Member Info for Josh95

I would be very interested in buying back in here if either RDW or GFRD are able to complete a takeover. Both have very strong management teams, especially Galliford Try with their new CEO pete trustcott, poached from Taylor Wimpey. This man is very experienced and should GFRD acquire BVS he would soon sort out the appalling management strctures and mess that disgrace of a CEO RItchie has left. Very interesting times now, GFRD offer is c. 7% above current prices so I would expect to see a rise of this magnitude come Monday. Inland Homes surely also another takeover target at current levels and worth a look.

Hi Alan, I agree the handling of Ashford College was very bad for publicity! I continue to believe there is significant value here at current levels however; the shares are barely trading at Net Asset Value and at current levels INL looks like a very attractive acquisition target. In this regard, things seem to be heating up in the sector with Bovis receiving approaches from GFRD and RDW albeit at prices only c. 7% above current levels. That being said, INL is currently cheaper than BVS on a net asset value basis and is far better managed. I continue to top up below 60p before the forthcoming half year results.

Wow, 58p live price! Never thought we'd see it below 60p before March interim's.. good top up opportunity, seems very quiet on here lately.. 58p is the net asset value (at book value, EPRA much higher).

Hi strictly, No problem- you are welcome. I do predominantly invest in house builders (although not solely) because it is a sector I know and understand well as I cover it as part of my job as a chartered accountant. I also believe the supply and demand dynamics and fundamentals remain strong and in favour of this sector despite brexit, but I continue to monitor conditions given its cyclical nature. I have a number of financial models that continually evaluate current pricing levels of sector peers and yes I will move funds without hesitation in and out of sector peers if my pricing models dictate there is an arbitrage opportunity. I have had more success with my proactive management strategy than I would have otherwise done with a buy and hold. A recent case in point was Bdev which at the start of the year was trading well ahead of crest despite fundamentals indicating crest was worth substantially more so I switched more funds into the latter which has been the best performing stock in the sector so far this year, redrow not too far behind. That being said I am more than happy to take a long term view and wait for pricing anomalies to close- tef and INL for example. Whilst I agree that broker consensus on EPS for RDW has been too low, I don't believe ROE is an appropriate tool for estimating EPS. The reason being ROE and EPS both require you to forecast a P&L and thus require an implicit understanding of how volumes, costs, and pricing mix will interact to create a profit for the year. This requires an implicit understanding of the businesses strategy, its landbank, dividend policy and its volume ambitions as well as a wider macro understanding of how market conditions will most likely transpire over the coming years. All of this would be required to construct a P&L needed to calculate and understand how EPS and ROE are likely to move over the coming years and thus it would be an oversimplification to merely take a judgement on how ROE would move over the coming period, without considering these, because these are by definition the ingredients that feed into the ROE calc so the p&L needs to be forecast and understood first, not the other way around. That being said, I too had higher EPS forecasts for RDW calculate on the above basis and I suspect the brokers took a too pessimistic view of the likely impact from Brexit and will subsequently upgrade their forecasts over the coming period. Another reason why they prefer CRST to RDW is because of the differing dividend strategies and the cyclical nature of this industry- there is no guarantee CRST or RDW will hit their EPS targets in 2019, market conditions will dicate whether that is the case, but in the meantime CRST is paying out large dividends holders can collect but whilst still offering just as strong growth prospects.

Topped up here today adding to the tranche I bought back in the 50's. This is good value at these levels IMO and barely above book value of c. 58p, let alone anywhere near the stated EPRA NAV of 86p. Given current market conditions, unless macro conditions change, I can't see us staying this low for long..

These EPS forecasts, both given as guidance by the respective firms for 2019 targets, yield at todays price P/E's of CRST= 540/86 =6.3 RDW = 470/77 = 6.1 At first site these look like remarkably similar values. But we are missing something in our analysis- the completely different dividend policies. For analysis purposes lets suppose conservatively that 2019 arrives, both firms hit their EPS targets and trade on 10x EPS. CRST is £8.60 and RDW is £7.70- that's a capital gain of c 59% and 63% respectively, but now lets look at the dividends. From 2017-2019 CRST is forecast to pay a staggering £1.15 per share using the same broker consensus link I gave you earlier. This represents an additional 21% return over the period amount to a TSR by 2019 of 80%. Using the same period RDW is forecast to pay 45.9p which is just an additional 9% from dividends taking its TSR to 72% over the same period. Granted RDW dividend forecast may still need tweaking by the brokers but I still think CRST edges RDW in terms of value over the period and brokers seem to agree. Both great picks though and far better than the big 3 (TW. BDev and PSN) IMO but CRSTS greater efficiency and dividends give it the edge at the moment.

