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downgraded PSN a bit and upgraded BWY, PCT and GROW.
Between PCT and Grow nearly half my ISA now in only 2 technology stocks. Big change for a 100% TEF refugee.
GROW risky but oh what potential. If I get rich in my isa it will likely be GROW related. Fantastic portfolio of ultra young tech companies right in the fastest growing sectors, 4.0 P/E and current broker recommendations 40% higher than current SP. Nothing in the builders to match that. Nothing to match that risk level either but hey ho good to have a bit of investment fun to create hope amongst the grim political news.
PCT has grown at about 25% quite steadily over a 4 year period and over it's 20 year history something nearly similar. If it can repeat the trick over the next 20 years I get my TEF substitute.
I am now expecting a Johnson majority and a Canada plus Brexit. Generally even on Brexit I expect Johnson with a 100 seat majority will pivot a bit to the center thus the "plus" on the Canada free trade deal. 5 years of Johnson a pain but I didn't mind him as Mayor and, expect for Brexit, I expect the same centrist please the crowds tendencies as PM.
He likes to be liked and is no ideologue. He will be picking up a lot of working class votes and needs to do one nation polices to appease them or it will be a one off transfer. Those working class votes are not big on the small state neoliberal tendencies of the ERG no the social conservative side of Mogg. I suspect Johnson rode the ERG to undermine May and be PM but with a large majority his loyalties will almost certainly be elsewhere.
Liked the fact he cancelled corporate rate cuts to fund NHS. Shows he is starting to get serious about governing. Easy to spray spending and tax cut premises about. Harder to signal there are trade offs. McDonald was doing that. Johnson is starting to do that. The lib dem surge is not happing. They don't seem to have a coherent policy package beyond Brexit. Jo is nicer than Johnson but not a visionary.
They say that pre 1989 communism scares the capitalist democracies to one nation polices. Now 2019 Labour is creating an anti austerity movement in the Tory party by trailing a lot of spending ideas that have political legs. So Corbyn can retire to his vegetable patch with a minor success under his belt after one failure after anouther. He did not even advance the Palestinian cause on his watch in spite of a strong personal commitment so inept and clumsy was he. To be fair even that minor anti austerity success was really McDonalds who tried hard to keep his radical polices costed and pro growth rather than merely redistributional bash the rich feel good stuff.
Labour party need to find a younger, smarter, more flexible leftie to lead them in the upcoming 2024 elections. One thing 100% for sure it won't be Jeremy Corbyn. Personally can't stand the man. He was given a once in a 2 generation opportunity to reshape Britain to be better, fairer nation and he ble
Terrace & Steph,
The two points you've raised, Terrace, aren't my only concerns about Persimmon...
See the comment I made a couple of days ago about this on the PSN chat...
https://www.lse.co.uk/ShareChat.asp?ShareTicker=PSN&share=Persimmon
Steph, let me know if you want to sign up for Strictly Wacky Races on the blog and I can allocate you a cartoon character (most of the regulars, Muttley, Peter Perfect, etc., are already taken so it looks like we're going to have to delve into characters who only put in the occasion appearance, like Brenna Bubbles, for 2020...)
And if you need another link for the blog, let me know...
Strictly
Steph..also,dont you think that PSN are very expensive o an SP to NAV basis?.
by
Steph..the PSN dividend is huge but only just covered be earnings.Doesnt that worry you?.
thanks, I might add to bellway. Still 10% divi PSN is really nice.
Becoming more and more pro GROW and PCT. Real prospects of 20%+ SP growth for both over a 10 year period of time. No divi though. PCT a more traditional stick picking fund in the global high tech envelope. Achieved 20%+ annual SP growth in the last 10 years and no reason why can not repeat that driven by disruptive innovation. In the short run our builders can (and probably will) beat that but in the long run I can't see how. Best play is probably to stay in builders until they re-price post Brexit and then pivot to technology stocks for the long run. Of course builders will always be good income stocks in a balanced portfolio.
Look at some of the companies GROW are into. Cool stuff. Real potential. Real risk as well.
https://draper-esprit.s3.amazonaws.com/production/uploads/document/file/36/Draper_Esprit_plc_Annual_Report_and_Accounts_FY2019.pdf
Wacky -I'll try to log in and do that when I get a chance.
