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Johny,
I've just sent an email to the address you gave...
Strictly
Try ‘mezzer50@gmail.com’ strictly, thanks
Don’t want to go into PFC, but trying to catch falling knife then getting in too deep to extricate easily just about describes it!
"One regret, I do so wish I’d entered your SWR although I can play along on the sidelines. Definitely next year! "
......................
Crossley,
Well, if you do want to join in on that, you may have not noticed the recent blog comments saying that, as it so happens, I’ve now rebased this year’s SWR competition as from the start of this month ~ as I came to the view that we should take out all the non-housebuilder stuff (largely brought in by "outsiders" joining the blog in recent years…) as I reckon it was proving to be a distraction and, like Beelzebub, could lead doubters off the Straight & Narrow...
I mean, that they might start to ponder risking their dosh in dodgy companies ~ which, IMO, is pretty much anything else other than house builder shares ~ though I appreciate that that comment may not go down well in all quarters here…?
So, anyway, you can go to the ball this year, Cinderella, if you so wish ~ just email me directly to confirm on this (especially as this is all rather off-topic for LSE BWY share chat ~ and so some folk might soon become naffed off by it…?) and also for me to send you the relevant spreadsheet...
As you know, you are also most welcome to comment on the blog for this sort of stuff rather than indirectly via here on LSE...
Strictly
Morning Strictly
Whilst you’re on about the blog I’d just like to thank you for the extensive time you put into it. You clearly throughly enjoy it. Which I do too. I popped on the other day and found required information in five minutes but it seemed to take another five hours to leave once trawling. Talking of trawling, I totally agree with the buoyancy thing with PSN and that is why I invested there. I do wander how long it will take to be realised though. Maybe once the, hopefully second dividend is announced?
I purchased Bdev and PSN within a week of each other back around the start of October and my average including divs. PSN £11.68- Bdev £3.76
One regret, I do so wish I’d entered your SWR although I can play along on the sidelines. Definitely next year!
Have a pleasant weekend
Johny,
Well, I had a look back through some of your stuff here just to get a sense of things, and you seem to write reasonable comments, and in a friendly manner, and those things are important in my view to maintain the character of the SB blog which I like to think is informative & supportive and with the occasional bit of banter thrown in…
I originally set the blog up around seven years ago to help my circle of family & friends who have joined me in this investing-in-house-builder-shares malarkey over the past twenty years or so that I’ve been in this game ~ having seen how well it’s gone…
And over the past few years, I have invited in a few commenters from here and also from the Telegraph online share chat… and there’s a quid pro quo in that in that I look for the “outsiders” who join to be able to contribute to the discussion from time to time…
The thing is, the people who’ve joined from outside will have each had their own investing journey thus far, and no doubt different thoughts & opinions to match ~ rather than coming into this from having followed Brian (i.e. me ~ though that’s not actually my name…) who isn’t the Messiah just a very naughty boy…
And I did take a very brief butcher’s at Petrofac, seeing as you have written so many comments on LSE about it….
A quick look informed me that it is the sort of company that absolutely terrifies me & my crew as an investing prospect ~ but if you join the blog and read back through some of the past posts I’m sure you’ll soon understand why..!
Anyway, if you want to put up an email address here ~ albeit, if necessary, a temporary one just for the purpose of making initial contact ~ we can then take things from there…
Strictly
strictly - you mention private blog, would really like to ‘blag’ in as ‘twere
Permission por favor?
Johny,
I've got one or two people like you on our private blog about house builder shares....
Senior moment spotters...
My senior moments, I mean, as I am prone to them…
So, well done for spotting that ~ my error was actually a typo, as it should have been £2,390m less £675m puff, gives £1,715m tangible assets, which divided by 228.3m shares does equal my figure given of 751.2p BVPS for 2021.
It was just a c.ckup copying the starting figure from my spreadsheet...
As an aside, though, I do have to say that I am seriously impressed with Greg Fitzgerald, the big cheese at Vistry….
He seems to have taken two inmates of Battersea Dogs’ Home ~ that is, Vistry & Galliford’s house building arm ~ mated them together, and then convinced the market that he’s come up with a Crufts winner as the progeny…!
