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No. iPad stuck or something tech. Difficulty in initiating new message.
"Relatively small, but an example of the additional resilience ( mentioned earlier ) provided by ongoing partnerships with social housing providers."
Raleigh, you're putting these comments out under the heading that I initiated, so I'm wondering if perhaps you are aiming them at me and are seeking a response...?
Taking driving a car as a metaphor for investing, my approach is to spend much of the time looking in the rear view mirror.... I appreciate that wouldn't be ideal if one was actually driving a car so the comparison only stands up so far....
The thing is, I've been in this game for twenty years and that approach has served me well, and now being well into my late sixties and (allegedly) somewhat set in my ways, it seems unlikely I'll change...?
But the thing about the rear view mirror approach is that you essentially only need three numbers...
The book value per share net of intangibles at the start of the year, the total equity net of good will at the end of the year, the number of shares in issue at the end of the year, and the amount of dividend per share actually paid during the year...
Okay, four numbers then...
From those, I can obtain the real, not mythical, earnings per share, and, from that, the real return on equity and the correct price to book value (which I update each month based on estimates and am usually within my target 2% error allowance when the numbers are issued - which is near enough for my purposes)
And that gives me what I want to know, going back decades for most of the big house builders. The amount of debt, or lack of it, is obviously an issue going forwards but, again, how successfully the company used leverage in the past shows in the actual return on equity achieved, and also I observe that companies, like people, can tend to have natures that, give or take, are likely to be fairly consistent.
"It's different this time" reckoned to be the four most dangerous words in investing.
Whereas, many investors put far less store on the past... and, of course, they may have great success with that... but it is very much a different approach - a different hand on the big ouija board that is the market, perhaps...?
And if Bovis really has changed, and if my metaphorical car I'm driving is also a time machine, then, all being well in due course, I'll be able to observe how they've done in the rear view mirror and make a value assessment accordingly...
And in the marketplace, all companies tend to have their moments in both the sun and the rain, and history suggests I can almost certainly bide my time for Bovis and, in the meantime, there are easier questions on the exam paper IMO.
Warren Buffett's perfect pitch, if you like...?
And if I'm wrong, and Bovis soars off into the sky from here and stays there, well, no one house builder has ever been the only game in town so far....
Relatively small, but an example of the additional resilience ( mentioned earlier ) provided by ongoing partnerships with social housing providers.
VISTRY PARTNERSHIPS STARTS ON WIRRAL SCHEME
16 Sep 2020 North West Property
Vistry Partnerships has started work on a Wirral development.
The development, named Poppyfields, will comprise 78 self-contained apartments.
It will also provide a variety of facilities including a bistro, hair salon, spa bathroom and wellbeing suite.
Included in the development is a head office for Alpha Living, with North West managing director Ian Hilliker saying: "It's important to highlight the need for developments like these and we are happy to be able to provide flats to people who truly need them.
"High quality developments such as this are vital for local people and help build and sustain communities."
Chief executive Graeme Foster added: "The whole project team has been focused on delivering a high quality development, which will provide much needed affordable extra care housing on the Wirral."
What did you make of the Galliford Try update. Jam tomorrow but at least parts were encouraging. SP rallied but has since fallen back."
To be frank, I haven't looked at it.... if you're a Galliford fan, you probably won't want to hear this but I regard them based on track record as an even bigger nightmare than Bovis.... I did get into some chat, as I recall, on the GFRD share chat some time ago so you can probably scroll back on my old posts for chapter and verse if you like...
And now Galliford have offloaded their house building arm to Bovis, I'm guessing that makes them just engineering now so they're off my radar in any event....
Of much more interest to me are Barratt, Redrow, Bellway, Taylor Wimps and Crest...
After all the hoo ha this year, Barratt have made a return on equity of 8.6% and Redrow have made 7.0%.... not really any big difference there to shout about, is there...?
Haven't had Bellway's results yet but I've got them in for 9.3% ROE.... maybe it's a tad high given the others, maybe not, but it's based on an estimated EPS of 220p but that's still less than the scribblers' 242p.
And I've got Taylor Wimps in for a prospective 8.0%, so that seems in the likely general ball park....
And Crest are having an annus horribilis, and they're in for minus 1.6%. but the market has already hammered them for that.... probably too much IMO, hence it's currently my biggest holding.