Steph,
As a PS to my previous comment, without wishing to get to my own hat trick on this, I wrote a rather lengthy spiel on the Persimmon share chat in response to a comment there underlining my concerns about Persimmon based simply on the numbers - and you've said that Persimmon happens to be your number two share behind Bellway...
Strictly
Steph,
The sequel..?
You referenced me in part one of your trilogy here, so I didn't know whether you were seeking a response from me..?
Anyway, I have a challenge for you to take up, or not, as the case may be..?
You're signed up on the blog, so why not join in Strictly Wacky Races 2020.....?
No worries about including non-builder shares - Lazy Luke has half his money in Dechra (which scares the pants off me as an investment prospect), so that's all okay...
Then you can very clearly benchmark how you are doing each month compared to the others - who apart from Luke are pretty much all in builders' shares.
And the people on it are mostly pro active with moving money around - even though they are relative novice investors and they've overwhelmingly only come to this investing-in-house-builders' malarkey because of my influence and so they're mostly learning on the job...
Don't know if you keep up with the comments on the blog from readers but, if so, you can no doubt see what a positive impact on performance having to keep a focus has made as far as they're all concerned.
So, apart from bench marking against exclusively house builder share portfolios, assuming you're continuing in the musketeers' long term buy and hold approach, you would also then be able to be to benchmark that approach against actively seeking best value.
You don't have to trade in order to take part, and I can send you a simple spreadsheet designed to keep everyone's records the same way in the spirit of fairness...
Your largest holding you've said is Bellway... I'll drink to that as that share currently represents 88% of my investment holdings... but seeking perceived best value, i.e. only being in Bellway as, when and while it is perceived best value, has added an annual 7% extra gain to that of Bellway since my records on this began in 2013.
And, who knows - we might even get Terrace signed up for Strictly Wacky Races...?
There's a thought to conjure with... :-)
And, finally, I can tell you that, currently, James188 is in pole position - competing as Mean Muttley - though he's probably far too modest to tell you that himself...!
Strictly
Well I am now 40% completely independent of Brexit with PCT, GROW, CLIG, and SMT. Feel relieved and more willing to tolerate the UK politics driving our UK builder SP's. I expect my 60% builders will outperform the technology stocks for a couple of years but wanted a more balanced portfolio so I sleep better at night.
Thanks Cyb
Grow is 10% of my ISA right now and certainly a hold for now. Will not be adding nor selling for a few years now. To justify 10% it needs to beat 20% growth as I can nearly get that with Polar. They recently (2016) went public so not a long track record as traded but a long term stable team from before.
Of all my punts most nervous about GROW but most curious and most optimistic. I've always wanted to invest in tech start ups before they come to market and this is the best vehicle I can find to do so. Best chance to surprise on the upside. Also as GROW gets bigger and better known may re-price suddenly upwards. P/E of 4 is silly value if they really are able to grow from here. Just confidence needed. A P/E of 4 indicates the market thinks the current earnings is a bit of a one off.
For the life of me can't understand the P/E of Polar at 5.1. Must be a trick to it but never the less it is now nearly 15% of my ISA. Unless I can find something to spook me I'll keep 15% as a proportion for many years.
Well capitalized builders a steal right now. Seriously undervalued as if history will repeat itself in another recession. SO I'll keep 60% in UK Builders and have by a slight margin my largest holding in BWY and just behind PSN and Polar. Between the three of them they are 50% of my portfolio.
Steph,
>That said if one looks at history and not hope GROW has not performed as steadily or as well as Polar in the last 5 years. That can be a buy signal (it is just temporarily undervalued due to sentiment) or maybe a signal of underling problems to the investment model. I need to research further.
I did look a bit more into GROW yesterday and they make claims of 20% yearly portfolio growth over the long term. Not quite what you are looking for but if they can do that over the future years then that will be a very fine return.
