense, wondering how long they will keep rolling, fretting about when a seemingly inevitable correction will finally put a stop to the market elation. As a market continues ascending, the decision can become increasingly agonizing whether to take profits in a position or let it ride.“

By default, I now “let it ride” as, as a long time investor, who has been through many corrections, markets invariably recover and any damage for me at least in doing so has been less than the damage of getting the timing wrong. LGEN, to me, has all the attributes to survive through thick and thin.

But each to their own.

Alas- curious why you “prefer to average up rather than down” as I don’t do this unless a company’s prospects have significantly improved since first investing. I can understand the logic for high growth companies with ever increasing growth prospects. But for LGEN? Perhaps you could explain your reasoning.

To me averaging up increases the risk of my initial investment - averaging down decreases it so averaging down is the approach I adopt when Mr Market values a company below my cost - and when I still believe it is worth more based upon its fundamentals.

II today posted a reasonably well balanced review of PHNX. Worth a perusal IMO.

DB - The price will be fixed probably through the automated trading system -SETS -so the price will be determined by the market at the exact time of the transaction. The exact day and time of the transaction will be determined by the broker being used - sometime after the dividend is paid.