Early on in our blog, I wrote a post entitled “Profit & loss accounts can be a work of fiction, so rely more upon balance sheets”, and that’s what this is all about, really….
I mean, Greg said, upon the blowing of the recent Vistry full time whistle, that their return on capital employed for 2022 was 28.6%.
Well, he might as well have said that he was hung like a stallion…
Because what both of those comments would have in common is that neither are demonstrated in the balance sheet…
Strictly
Senior moment?
2021 - £2790-£675 =£2115 tangible equity, divided by 228.3m = BVPS 926.4p
Even bigger negative ROE
Love reading your posts strictly, very very informative and knowledgeable-sort of person I like learning from, also follow your posts on Persimmon
PS.
Newboots,
I obviously don’t know whether this issue interests you sufficiently to want to look a bit closer but, in case it does or if it interests anyone else reading this, here are my numbers for Vistry.
2021 balance sheet value = £2,790m less £675m intangibles = £1,715m tangible equity divided by 228.3m shares in issue = BVPS 751.2p
2022 balance sheet value £3,250m less £1,261m intangibles = £1,989m tangible equity divided by 347.2m shares in issue = BVPS 572.9p.
572.9p – 751.2p = minus (178.3p) + 63p divs paid in the year = tangible loss per share of (115.3p).
By my reckoning, assuming I haven’t had a senior moment with the above numbers, this equates to a negative ROE for 2022 of minus (15.3%).
So, while I can see that you most likely took your ROCE figure of 28.6% straight from Vistry’s report, the big question for me is: How did THEY come up with that figure..?
And a final point here.
In my experience, you can pretty much ignore P&L accounts ~ as it is from the balance sheet, armed with also knowing the number of shares in issue and the dividend paid during the year, that one can obtain the reality check on the numbers reported by the companies.
As I have hopefully shown above?
And, based on many years of extracting these vital statistics for the house builders that I track, I can tell you that Bellway has always played with a very straight bat for forty years ~ whereas I can’t say the same about all the other house builders…!
With the reality check EPS, one can then also obtain the reality check price earnings ratio, price to book, etc.
As I said in the previous comment, the only thing that makes this tricky is a rights issue…
But then, on the whole, companies only instigate rights issues when they’ve c.cked up ~ see Taylor Wimps, Barratt & Redrow due to the credit crunch and, since then, Galliford ~ whom, it seems to me, were baffled by their ownbullsh.t with the mythical numbers they were putting out.
At the end of the day, Newboots, I guess we all pays our money and takes our choice, and if you have a buy & hold plan then that may well suffice..?
However, I am constantly watching for perceived value gaps in order to trade between the house builders, so for that to work I need to be right more than I am wrong.
Since the start of my tracking performance accurately, in 2013, I reckon I’ve added about 6% extra gain a year on average (outside of swerving covid) ~ so, for me, it’s very much worth doing.
Strictly
Newboots,
The issue with ROCE for me, as an investor, is that it doesn’t fit in with following the progress made by an individual share, adjusted for dividend, as does ROE.
For me, this is what 23 years in this game has distilled down to…
The only thing that messes that up is a rights issue ~ everything else it can take on the chin unaffected.
I do recall having a similar conversation some years back on the Redrow chat with an investor going by the moniker of Josh95, though I also recall making no headway with him on it and, in fact, he was rather dismissive of my take on this…!
As I remember, he was an accountant, and he was also a big fan of Crest back then because he rated their ROCE, whereas I regard them as being just another underperforming house builder…
They are another company whom I regard as currently being well out of whack in relative value terms these days so I haven’t owned any for a while (I move between different house builder shares, pursuing perceived best value, while remaining fully invested ~ except for having largely swerved the recent covid iceberg)
Anyway, I do take leverage into account by taking note of total liabilities as a percentage of tangible balance sheet, so as to be able to essentially swerve house builders with weak balance sheets ~ having learned that particular lesson the hard way, i.e. expensively, in the credit crunch with Barratt due to their high borrowings at the time incurred through having splashed out for Wilson Bowden…
It might be worth considering what I said above ~ I mean, about being able to incorporate ROE into the progress of a single share and which, as a by-product, provides for reality check calculations for EPS…
Because, IMO, declared EPS numbers are often mythical ~ Galliford was prone to that, and so earned the nickname Vicky Pollard within our investing circle.