I see in a trading statement from just the other day they are looking at growth of 12% "fair value" for the first 6 months. One thing that did raise a bit of a flag and which I would check if I was invested is when the events that created the valuations took place. These events typically (well from my perhaps flawed understanding anyway) relate to further fund raising and the price paid by the investors. I got the feeling that this might have been very close to the start of the 6 month period and if that's the case the cautious side of the greedy and yet fearful investor in me would be wondering if it was significant.
For me, the way they value the investments is hugely fragile in general. People generally get carried away when they value technology. GROW saying they've had long term 20% annual returns but again the cautious side of me wonder if they were investing during the tech bubble in 2000. What actually is their 'long term' and is it just during the long bull market?
I hope this works out for you and I'll be watching the SP and kicking myself if it does but too risky for me at this stage of life. Incidentally I was looking into recessions and market corrections the other day and BWY's SP actually doubled during the dotcom correction. That was something that surprised me.
YEs but, holy cow, GROW selling assets to generate a P/E of 4 is pretty amazing even if NAV is exaggerated by an overvaluation of the underlying assets. I am assuming of course they can't book earnings unless they sell something. Can't in accounting world to my inexpert knowledge be a theoretical profit.
Theoretical NAV of course for reasons you mention yes (with over 100% cover of sp which leaves some room for minor overvaluations). Theoretical value of assets which is why most UK builders showed losses in 2009-10. It was writing down a theoretical land asset value rather than losses on the throughput of homes they were actually building. So builders earnings even more volatile in relation to writing down an asset base as GROW or Polar whose booked profits are not direct affected by asset base decreases.
Polar Capital gets a P/E of 5.1 even though it has positions well balanced across the world of the largest technology companies. If the same accounting principals for GROW apply it can't book earnings from rises in it's stakes. Must come from dividends or sales. So if the tec sector tanks for a couple of years it will have a dive in earnings (less profit booked on any sales) and NAV but dividends will keep coming in. I can't see the risk that justifies a P/E of 5.1. Yes it is a slightly leveraged bet (stock picking not stock index linked) on global tech stocks to be sure but is the business model really riskier than holding the tech stocks themselves or holding a tech index tracker?
Seems to me Polar is a lot bigger, more liquid and more secure for a minor difference in P/E. SO GROW should never be a large percentage of my portfolio. But hey what fun to still be a significant part. Just love getting into UK and EU tech start ups before they hit the exchange. High risk but real potential to rise faster than the tech index and even Polar. That said if one looks at history and not hope GROW has not performed as steadily or as well as Polar in the last 5 years. That can be a buy signal (it is just temporarily undervalued due to sentiment) or maybe a signal of underling problems to the investment model. I need to research further.
This is all new stuff for me but it is a significant part of my pension strategy so worth the time to get it right. I don't mind as I did for TEF to take risk to get a good 10 year return within my ISA. I can diversify later into income generating stock. Right now I am willing to have up to half my portfolio high risk and high growth. I think our UK builders will have a bounce when Brexit uncertainty finally lifts but not convinced the ones I have can grow beyond 2. 5x dividend reinvestment included over 10 years. The tech ones certainly can. 4x, even 6x over that time frame are will within the range. I am not gambling on tiny oil exploration companies here based on some rumour I heard in a pub. Polar actually achieved that in the last 10 years on a pretty smooth looking curve.
Steph, had a quick look at GROW. Not sure p/e ratio is the best measurement for these type of companies. I imagine earnings fluctuate from year to year depending on what they sell of the underlying investments.
Only been going a few years and they invest in high risk companies. Valuations of the underlying investments are their own I think and it's not like the valuations are based on solid assets like land. I would imagine the valuations put on these high tech. companies could be pretty volatile.
High risk I'd say.
Straying
Steph...very brave picks other than homebuilders but I am fearful about staying into sectors that I dont really know or understand.
I have in descending order of size 9 main holdings now. The weighting is about 2/3rds UK builders and the other 1/3rd global tech stock and tech start ups.
BWY
PSN
GROW
PCT
RDW
CLIG
SMT
BKG
I have used trusts that stock pick to hold in the alternative sectors rather than indexes or individual shares. Historically these have outperformed the tech index benchmark (which itself was not too shabby at around 4x over 10 years).