But, anyway, firmly glued to the naughty step, is Bovis, on minus 22% and, yes, this is mostly writing off the goodwill acquired in buying Galliford's house building business, but it all goes in the pot as far as I'm concerned though obviously everyone is free to calculate value their own way.
Retail & consumer
Builders and building materials
11:37 Wed 16 Sep 2020
Vistry Group Plc
Vistry upgraded to ‘buy’ by UBS over solid base for 2021 profit rebound
The price target was bumped up to 790p from 730p as the discount was previously justified by the risk of an equity raise more than offset by a stronger outlook
Vistry Group PLC - Vistry upgraded to ‘buy’ by UBS over solid base for 2021 profit rebound
Vistry PLC (LON:VTY) was upgraded to ‘buy’ from ‘neutral’ by UBS as analysts see a solid base for a profit rebound in 2021 and beyond.
The housebuilder can count on volume and margin growth potential supported by the existing landbank, pockets of resilience provided by mixed tenure business, and realisation of synergies post-merger.
READ: Vistry predicts profits recovery as housing demand rebounds
The price target was bumped up to 790p from 730p as the discount was previously justified by the risk of an equity raise, despite being ruled out by management, while now the German bank thinks it is more than offset by a stronger outlook.
“The productivity restored to pre-COVID-19 levels provides improved visibility into near-term volumes and profitability,” analysts commented.
“Sales rates in July-August are 20% above 2019 levels with firm underlying pricing. Gross margins in the land bank are at 24.2% which provides a good upside for profit and loss margins recovery in mid-term from around 20% expected in the second half of 2020.”
Shares added 1% to 603p on Wednesday late morning.
Quick facts: Vistry Group PLC
Price: 600 GBX
What did you make of the Galliford Try update. Jam tomorrow but at least parts were encouraging. SP rallied but has since fallen back.
Social housing partnerships again.
Appreciate your view, thanks.
I live in Weybridge where both BKG and Crest started out.
BkG now HQ'd in Cobham, Crest was/is near Chertsey way.
Canna cord raise target to 840p. and reiterate Buy.
"...but my all time star is GGP "
I had to look up GGP to see what it was...?
Gold....hmmm, that's some way above my pay grade, I'm afraid - and, as my moniker implies, I stick to house builder shares...
All power to your elbow, though, if you know what you're doing with that, but house builder shares over the past twenty years have transformed my finances for the better, and I'm exceedingly grateful to providence that I discovered them...
Of course, opportunity is like beauty.... it's in the eye of the beholder.
Thanks for that. I was also worried about TP and bonus but held my nose.
I haven't done too badly but my all time star is GGP which today is at 19p and I bought a lot for me at 2p.
It has rescued some other bad ones.
Take care and stay safe
"Do you follow BKG (my biggest house builder) and if so where do you rate them on your scale?"
No, BKG is not on my list I'm afraid... mostly for the following reasons...
Pre-credit crunch, Tony Pidgeley was heading for one of those super-sized directors' bonus malarkeys, a la Persimmon (who, I reckon, copied him), and I wasn't impressed with that - even if it was headed off at the pass by events, the intention was still there... and obviously TP is no longer with Berkeley, or with anyone else come to that, but maybe his spirit lives on there and, being an investing wuss, I don't want to chance it...
And then there's all the share buy backs in the past, and I'm a simple soul who wants to be able to accurately track book value per share movement, because that's where it all begins and ends for me and most other stuff that emanates from company reports tends to be varying shades of fluff and fiction, IMO....
And now we've got another big added unknown.... London.... that's where BKG are.... and it might be originally my home town, but I haven't got a clue what might happen to house prices there and it just may be that it's been far too good for far too long and that there's a big reckoning to come....?
Stick with the easier questions on the exam paper, I reckon... like I say, I'm an investing wuss...
So, I follow Bellway, Redrow, Crest and Inland closely in that I'm updating each of their book values per share, to my best estimate, at the end of each month and at each ex div date, and I'm constantly tweaking that as events, and updates (and whim) unfold.
Less closely, I also follow Barratt, Persimmon, Bovis and Taylor Wimps - but none of those is anywhere near being in the value zone for me and I'd likely only up my tracking of them if they start to get close - I have held shares in all of them at different times in the past..... and even in Galliford (I hesitate to own up to that, but fortunately I'd got out of them in good time by 2013).
