Member Info for LorenzoLynch

Feet,

I think it’s highly likely that you’re correct in your assumptions. If I had to guess the bottom, I imagine it will be Q4 of this year or Q1 of next year. All it takes is some positive news on the outlook, however, and these housebuilders will rebound (like yourself, I do think this is unlikely tbh). I’m content owning shares at these prices though, although, as I’ve said on here before, I wouldn’t buy PSN right now due to the weakness of the balance sheet. I do however, think that PSN will offer the most upside once it finally bottoms out at peak fear. If PSN was what I wanted to own, I’d also be sitting on the sidelines, for now. I think a lot of investors are in denial, because they’re left holding the bag, and/or would like a dead cat bounce so they can sell. I’m certainly going to keep a nice chunk of cash for Q4 onwards. At 0.5 P/B, I’ll be doubling down on my HB holdings. You, and others have caused me to reflect though tbh. I’m probably a bit too heavy on my HB’s atm, all things considered

Steve,

I’m not contradicting myself, I’m hedging my bets. It’s called risk management. Inflation is a complicated game, and it could shift very quickly. Likewise, the govt could introduce a scheme that artificially inflates house prices (you know, as they often do). Fortunately, I foresaw this decline, so I only bought back into housebuilders recently, after selling during the recent rebound. Consequently, I have a low average and am only just in the red. A repeat of 2008 sees my HB’s bottom out at 30% lower than today (a p/b of 0.5), assuming no dividends are paid for the duration (which hopefully won’t be the case for my HB’s). A 5% dividend pa would reduce my downside to what? 15%? Vs upside of 120% upon recovery (excluding dividends). There’s no guarantee that a repeat is due, but it seems like a lot of investors are using 2008 as a guide, so I’m not ruling it out. I’ll continue to top up on the way down, cautiously. A fall to 0.5 P/B would simply see me trim other holdings and throw money at the HB’s

It astounds me how so many people are in denial about it the current economic situation and how this will impact on house prices. I topped up both of my HB’s yesterday, but I’m under no illusion that there’s more pain on the horizon. I’m just trying to hedge against the govt making a last ditch attempt to artificially prop up the housing market. Moreover, most stocks are overvalued atm imo. I think another 20% downside is likely in HB’s… maybe more

Avocet,

It’s well documented the banks have been lending irresponsibly since the govt lifted restrictions on them (the ones that were imposed due to 2008). The ruling classes like to buy property during times of crisis, so this cycle will continue into perpetuity, and our entire economy and monetary is based on debt, so where would our economy be now without irresponsible lending?

Blades,

You could spend £20,000 on a camper and sell it 5 years later for £15,000. £5,000 lost. Compare that to rent… you’d lose £5,000+ per annum. As you said yourself, some people can’t afford the deposit or they may have bad credit and so on. On a £200,000 mortgage @ 5% interest (on average), you’re paying £150,000 in interest alone. Let’s assume that house price growth tracks inflation, and we exclude disposal costs, maintenance costs and council tax etc. That’s £6,000 down the train per annum. Now, for reasons I’ve mentioned before, we have seen real house price growth in recent decades. Where is it going to come from in the future? Demand for housing and a shortage of housing doesn’t mean people can pay whatever they like for houses; it’s more likely to motivate them to look at alternatives. Many will even move abroad. Would I buy a house if I was in the 1960’s or 1970’s? 100%. Now? No chance; not unless I was renting it out on Airbnb when not at the property or renting rooms out. Compare the real returns on U.K. housing vs Berkshire Hathaway during the past 40 years, and tell me it’s the best investment a man can make

There are other options though; many of which are being explored. For example, living in a HMO (albeit, these are becoming stupidly expensive), living in a campervan, narrowboats etc. The rental market is a joke in many parts of the U.K, I agree. Both renters and homebuyers are paying well over the odds imo and I think in the latter case this stems from the false narrative that ‘my parents made a fortune on their house, so the same will happen for me’. From the 1960’s onwards, we’ve seen a huge level of market value appreciation in relation to salaries. Such a trend can’t continue. Taxation is forever increasing, the economy is stagnant, inflation is out of control and essential industries (energy and food, primarily) are holding consumers to ransom; the latter two are short-term. Will house prices rebound after their inevitable dip? Sure, but that’s the only stage in the cycle I’d consider buying something, but then again, the low point will likely be when interest rates peak, so that has to be factored in. In most cases I’ve looked at, homeowners have made narda when inflation, mortgage interest etc have been priced in. That’s not an investment imo, but yes, smarter than renting, at present