My thesis is that cloud computing, logistics, robotics and communication disruptive technologies have only started to run their course and a global diversified portfolio will over the next 10 years yield growth of TEF pace (doubling every 5 years). It is also UK Brexit drama free investment. Getting a bit tired of it all and we have years of Brexit uncertainty if Boris wins as, after an initial honeymoon, he is bound to start threatening crashing out again if he does not get his way on the free trade deal that normally takes 7 years to negotiate and he claims he won't extend the transition period. It just goes on and on. TESLA just announced a Brexit related decision not to produce in UK.
I am thinking of further diversifying by stock picking within the global chemicals sector (especially middle and far east) as I know that sector almost as well as TEF's residential patch. Pretty amazing new stuff coming out in the engineered plastics and good sector growth as plastic replaces metals for a growing number of applications.
It has been a pain for me to get bombed out of TEF but I hope by spicing up my still substantial UK builder portfolio with fast growing tech stock and tech start ups I can still get the pace I thought I had. Like TEF I am taken a 10 year plus view and can ride out a modest recession and still hope for 4x SP growth over 10 years within the non builder bit and 2 to 3 x for the builders -dividend reinvestment included. Not hard to imagine if PSN can maintain divis at 10%. Does not need SP growth to get 2.5x.
>can anyone speculate why structurally PCT and GROW have such juicy P/E ratios of 4 to 5?
steph, can you provide some links to info. on them. I had a quick look for GROW yesterday but didn't find one that specialised in EU tech.
can anyone speculate why structurally PCT and GROW have such juicy P/E ratios of 4 to 5? This is even better than our UK builders. who range from 6 to 9.
Seems to my inexperienced TEF oriented mind a buy signal. Both invest in tech sector with GROW exclusively in start ups.
I think I have with GROW, PCT, CLIG and a bit of SMT a UK builder counterbalancing exposure to global tech including a fair weighting to tech start ups (the most risky but with the most upside. CLIG interesting as they pay a UK builder style dividend. The rest no significant dividend but capital growth potential (and history) of doubling every 5 years -my old TEF target.
I'm continuing a slow diversification such that UK builders are down to 2/3rds of my portfolio with Bellway the largest within that (in deference to Strictly) and Persimmon the second (10% dividends). So far Persimmon has been the star performer.
Outside I go far away from UK builders with GROW, CLIG and SMT. CLig global with an emerging markets specialization and a UK builder sized dividend. NIce combo. I may buy more. GROW no dividend and a specialization in EU tech start ups with a massive P/E ratio that only small start ups can generate. GROW can easily go up 5x over the next 10 to 15 years. A trick no UK builder (except the now privatized TEF) can aspire to.
SMT a more traditional tech stock consolidator with shares in Tesla , Amazon and the like. I could do those tech stocks individually but don't mind the fees to have someone do a portfolio for me. Poor dividend but an interesting 8.5 P/E ratio given such exposure to large tech stocks. So essentially leveraged I suppose in my inexpert assumption.
I'm expecting a Boris majority government. With that I expect an orderly hard Brexit and a Canada style free trade agreement with maybe some sectors closer than that as traditional UK business lobby kicks in. Might be a surprise on the upside for business and financial services but that only benefits London and thus only marginally for the builders I hold.
This is disappointing on a personal level but December 13th should see our SP's rise a bit in the UK builders sector.
There is a chance of a hung parliament of course. After a bit of volatility probably good for UK builders shares as we get a mild Brexit or no Brexit combined with a Labour minority government with polices aligned with the LIb dems and SNP so no hard left soak the rich stuff to worry about.
I can't see any way Labor can get a majority so the soak the rich policies that would hurt our SP's will not see the light of day. Good for my investments but on a personal level a bit disappointing. I don't mind being soaked by a competent left wing government achieving real efficient and tangible improvements for the many by soaking me. Key operative word is competent. Can't stand Corbyn (basically stubborn and stupid) but have time for McDonald (smart and strategic).
The Lib Dem surge would have started by now if they were to make a real breakthrough this election. I expect they will clock in in the upper teens. Enough for 30 or 40 seats with tactical voting going on but not enough to change the basic composition of Parliament. SNP will do well and we may well see an independent Scotland in the EU leading to a hard border between Scotland and Britain. So the Conservative and Union Party will have caused the break up of the Union.