As I've mentioned, my benchmark is Bellway.... and that works two ways.... firstly, to mark other house builder shares against, and secondly, to mark my own performance against them.... since I've been doing that seriously, from the start of 2013, my target was to be beating them by an average of 10% a year, so that's a tough target...
I was managing an average of 6% a year until 2020 and the arrival of covid.... I got lucky, and for the first time in twenty years I moved a substantial portion of investment funds into Index linked Gilts, which I regard as plan B in case the smelly stuff really does hit the twirly thing.
The upshot is that my average improvement against Bellway is now about 10%, but against that, I've now got less skin in the game so a serious Builder share price bounce would knock that performance back again....
But, as things stand, I ain't complaining..!
Do you follow BKG (my biggest house builder) and if so where do you rate them on your scale?
1) "Why bother about Crest Nicholson on here. SB anticipated a 'nightmare' with Vistry on the Galliford Try purchase - not the case at all."
2) "So which Housebuilders so will do best over the next say, 6 months, or any period you like?"
To take your two points, the first of which crossed with my previous one while typing it and I have probably already covered it to some degree there....
Vistry's results were every bit the nightmare I'd imagined, the scribblers had them in for 60p EPS for the full time result and I had them in at a precautionary minus (200p), i.e. a loss...
Okay, that was a precautionary figure, but not by much as it is turning out.... my new estimate is minus (185p) based on the figures just released. Most of this, of course, is writing off all the intangible asset, aka fresh air, that was generated on the balance sheet through the purchase of Galliford's house building arm...
I am a seeker of value not a predictor of price. If you look at the graph I referenced previously, twenty year comparative between Bellway and Bovis, the former has a price gain of around 700% percent and the latter only 100%, yet they both sit at the same PBV so, priced more rationally, the gap would surely be even bigger given that Bellway's performance implies it's worth a higher rating than Bovis...
By contrast, Persimmon's PBV is around three times that of Bellway based only on a few years of relative out-performance.
I'm happy to rest my case on that.
Re your second point, it might only be a one liner, but would probably be a rather mammoth task to answer properly....
However, my previous point probably assists..
I have no idea about the next six months - after all, the market has had more than twenty years to get Bovis right and it still hasn't done so!
The whole point is that I'm seeking value and that can be very different to price in the short, and sometimes medium, term.
You can look to Warren Buffett to validate that if, as I do, you have respect for what he has achieved and the things that he says about investing... I certainly learned a lot from him when I started.
For example, one of his "If you don't feel comfortable owning a stock for ten years you shouldn't own it for ten minutes"
So which Housebuilder's so will do best over the next say, 6 months, or any period you like?
"I'm guessing you are less hopeful on CREST, than some of your
No, quite the opposite.... Crest has had two duff years (including current year, and we're seeing that it's not alone in that) prior to that its profitability was towards the top end of the sector for the previous six years.
They also got into bovver before the credit crunch, by that seemed to have been entirely due to a Scottish entrepreneur, Tom Hunter, buying the company with a modest down payment then loading it up with debt, a la Debenhams, immediately before the credit crunch.... he lost his shirt and the banks took over the company... bit like renting a rowing boat just above Niagara then going with the flow...
Whereas, Bovis seems to be having a duff life... their only bright spot was that they had low borrowings going into the credit crunch so didn't need an investor-value-destroying rights issue like, big time, Barratt and Taylor Wimps and, later, in a smaller way, Redrow, when the king returned to put things right there...
I give book value weightings to companies against Bellway, which I use as a benchmark as it's been so steady, comparatively, over the nearly forty years I have records for.
Crest gets a weighting, in my rating system, of minus twenty percent....
There are one or two folks in my circle who would penalise Crest more heavily, but there you go - we're all over eighteen and old enough to fight & die for our country.
By comparison, Bovis is in a class of its own with a minus fifty percent... again, others might argue with that, but then, again, we're all investing our own money so are entitled to come to our own views.
The point is, even with that weighting as a handicap, Crest is still yards ahead of the other house builders IMO in terms of investor value as its price to book is so low even with being penalised by the weighting - and that's after having already taken a self-imposed hit on their land bank values as at the half time whistle.
At the last reckoning, they were also the ONLY house builder, of those I monitor, whose balance sheet passes the acid test ratio that accountants use as a measure of solvency and risk.... and that probably surprised me as much as anyone once I'd thought to check that particular ratio, but there you go!
