Should I reduce my holding in FEVR (Fever Tree)?

ValiantSon

I agree with others, your investment value is far too small to be building a bespoke portfolio and there is a significant chance that trading fees will singnificantly eat into your returns. I'd also avoid single company shares as the risk is very high. Furthermore, you are overly concentrated in high risk funds. Why the concentration on technology, pharmaceuticals and emerging markets? This looks like you choose recent high performers, but you haven't actually understood the importance of proper diversification. Proper diversification can be achieved with one fund.

I'd sell the lot and buy a mutli-asset fund like Vanguard LifeStrategy, Blackrick Consensus, L&G Multi Index, or HSBC Global Strategy. When you have an investment value of £50,000 - £100,000, then you might want to start adding particular funds, but you don't need to.

kidmugsy wrote: »

Here's what my crystal ball says:

The company is entering the US market. UK companies usually flounder there. They probably don't yet realise that Americans prefer sweet gloop to anything adult. Sell, sell, sell!

It is true that many UK companies have suffered in the US. This can be for a variety of reasons, including trying to enter into a mature market; not understanding the cultures and geography of the US; inadequate investment; fierce competition; distribution issues.....

Contrary to your assertion that, "Americans prefer sweet gloop to anything adult," there is a vibrant and highly competitive US market already in premium spirits and mixers. Many Americans buy premium mixers, such as Q Tonic (anything but sweet!). If Fever Tree can muster the necessary investment, manage effective distribution, massive adverstising spending, and overcome the in-built advantage of some of the native premium mixer brands, then they stand a chance.

Most of the Fever Tree that can be bought in the UK now is disgusting thanks to their insistence on trying to beat the "sugar tax" with their revolting "Refreshingly Light" range. I don't know what the wider response has been to these, but if others have reacted as I have then Fever Tree may regret that decision, and their share price may consequently suffer too.

Alexland

DairyQueen wrote: »

Plenty of people hold six-figure portfolios in a couple of global passives. They will capture the upside of the market at low cost, and with minimum effort, over your decades-long investment timescale.

What's not to like?

Although I do have mostly passive funds there are some disadvantages such as equally capturing the market downside, and more importantly grinding away achieving very little growth when the market moves sideways. When this happens you can't help feeling life is passing you by. For the reason it's good to have some satellite investments which can capture some of this upside.

Alex

DairyQueen

Alexland wrote: »

For the reason it's good to have some satellite investments which can capture some of this upside.

True Alex but unless the satellites are carefully chosen they can also capture even more of the downside. OP's current picks look pretty volatile and chances are that any satellites selected at this stage would increase both volatility and risk.

OP's attitude to risk will likely develop as the portfolio grows. A 20-50% correction that gives a paper loss of a few thousand is very different from a drop of six figures.

Satellites also mean rebalancing and higher charges.

Reed_Richards

You have a very unbalanced portfolio that has done really well in a short time. Either this was good luck or good judgement. Most people offering advice seem to think it was good luck and so advocate putting your entire investment into some passive fund or other.
If it was good judgement then can you keep it up? If you think you can then you should sell some or all of your Fever Tree shares if you can find an alternative stock or fund that you think will perform better in future than FEVR will. The same thing applies to all your other holdings

eskbanker

twotonealex wrote: »

Should I reduce my holding in FEVR (Fever Tree)?

I agree with the others, you should look at branching out into other investments....

Alexland

DairyQueen wrote: »

True Alex but unless the satellites are carefully chosen they can also capture even more of the downside.

Absolutely agree satellites need to be carefully chosen with expectations aligned to the market cycle.

For example value investing tends to do well in the first half of a bull market and cash generative growth companies tend to do better in the second half. In both cases these factors do well enough across the rest of the cycle to deliver long term out-performance so there is no harm in holding both at all times.

I am less convinced with the small/large cap argument - again small cap tend to do well at the start and large cap tends to do better later but there doesn't seem to be much evidence that either show out-performance in the long term so to make this work you would need to be good at market timing.

Alex

Bimbly

Have you read up about rebalancing? Most people spread their investments across funds in percentages. Eg, 10% UK equity, 10% emerging markets, 20% US equity etc.

Now, say the US fund in your portfolio did really well last year and it now takes up 25%. But you want to keep it as 20%, so you sell the surplus and buy more of the other funds in portfolio to balance them. You are thereby cashing in some of your winnings and buying cheaper stock which you hope will grow.

The multi asset funds mentioned above do all this for you, which is why they are an excellent suggestion.

Have you read Tim Hales' Smarter Investing? Recommended.

I've read of people who keep 5% aside as "play money" to invest in individual shares. They know they might lose, and it's a gamble. It works for them, although it wouldn't be something I would do.

I would sell fever tree to lock in your winnings and hold it in cash until you can fathom out an investment strategy. Once you have an investment startegy, then plug the money into that. A multi asset fund would be a good choice.

itwasntme001

I also own fevertree and had also invested about 3k last year which has more then doubled in value. My strategy is to have a mental stop loss for the position so that say it falls 15-20% from the highs and there are fundamental reasons to be concerned about the stock long term, i would sell out.


However my portfolio size is around £500k, so fevertree represents about 1% of the portfolio. your case is very different to mine.


With regards to rebalancing - i just do not believe in it. Simply why would you want to cut your winners to add to the losers? It just doesn't make sense. I am holding a portfolio that is 80% in US stocks thus "should" have rebalanced a long time ago, however i would be making a lot less in profits given out performance of US markets vs pretty much all other markets.


I understand that rebalancing is there to remain "diversified" and thus reduce risk, but risk is highly subjective. IMO being invested in europe and EM at this stage is a lot riskier then invested in US.


Before i get replies to my post saying "how dare i go against rebalancing and being massively overweight a country", i would like to point out there really is no right or wrong way of doing things as its entirely dependent on personal preferences, risk tolerance and subjectivity (with goes with biases).

Audaxer

itwasntme001 wrote: »

I understand that rebalancing is there to remain "diversified" and thus reduce risk, but risk is highly subjective.

I think the point of rebalancing is to maintain your original risk level rather than reduce it. If you started at 70% equities and are now at 80% equities, your risk level has increased. If you are happy for your risk level to keep increasing and accept that you will have a bigger loss come the next equity crash then that's fine.

atush

Masomnia wrote: »

I'm in a similar situation to you.

I own the odd single share but I see it as more of a hobby than a long term strategy. I've got some funds/a pension as well.

What I'd do in that situation is sell half, and then look for something else to invest the £1k in.

Good luck anyway!

I have done this in the past, when holding a share that has performed very well. Sold half and kept half. Did it 4 times with one lol.

Fevertree is a good company. Still expanding their range and gaining market share.

Having said that, the product is expensive so I dont buy it- I am far too cheap lol.