I expect the Brexit party and UKIP will do badly and win no seats. Once they loose their EU Parliament seats on EU exit in January they will not get as much air time and should thankfully fade into irrelevance. I
Hi Strictly
Still think my system is better but can't prove it. (Invest in tw pre FinRes, when made 20%, move to bdev pre FinRes, when made 20% move back to tw - 40% pa excl Divis).
Don't expect to make 40% but even if 20% pa since 2013 then Invest £ 100 4/01/13, then Date, Value:
03/01/14, 120: 02/01/15, 144: 01/01/16, 173: 06/01/17, 207: 05/01/18, 249: 04/01/19, 299: 03/01/20, 358.
Again this does not include reinvestment of Divis (which in the case of tw and bdev far > than bwy).
I will send you my Planner SS (based on 2017 cos least affected by Brexit), good fun playing about with it, future projects include general system, include LSE Coys, apply 2017 to other years... but as I said Brexit has messed my system up. From RelPrice graphs one thing becomes obvious is that when Brexit panic Sp's converge to a much lower (and closer) level regardless of company performance, which I think you observed before.
Al least this lottery should end soon & BoL
Terrace,
Well, if you're happy with the compromise of the percentage as from the start of 2013 (because all these numbers are already there in front of me on the spreadsheet), with an opening price of 1,037p, I can tell you that investing all divs on the day received means you would have bought yourself another 0.242 shares in total and using tonight's closing price of 3,190p you'd have made an overall 282.1%
Maybe give or take a fraction of a percent....!
But almost exactly double Telford over the same time...
Who says I'm an anorak..?
Strictly
Strictly...can you tell from your records what the total return would have been had you solely invested in bellway and reinvested dividends over the last 5 and 10 years?.
Strictly...can you tell from your records what the total return would have been had you solely invested in bellway and reinvested dividends over the last 5 and 10 years?.
Taverham,
First off, I rate all the other relevant house builders with a book value weighting against Bellway - the Ghost Dog of builders' shares.... they've slipped along, silently and efficiently, scarcely noticed by LSE share chat aficionados, until the musketeers and others reassembled here after they were forcibly evicted from TEF...
I'm a big fan of Ghost Dog..... I've got 37 years of vital statistics on them and, in all that time, they've not really put a foot wrong...
So, when it comes to Crest, they've been pretty flaky recently and I suppose the previous boss either got a bit jaded with pushing out disappointing news, didn't see it the same as the new chap or, as you say,the new CEO is simply giving the kitchen the mother of all spring cleans...?
Whatever, maybe we'll get to a Crest balance sheet we can trust when the next one comes out - or maybe we won't...?
The dividend should probably never have got to 33p in the first place but, now they are where they are, they've probably, like plenty of players in the FTSE100, got to keep on with it and hope they don't end up becoming the new Galliford.
And a consequence of that is the new CEO is looking at pretty much zero book value growth for the next two years as far as I can see - so, yes, he may want to finesse the starting line a bit if he wants to appear heroic, as EPS growth is no doubt going to be harder to achieve for him than for competitors paying a more sensible dividend (the most sensible dividend of all, of course, being zilch) and therefore working off an ongoing and steadily increasing BVPS.
In the meantime, I reckon I'll just take the Crest numbers at face value at the bottom end of the range - they don't warrant better than that, IMO .... Crest have lost some serious brownie points with us lately - by "us", I mean not only with me but with others on the (Strictly Bricks) blog that I refer to in various comments made here, as that's where we tend to dig into this stuff more...
So, anyway, Crest has got a minus 35% weighting for me at the moment and, as of close of play tonight, that makes it 40% more expensive than Bellway in value terms...
So, until and unless I alter my view on that, for me it would require a rather serious relative shift in share prices to be in the zone once more...
And that might just mean that I miss out on a price bounce at some point - but I can live with that as I reckon that trying to predict short term price movements is a mug's game and I have a lot of faith in the notion that to continually pursue best perceived value pays off in the end.....
At least, it has for me these past twenty years..
That was all rather long-winded, and I'm still not sure I answered your question, but there you go... :-)
Strictly