Anyway, the upshot is that Crest is currently by far my biggest holding.....
Everything has its value, even Bovis... at the right price, it could be a buy for me.... but, relative to the others, probably not this side of 300p.
After all, IMO, the market's been getting Bovis's relative price wrong for more than twenty years (and if you think I'm overstating that, make yourself a comparison graph, on FT.com, of Bellway and Bovis since the start of the century), so why would it change the habit of a lifetime..?
Why bother about Crest Nicholson on here. SB anticipated a 'nightmare' with Vistry on the Galliford Try purchase - not the case at all.
I'm guessing you are less hopeful on CREST, than some of your
"I thought it was JFK. Never mind."
Yes, you are right, the first bit was JFK...
Buffett just added the second phrase, I imagine as a reality check for over-exuberant investors... and, let's face it, there are a few of those around from time to time...
I thought it was JFK. Never mind.
BKG fallen by £3 in the last few days. If only I had the nerve (and ability) to trade them. I don't have historical records as long as SB but I have had BKG since 2013 when it was about £20 and so it has more than doubled with significant dividends as well so I am more than happy with it. £1.07 about to be paid next week for example.
I foolishly bought GT for the dividend but then it all went t*** up and so I am stuck with them and Vistry until they pick up at least a bit.
"A rising tide lifts all boats."
As we seem to be having a Buffett themed morning, the part he added to the above was:
"...but only when the tide goes out do you discover whose been swimming naked"
And I think that's probably more our concern here, as it doesn't seem much like a rising tide at the moment....!
A rising tide lifts all boats.
"One can pick over all of these builders at the moment, with guidance from the past, and still finish up in the same place when trying to forecast what lies ahead."
Well, events may prove you correct, who knows for sure, but twenty years in this game has shown me that it does pay to take a view and, after all, that's surely why everyone comes here, reads, and makes comments...?
If I was presented with two lines on a graph and each was heading steadily in different directions and I had to decide where the next plot for each would be, I'd no doubt continue the trends.
And the market does take a view... it offers a wide range of price to book values on house builders' shares, from 2.70 for Persimmon down to 0.62 for Crest, so it clearly thinks that Persimmon will do rather better than Crest with every £1 of land you entrust it with...
As it happens, Bovis and Bellway are currently on exactly the same PBV of 0.91, so the market places equal trust if one is using price to book value as a measuring stick - which, of course, you may well not do?
To reshape some of what I wrote yesterday, and if we imagine that everything changes hands at book value, then the 183p worth of Bellway (a single share) bought at the start of their 1998 year would have delivered a further 2,190p of book value plus 975p in dividends, being 3,165p in all.
Whereas, for the 185p worth of Bovis bought at the start of their same year, you would have received a further 670p in book value and 509p in dividend, making 1,179p in total.
As I say, you may prove to be right, and Bovis may now race ahead and leave many other builders for dust....
And, as investors, we all necessarily have to take a view and clearly we take different ones...
But, apart from the numbers above, my view is that not only does Bellway's impressive performance stretch back much further than the period discussed, there's that not only has Bovis bought a business from Galliford Try ~ which is another company that has hardly covered itself in glory since the credit crunch ~ the new management also came from Galliford Try, so I wouldn't want to bet that they haven't also imported old bad habits while they were at it...?
As Warren Buffett has said "In the business world, the rear view mirror is always clearer than the windshield"
And I have no argument with Mr Buffett's long term performance, even if his most recent twenty years haven't been so great....
But anyway, I'm only trying to explain the sort of things that feed my perception of value and no doubt we each have different ways of doing so.... if your particular criteria work for you then I respect that and, if they don't, well, like me, you're probably always seeking to up your game further - rust never sleeps, and all that (and I'm speaking generally, rather than not referring to Neil Young there..).
I have read the previous posts with interest. And no doubt historically valid points have been made. Taking a broad brush, the share prices have all been battered by Covid. And now worries over the economy, and Brexit raises its head again. All house builders have challenges ahead. Some will fare better than others, but their challenges are similar.
I liked today's report, specifically the references to integration and synergies, and I think Vistry partnerships will provide a degree of improved resilience in uncertain times.
One can pick over all of these builders at the moment, with guidance from the past, and still finish up in the same place when trying to forecast what lies ahead.