Blades,

I fully agree with the irresponsible lending. I don’t just read about it in articles, I see it with my friends (late twenties and early thirties). Many are racking up debt and remortgaging just to cope. Those who can hold onto their homes will… those who can’t however… we know how that ends. A lot of people seem to be in denial, like housing cycles don’t exist. However, this is (say from now until 2024/25) the time to invest in house-builders. History also proves this. That said, I wouldn’t invest in many of them at present as I don’t think the pain is priced in to all of them. Moreover, the likes of PSN imo aren’t underpinned by a strong balance sheet, so the downside is anybody’s guess. Bellway’s SP fell to around 50% of NAV during the GFC. That would see the SP fall to £13.50 today. I think the bottom will be more like £16-£17 this time around, although that could change very , very easily in either direction. Now imagine PSN at 50% of NAV. The million $ question is how painful will this get? I can’t see a full repeat of 2008 as there were many other issues at play and the recovery is still fresh in the minds of investors, but I wouldn’t be surprised if any of the HB’s fall another 30%.. some I can see falling 50% or more. When a share price is underpinned by the dividend, and the dividend is suspended, it doesn’t take a genius to work out that the SP will go with it. It makes no difference to me what people do, but there seems to be a lot of confusion as to why PSN is so unloved. To me, it seems glaringly obvious. I thought mortgages had reached around 7x annual salaries, but it’s a while since I looked at that metric. Either way, we are due a sizeable correction there, although every average Joe seems to think that buying a house is still the best investment. As both a surveyor and investor, I am 100% certain that is isn’t… not these days. Not even close, when you factor in inflation, interest on mortgage payments, disposal costs and maintenance etc

I’m invested in 2 HB’s myself. Neither of them PSN, primarily because the balance sheet here isn’t strong enough for my risk appetite and PSN typically sell to low income people who are currently being hammered by inflation. Of course, this also has an impact further up the chain. For me, it’s all about balance at the moment. Sure, HB SP’s could fall further, but in that event, I’ll be buying more shares. Will I double my money in 3 years? Imo, almost certainly, especially as I’ll be averaging down if SP’s do continue to fall… if they don’t, well, I’m already in the green, and I’ll be averaging up (once recovery is underway). While inflation is the main threat we face, at the first sign of real disinflation, these HB’s will soar. I do however believe that things are going to get worse before they get better, unless the govt design to introduce a new sexy scheme to artificially pump up the market. That said, I’d love for the share prices to tank. The more fearful the market, the more excited and greedy I become

Steve,

You telling me that some investors believed that the U.S govt were willing to allow the global economy to collapse as opposed to increasing the debt ceiling? Wow

Did not see a 5% rise coming out of nowhere like that. Around 80p is what I was hoping for, in order for me to buy back in, but this could always be a dead cat bounce. Anybody aware of the catalyst? Sitting on my hands, for now

Apendragon,

Is that you Jim Cramer? With all due respect, you’ve made some terrible investing decisions with Boohoo and Novacyt, losing a pretty penny in the process, so what value does your opinion have? Your comment isn’t even logical. I wish I backed the opposite side of your previous trades. Might have to increase my weighting if you’re this confident in Mondi’s alleged demise. My advice: stick to playing Dungeons & Dragons. Are you shorting Mondi?

Https://stocks.apple.com/ARD1uFx1gRwqUGi_N9aCBuw

Billybob,

Again, very valid points. Once cash flows improve and CF is debt free and in the 250… wow. If I was a buy and hold man, I wouldn’t be sweating over the future, put it that way. I imagine the net debt will be gone by then though, I must say. I also think they could increase prices, but I think you have to trust the management team on that. Supermarkets are starting to offer better deals on cards, so I think CF has to increase prices cautiously. Ideally, I’d like to be back in before the end of the calendar year for that very reason, even though I personally don’t care for dividends. I just think it will reduce the volatility here and attract new investors, sending the share price up

Tories,

I won’t name all my holdings as some have small market caps and I’m still adding to my positions as I earn money. I actually opened a new position today in a stock that I sold earlier this year, so I have 7 now. 6 of my stocks are U.K-based. I’ll list some below:

• PRD is an educated gamble; gas & oil exploration. Could go to zero, but could also put my in a situation where I become a full-time investor/dosser, and soon. Risk vs reward justified as I’ve only invested 7 days of wages (after tax) into it.
• Porsche Holdings SE (not Porsche AG!). Around 100% upside imo, whenever you like, but it requires thorough research. The RNS’ are the only place you can find accurate information, as the share structure is often misinterpreted. My advice: ignore the balance sheet and instead, value their holdings separately (mostly VW and Porsche)
• 2 housebuilders. Do your own research here. Steve owns PSN I think from memory. For me, it’s number 3, but I fully understand why somebody would prefer PSN, as on earnings alone, the last time I looked (a few weeks back) it offered the most upside. I do think it offers a lot more downside than the two I’ve opted for though, due to differences on the balance sheet. I’m bearish on the housing market btw, so I’ve been trimming on the way up.

An interesting industry to look at atm is media. Some good value on offer there, but study those cash flows as RCH caught me out when I first started investing. Luckily though, it caught the market out as well, so I made about 550% from my first buys to when I sold the lot in one swoop. The p/e was 2 when I bought in, so for me, it was a no-brainer. I wouldn’t buy back in now though. The consolidation of the newspaper companies offers several opportunities, although I don’t own a media company atm. I am watching closely, however.

Stach,

I’ve already explained why I don’t think it’s worth £1.50 just yet, but I do think it will get there eventually. I’m not telling anybody what to do with their money, I’ve just explained what I’m doing with mine. I initially invested in CARD in 2020 and I still think it’s better than 99% of U.K. stocks. You think I’m unaware of the potential here? I should add that I always have a highly concentrated portfolio (6 stocks at the moment). If I had to hold 10, I’d still own some CARD. It’s all good looking at the potential returns, but what about short-term downside and opportunity cost? What relevance does ‘it used to be £4 per share’ have? It also used to be 30p per share, even more recently. Both valuations would be ludicrous today imo. 12.9p per share? That’s because they paid a reduced tax rate and benefited from £3.5m in one-off payments. In my valuations, I’ve adjusted the numbers to account for this. If it was 12.9p with no one-off benefits and after paying 25% tax, then I’d still own a small position here

Billybob,

I only ever pay for a company what I think it was worth now, or in a year’s time, whilst also factoring in my upside. It might sound overly-ambitious, but I aim for 30%+ per annum and I always leave 10% for the market. Once upon a time, I failed to leave 10% (with Best of the Best). Bought at £20 and it was £37 or so within a few months. I was holding out for £39. Didn’t sell and hadn’t put their RNS’ into my calendar... Sold at £20, before it tanked soon after to £4! It was highly probable that something of the sort was going to happen once the lockdowns were over, so I never considered holding it long-term.

I think CARD is around fair value now. I’m going to run a few calculations when I get chance to put estimates on future valuations. You raised a very valid point about the institutions. It hasn’t really crossed my mind, but at the same time, some of my other stocks have had exceptional results lately and the institutions haven’t move the dial with any of them (well, aside from my housebuilders). My other stocks each offer around 60% upside or more (50%, if I leave 10% for the buyer/market), so opportunity cost is at the forefront of my mind. I sold another one of stocks earlier this year for the same reason and that offers more upside than CARD within the next 2 years imo, even if £1.50 is achieved. Which reminds me, I might start opening a small position there. As CF is a value stock, I don’t see the market getting too carried away and pricing in future growth, especially as there’s no dividend at the moment

Stach,

And there were good reasons for that rise. You expecting the same level of earnings growth next year. Like I said, what is your valuation and why?

***an,

I agree on the paying down of debt and the timeframe (2 years at the latest imo). I also agree that the things you’ve discussed will increase the earnings and valuation of CF, but not for a while yet. I don’t have FOMO though and I’m confident we’ll see a fall here at some point; whether it’s justified or not. If I didn’t see more upside and less downside in my other holdings, I’d have just reduced my holding, but fortunately, I found a new home for my CF money on the weekend

Stach,

What table? Still waiting for your valuation.

Stach,

Then you my friend, are even more of a lunatic than I thought you were. Please point out where you disagree with my post and for once, try using numbers just justify your arguments instead of slander. It’d be nice to see your valuation of the company. Let me guess… basic EPS at the reduce taxed rate X 15 = £1.90+ per share? What do these market makers allegedly do in your opinion? My understanding is that they stir up volume? I think I’d post a bit more frequently if that was my intention and I don’t think I’d post a balanced comment that is supported by evidence, logic and reasoning…. Something you should try every now and again Mr Tinfoil-Hat Ramper