The analysts prefer CRST because they see it as a stock where you can have your cake (growth in EPS) and eat it (large and growing dividend). Although RDW growth in EPS is impressive its forecast dividend yield of a mere 3% for 2017 pales in comparison to sector peers such as CRST with a yield well over double that at 6.5% for the same financial year. Furthemore CRST generates returns on assets more efficiently than RDW and this can be seen from its superior ROCE of a whopping 31.3% vs a substantially lower 24% for RDW. This tells us CRST uses assets 31.3/24 = some 30% more efficiently than RDW meaning it needs lower capital employed to generate growth in EPS than RDW does and thus can afford to pay more out as dividends whilst still growing. ROE is a measure of return to shareholder funds but it can be manipulated easily with higher gearing; a low equity base and proportinally larger debt base will simply increase ROE which is why many prefer ROCE as a measure of efficiency. WIth regards to EPS the 62p is a factual amount and represents the profit accrued in the 2016 period for CRST as audited under financial reporting standards so it can be taken as correct. The ROE uses this metric in the numerator but it uses a balance sheet metric in the denominator which is a snapshot of the book value at a point in time. When calculating the ROE either the book figure at the start of the period, or the figure at the end can be used or indeed an average of the two but whatever way you look at it CRST also has superior ROE of 22.8 vs 19.8 forecast for the 2017 period with what looks like the average method used here: http://www.4-traders.com/CREST-NICHOLSON-HOLDINGS-12583133/financials/ The book value does essentially grow by the EPS minus the cashflow paid out as dividends in the period. But you need to be careful when calculating this as the dividend paid in the period will not be the same as the dividend for the financial year but a split between the final from the year before and the interim from the current year- this is a cashflow metric as opposed the the EPS metric which is P&L and the book value metric which is a balance sheet snapshot at a point in time. Furthermore the book will be somewhat diluted from the estimate this calculation gives you due to nil cost shares issued during the financial year for various share plans and executive bonuses etc. CRST does indeed trade on a higher price to book metric but this is again linked to its superior ROCE which is c. 30% higher than RDW's. The price to book metric can also be misleading depending on the carrying value of assets on the balance sheet too- such as land bank some plots of which may well have a realisable value well in excess to that carried on the balance sheet thereby giving a misleadingly high price to book metric. I like RDW but still prefer CRST and TEF at current prices. Take CRST for instance- the forecast 2019 EPS is a whopping 85p vs RDW stated guidance t

Stunning set of results, smashing market expectations once again! Redrow growing at breakneck speed with big improvements in ROCE, margins and EPS. 2019 EPS guidance is for a whopping 77p EPS placing redrow on a forward P/E for 2019 of just 6.1 against previous market consensus of 62p EPS or 7.5 PE. Ofcourse, this assumes wider macroeconomic stability but in itself is a bullish statement by Redrow and a very impressive set of interims. Unlike Bovis, Redrow has executed its growth plan impressively well whilst maintaining its 4 star NHBC rating suggesting a strong management structure and rigid set of internal controls. These figures place Redrow amongst the top in sector for value alongside TEF and CRST trading on similarly low P/E's (but crest with far superior yield). Brilliant results yet again!!

Compared to sector peers its an appalling performance; the management at Bovis has been nothing short of disgraceful and I am surprised Ritchie even lasted this long. This is not the first time Ritchie's poor management structure and system of internal controls have allowed important completions to slip further down stream and it is absolutely right that he has gone. No other builder would have allowed this to happen which is why Bovis is being punished by the market. Other listed builders have superior management structures that ensure units are delivered on time, and if their is a slippage for whatever reason this will be properly managed and equivalent units from other sites brought forward to manage sales and year end volume and profit expectations. Time and time again Bovis has failed to deliver and until they appoint a decent CEO who will shake up the management structure then I would advise steering clear as until then there is no guarantee of much needed operational improvements. Furthermore Bovis has a terrible reputation within the sector for build quality and customer service ratings, for which it is the worst in sector along with its ROCE, margins and share price performance! Ritchie took hold of Bovis not long after the great recession, which it weathered well due to its strong balance sheet and, at the time, sector leading margins. Look where he has taken it- Bovis is not a laughing stock in the sector with some of the worst product quality, lowest margins and the lowest ROCE in the sector. Good riddance to an absolute disgrace of a CEO! The only positive is that Bovis is now so lowly valued on price to book metrics for instance, that is has amongst the highest potential for improvements and share price performance in the right hands from here. But before its worth buying back I want to know who is in charge and what they are going to do to turn this laughing stock of a builder around! The management has been nothing short of shocking.