No doubt each has their own metrics that work for them, but I have considered ROCE in the past and then discarded it.
But if you agree with me that Vistry’s tangible BVPS is the same now as it was ten years ago, then all that they have earned over that time has been paid in dividend.
And that’s an average of 47.3p a year…
Which really ain’t much..!
The other thing I suggest is perhaps pull up an FT.com comparison share price graph for Bellway and Vistry since their pre-credit crunch highs… it’s very clear then that Bellway has well outperformed Vistry and that’s before any price hit to reduce PBV on Vistry’s part…
Anyway ~ good to have an exchange of views about this stuff..!
Strictly
Strictly,
Agreed that BV analysis and debt ratio gives BWY a 2-0 lead over VTY. I do think that ignores some of VTY's 'star player' contributions however.
For example - VTY's ROCE is a very respectable 28.6%, versus BWY's less impressive 18.6%. For every £1bn of capital, VTY earns £100m more than BWY. 2-1.
And as Mucktass alludes, VTY's sizeable (and highly profitable) partnerships/affordable housing focus gives the business a greater degree of resilience in a downturn, and potential for growth - particularly with a Labour government in waiting. 2-2
I personally think BWY's history of fairly consistent growth takes it on penalties (and for that reason I'm personally more heavily waited to them than VTY). To focus too heavily on BV ratios can leave a slightly distorted picture IMV.
But then I've only been in this investment game for a few years - so what do I know?
Bought in here having been the last few hours crunching comparisons. Decided on BWY with share buy back, divi commitment and land bank. TW and BKG have held up better SP wise but BWY offers better future prospects imo.
Anyways decided to split between here and MBH, they provide the shovels!
Just have a view that rates have peaked and UK plc may actually start putting real investment into the economy at some point! The housing shortage particularly social & affordable is a known opportunity! Supply side constraints have seemed to ease a bit.
Obviously time to buy was 6 months ago but then folk got a higher risk discount good for them! But still plenty of legs now in this cyclical imo!
Usual caveats
Trek
Muktass,
Yes, you are correct in that it's been mainly the two takeovers that have kiboshed shareholder value...
However, pre-credit crunch, it was, relatively, still ongoing death by a thousand cuts....
From 1997 to 2016, Bellway's ROE averaged 16.9% compared to Bovis's 11.9%.
The upshot of that was, with similar dividend payout policies through that time, Bellway went from a BVPS of 183p to 1,522p, whereas Bovis/Vistry/Battersea started slightly higher at a BVPS of 185p but finished the period with half as much at 780p.
I put my hand up to say that, for a while, I was a past sinner in that I have held Bovis shares back in the day....
But that was while I was very much still learning the game.... that, of course, is a lifetime's journey, but I hope I've made some progress at least, over the years....?
While I'm giving Vistry some stick here, a couple more things to perhaps consider....?
Their total liabilities as a percentage of tangible net equity are now 139%....
I regard this as risky if the economy goes seriously Pete Tong ~ just look at the mess Inland are in with a three figure percentage liabilities ratio.
This compares to Bellway’s 45%….
Vistry’s pre credit crunch high for tangible BVPS was 596p. Now it’s 573p, i.e. 4% less.
This compares with Bellway’s 934p to 2,880p, more than 200% up.
And Bovis/Vistry’s pre-credit crunch share price high was 1,082p, whereas now it’s 733p.
But that’s on a PBV of over 1.3….
If you took it down to Bellway’s 0.73 PBV to equalise it, the share price would then be 408p.
In other words, a share price loss over 16 years of over 60%.
Okay ~ that was three things…
I’m not trying to tell anyone where to invest ~ or not as the case may be….
But surely, for anyone with serious money in this game, it’s worth doing some serious number crunching…?
