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Gunga
Investing seems to have been your primary income for longer than it has for me. Investing is all I do now, although I say that I am retired for simplicity, as I am 55 now. It has surprised me how many loaded comments we tend to get from a lot of directions. Let's just say, although we play it down, we don't work conventionally and we clearly are not broke. Our circumstances tend to be a lot less respected than someone who is seen to go out and do an honest days work in the conventional sense. It does not bother us unduly, needing wide approval by as many people as possible is a poor objective in life in my view, but is this something that you have come across yourself.
Also, looking closer at Henry Boot, part builder so just about in your zone. Market cap, £350m, land bank over 16,000 acres, assume very conservatively, 5 plots and acre, some may be lower value commercial, but the 5 plot per acre assumption allows for this somewhat. That land is on the books very cheaply indeed. Tangible equity has been building up at around £25M pa for some years while the price stays range bound, looks very under valued. Your thoughts?
Johncut, sorry I was thinking you were another John. I think that it was John Fallon who mentioned M&G. What else are you holding and/or interested in at the moment?
Hi Vlad - yes same from the DT. Can’t remember mentioning M&G out loud but I have looked at it but I just dismissed as a value trap. However as you said you’d probably get a year or 2 SP growth before it starts sliding back.
Strictly - I can imagine the 20% plus return for your friend. I think Bellway has returned that in around the last 6 weeks. I picked up at £28 and is now 20% up on that. Lucky hit that one. Redrow has returned around 16% over that period so maybe will catch up?
Vlad,
You may well be right, though I was surprised that, during a process of several back & forth comments, he did come forth with some numbers and seemed to temporarily forget that his job is to blow holes in our shared investing perspective ~ largely, probably, for the amusement of others.
But I do feel it's mostly a bit of a lost opportunity that he enjoys sniping at you and that seems to get in the way his taking an engaged viewpoint.
While typing this it's just occurred to me.... he seems like the investing world equivalent of your local builder whom you've mentioned who doesn't think much of your DIY skills...
It's all very well taking the p.ss, but a jaundiced view can obscure objectivity, and the sum is often greater than the parts, or sheeps' heads might be a more appropriate metaphor..?
Strictly
MR Clyde is not quite what you think. He has a degree of knowledge and claims to have generated a a sizeable pile in his lifetime, which I believe, although not primarily through investing, as he would state, although he does stick his accumulated cash in decent-ish divi payers, but even then does not assess the divi cover correctly. But when you press him on detailed points and ratios etc, it often breaks down into a load of bluster. Whatever his capacity once was it is not fully there now, which I think in part accounts for his excessive abrasion.
"Gunga - what is your view on M&G..?"
Vlad, I'm afraid I'm likely to let you down here as a company like M&G is so far out of the zone for me that I don't have a view to express on it in any event let alone on a forum like this....
It's back to this sheep & goats issue we've discussed elsewhere previously....
As I've said before, I found my flock back in 2003 and they can be easily identified as Strictly Bricks sheep by the fact that in place of warm woolly coats they have nice comfortable land banks upon which they build houses.
Nothing else will do for me.
Only four are in the frame right now, they are Redrow, Crest, Inland and our mutual old pal Bellway.
Crest have, IMO, currently become rather seriously over-priced right now - and I blame Sid & Doris for that, as I reckon they don't pay anywhere near enough attention to that cheeky little word "adjusted" that tends to appear prominently in trading updates issued by Crest in recent years.
And even being spread across the other three right now has proved unwise thus far this year.... I have a fair amount of Inland at the moment whereas my pal, wisely with the benefit of hindsight, has zilch.
Within the Strictly Bricks blog we have an annual investing competition called "Strictly Wacky Races" (and, before you ask, I'm Prof Pat Pending).
My pal, who followed me into this game about twenty years ago (and in SWR, he's represented by the Ant Hill Mob.... and there are others who read LSE BWY who are also engaged in this friendly but fiercely fought fixture) is ahead of everyone by a fair margin right now, and all he's done that I haven't been so successful at thus far this year (though the Fat Lady has been known to come to my rescue in the past) is essentially bob around between just Bellway and Redrow pursuing perceived best value.
And that has been sufficient to put him on 17.7% for the year to date, against my humble 8.5%, which is not only half his it's also a tad embarrassing.
I'm telling you this seemingly pointless & irrelevant story to try to make the point that the few house builders we have to play with are enough.
As we've previously discussed, it's been sufficient for us to return just over an average of 20% a year these past 21 years and, for such a seemingly sound game, I'm not looking for more than that and just to be able to continue at that sort of rate ~ if that proves possible ~ is nothing short of splendid.
You might have picked up on a recent extended conversation with your pal Mr Clyde in a Telegraph chat recently....?
He strikes me as being pretty switched on, but perhaps it's a pity ~ for him at any rate ~ that he's so dismissive of what you bring to the discussion.
By which I mean, after some pushing from me, he estimated his return over the past 20 years at around 12% a year.
Which only gives a fifth of the gains of 20% a year...
None so blind, and all that...
Strictly
Johncut - are you John..... on the DT who mentioned M&G a weeks or so ago? I agree that M&G may not be a very long term hold, although my typical holding period is 1 to 2 years and M&G is set to throw off so much genuine profit in that time period. One area where I disagree with the BH phase Buffett is the punch card of 20 businesses in a lifetime. So vast was the BH capital and so many the controlled businesses that this made sense. Key to BH Buffett was the control of insurers so that he could get his mitts on the float, the capital pool that insurers must hold, Buffett then would directly invest the float with devastating effect. The possibility of M&G's share price doubling over the next year or two seems very real, double the price and the price would only be about fair, not over priced. The Biden spend bonanza and business tax hikes is going to end in an awful mess in time. But possibly more time than some expect. The signs will be there to see, we could well have a pretty strong year or two before things begins to hit the fan. Clearly it is better to be in companies with great tangible surplus relative to market cap that are highly likely to be performing just as strongly in a decade - BWY, LGEN, RDW, but the medium term case of M&G is pretty strong and M&G is only a 10% holding for me presently and probably won't be much more.
Hi Vlad, M&G is always top of the yield list...I just thought was a value trap however I did start reading up and it’s actually spun out of Prudential which I thought was a well run company so did think may be worth looking into. Will this not be a very cyclical company depending on the wind of the economy ie at the moment people are pouring money into ISA’s, pensions etc so funds under management will continue to grow for the moment. Maybe in a year or 2 the sugar rush of the Biden bounce, furlough money etc will wear off and interest rates will climb and share prices will retrench funds under management will reduce...?
Gunga - what is your view on M&G. I have taken a relatively small holding. Not the kind of business that you could hold and forget for a decade, but very cheap and the cash generation over the next 3 years looks like it will be considerable. Tangible surplus, i.e. yield plus annual build in tangible balance sheet equity, expressed as a percentage of market cap, looks like being 12% or more relative to the current share price. It may be just a case of hold for a year as the market comes to its senses, your thoughs?
Henry Boot - doing okay, the tangible equity build up has been steady over recent years, when the divi comes back fully, the tangible surplus will be around 10%, not bad you know not bad at all.
DT decided to verify and write up, comes out Monday I believe, no idea what they will say, but they did not question the extensive verification data that I submitted so presumably they agree, we shall see.