Can we hold it at close? Not long until results (24th Jan).. great run for Crst.

Ritchie is off! Fantastic news, I've always liked the business plan of Bovis but Ritchie was always the weak link in the chain and hence I've been out of this for a good while. Great to see him gone- worst CEO in the sector. Lets hope they get someone decent in, BVS needs a big shake up at the top.

Gleeson is not a risky business, in fact quite the opposite. It is less risky than traditional house builders because it sells homes in the North with an asp of only £125k which is affordable for almost any couple and furthermore its strategic land business is based around buying land without planning permission in the south and progressing it through the system and selling for large profits to hungry housebuilders. Hardly a risky operation is it! This fact that it is a lower risk play is also backed up by all the facts. Take a look at its beta coefficient which measures the volatility of its shares to the market portfolio; it is only a fraction of what a higher risk builder such as Bdev's is for instance. And the fact that it is lower risk translates into its higher valuation on a price to earnings basis; because it is lower risk investors require a lower return than they do at other higher risked house builders which is why it trades on a much higher PE ratio than sector peers. Feed its numbers through the capital asset pricing model and you will understand! Sorry, not at all interested in your "system" it won't allow you to beat the market over the long term. I am afraid its completely useless but good luck with it! If you want to make superior returns you have to look forward and anticipate which businesses are likely to perform best in the future and outperform the market, this requires an assessment of fundamentals and implicit understanding of the businesses operations and strategy, not a floored "system" based around publicly available information! I'm afraid what you are doing is nothing more than gambling!

This has been overdue IMO, far cheaper than sector peers on an earnings basis. Lets see what tomorrows update brings.

No one is forcing you to hold INL. If you don't like the firm or management, divest your shareholding or speak out at the AGM. Those are your options as a shareholder. This isn't a dividend stock and retained earnings are required to finance expansion of the balance sheet and grow earnings. If you don't like that and want a high yield sell and go and buy crest or tw. but stop moaning as you and you alone are responsible for your investment choices and can divest at any time. A 1.3p total dividend for the year amounts to a yield of c. 2.3% at current prices which is actually pretty good for a rapidly growing AIM. In addition, ignoring EPRA NAV accounting, this currently trades at c. 1x book value on traditional metrics with a NAV of c. 57p per share and a rapidly expanding landbank with significant value locked in (as detailed by the EPRA NAV figures which are much higher than the book values). I've been buying this below 60p having sold out a while ago in the 70s and 80s and plan on continuing to do so below 60p.

Might add, Gleeson also up there.

Redrow now back to pre-brexit price- strongest performance out of any builder post brexit and by a very large margin.

Doesn't make any difference to shareholder value if capital return is paid through dividend or share buy back. Yes buyback reduces shares in issue and translates into higher EPS and thus lower P/E. But P/E also goes down when stocks go ex dividend as the share price drops, Basically, ceterus paribus, the capital gain created by the share buy back will be of almost identical magnitude to the dividend yield so the only differences to shareholder wealth is whether you are being taxed more heavily through dividends or capital gains. If management believe the share price is too low and represents good value they may opt for a buy back, if not they will probably go with dividends. Makes barely no difference on shareholder wealth and is a nominal decision anyway; you can always reinvest your dividends in the same company which will have basically the same real effect as a buy back anyway.

The brokers recognized just how undervalued Crest is. At one point Redrow was within 15p of this stock, absolutely no way it should be that close; as much as I like Redrow this is far better value at these levels from an earnings and yield perspective over the next three years and the book values are currently very similar. Despite the 5% surge today this is still undervalued compared to sector peers and I expect it to catch up- the update for year end results next month may be the catalyst we need. Huge divi forecast for next year! Telford Homes also worth a look and currently offers similar, if not better value.

Agree Dako, based on the latest broker consensus EPS forecasts this is the cheapest builder in the sector at these levels on a combined earnings/yield return basis over the next few years. Year end this month and an update mid November could help provide an uplift.

I'm afraid to say that your so called "model" is based on historical empirical observation is useless with zero predictive power. Your outlined "trading strategy" actually amounts to gambling and the sooner you realize that the better (before you get badly stung!) You have been riding the crest of a construction sector bull market and have recklessly concluded you can make super normal profits moving forward using a strategy that has involved nothing but luck so far. Builders have been in a bull market for the past 5 years with improving sector conditions so of course their share prices have grown above ex div until now. I suggest you research the efficient market hypothesis and arbitrage pricing and then perhaps you will realize you are wasting your time with your so called model and strategy. You have been gambling with your strategy- that is not investing.