After all, I’m only working with the substance here, not surmise…
Strictly
Having been a holder of both shares for the last 10 years I can attest that there are a couple of key differences which makes comparison difficult. One is that Vistry has undergone two large acquisitions during the period (Galliford Try and Countrywide) and secondly a large chunk of Vistry's business is affordable housing which has different capital requirements and crucially better growth prospects in the current market.
I don't suppose any Vistry aficionados who may be reading this will be much pleased to have this presented so starkly, but I've just checked the past decade's performance for them against Bellway now we have the latest figures on both companies....
From the end of 2012 to the end of 2022, Bellway increased their tangible book value per share virtually threefold, from 930p to 2,727p.
Whereas, Vistry ~ or Battersea, as it is affectionately known as in our investing circle ~ increased their tangible book value per share by virtually diddly over the same time, from 567p to 573p.
Yet, weirdly, despite their underlying absolutely p.ss poor performance, one has to pay a whopping 1.31 PBV on tangible assets for Vistry but only 0.71 for Bellway…
If this doesn’t blow efficient market theory right out of the water then I really don’t know what does…?
Furthermore, US investors are apparently pushing to give Vistry’s boss, Greg Fitzgerald, a bonus of £60 million ~ which has echoes of King Jeff’s notorious reign at Persimmon…
Really…?!
Nice work if he can get it, I guess…?
Strictly
Morning Strictly
Hope you’re keeping well. Thought I’d bring this over here!
I would appreciate if you have the time?
I’m interested into delving into this 17% p/a
Do you have BWY dividend payout % readily available so I can collate and better understand the history, re: overall compound split with trading returns if that makes sense?
The dividend history should tell me all I need to know. Interesting!
All the best
Sp could drift after rns today.
Strictly,
Thanks for and taking the time to reply.
Appreciate that. I shall be dipping my other toe in over there and indeed here. Just looking for the appropriate time. Wherever that might be?
Enjoy your evening
Tim!
Crossley,
I am currently about 60% Bellway 40% Persimmon...
In an ideal world, Captain Hindsight would have had a word in my shell-like and suggested that I held off buying the Persimmon until after the trading update this morning ~but there you go, I can't odds that...
I am happy that they intend moving to a more normal dividend policy rather than carrying on with 235p a year come hell or high water…
So that is a plus for me…
As are their superior margins… to use a boating metaphor, they have more freeboard than the other house builders ~ which implies they can cope with bigger waves…
Not all of my investing crew, on our blog, are convinced about Persimmon…
But then they are all over 18, and old enough to fight & die for their country, and they necessarily have to make their own minds up and then, like everyone else, take responsibility for their decisions.
Anyway, having listened to the recording of the Persimmon & scribblers telephone love-in this morning, I thought the presentation was pretty frank and, okay, they are no doubt going to take a kicking on next year’s earnings.
But the current sh.tstorm might develop into a hurricane and, much as I dislike paying the still relatively high price in PBV terms for Persimmon as compared to Bellway or Redrow, they have such high margins and such a low priced product they’re like the Ryanair of the house building business…
And look how well Ryanair have done in recent times as compared to some of the other airlines…?
Strictly
Afternoon Strictly
I was just pondering? Will you still be 80/20 or will you revert to 100% back here
I have had a look at the figures from today and I do think PSN are being ambitious with their total unit sales for the year although I still expect a dividend of around £1.10 even with the additional £275m put aside. That’s if they do not stray to far away from past strategies. I’d be interested in your take on things if you have the time?
Regards
"Markets always go to extreme valuations"
It could go below 1500p before christmas.
The Going Concern statement looks pretty bullet proof, 50% drop in sales and 20% and implies can still pay a reduced dividend.
NAV 2,720p versus 1.800p share price. On average HB’s have traded at a 1.2 x premium to NAV!
Markets always go to extreme valuations, either over bought or over sold. 1,800p is illogical because on a medium term view this will clearly be a lot higher. Buy now and be happy in a year or try to call the actual bottom and risk missing out
But on the other hand the BoD are not so happy about the planning system, which suggests that so called flexibility and agility are a chimera.