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Hi Strictlybricks
Thanks for the feedback . . . regarding BWY 2018 BVPS, as I didn’t calculate it I simply used the ‘NAV per Share’ value on the BWY fundamentals page (2082.68p). This would explain the difference! So no detention, good, but continued lockdown :-(
I think I recall you saying in a previous post that you then guesstimate/predict/extrapolate the BVPS going forward – can you outline this (ie. what figures do you require and where are these found) and do you do this on a monthly basis? Is this to maintain an ongoing PBV (albeit predicted)??
I have setup a temporary email – montypy2006 at gmail dot com – if you preferred to respond there? Was also wondering if you are still accepting people to your investing blog??
Cheers
MontyPy
Hi strictlybricks
I have now re-read the article a couple of times since posting the link. It all starts very positive with numbers that seem to agree with your position. Around the middle it seems (IMHO) to try and be looking for reasons not to buy? Some of the points he discusses I think are valid eg. house price to earnings (always been a big concern for me), double the number of homes sold at double the price (can this increase continue) and the HTB scheme (like johnc below, I think this will continue, for a while at least). Almost as if he places more emphasis/weight to these subjective issues than the hard-nosed numbers? I guess what tipped it for me was after presenting the analysis and determining a buy-in price, not following through . . . but may be that is a bit harsh as it was 10 months later?!
So, this morning over a cup of coffee I have punched some numbers into Excel to see if I have understood this reality ROE. This is what I have for BWY (only done last two years to see if I am on the right track) – hope the formatting makes it readable:
31 July 2020 31 July 2019
A - Balance Sheet Equity 2994 2921.2
B - Intangibles 0 0
C - TOTAL EQUITY (A-B) 2994 2921.2
D - Voting Rights/Shares 123.345 123.168
E – BVPS (C/D) 2427.34 2371.72
F - Dividends 100 145.4
G - Previous BVPS 2372 2083
H - EPS (E+F-G) 155.34 434.12
I – ROE (H/G) 6.55% 20.84%
And for comparison, looked at RDW
28 June 2020 29 June 2019
Balance Sheet Equity 1626 1585
Intangibles 2 2
TOTAL EQUITY 1624 1583
Voting Rights/Shares 352 352.19
BVPS 461.36 449.47
Dividends 20.5 29
Previous BVPS 449.47 401.4
EPS 32.39 77.07
ROE 7.21% 19.20%
So, how did I do? Guessing that the ‘function’ for the calculations are Ok (C, E, H & I), did I get the correct input values (A, B, D, F & G).
Cheers
MontyPy
Hi strictlybricks/Vlad
Came across the following article this morning – it is a bit dated (Dec 2019) but wondered if you had seen it and what your thoughts on it are?
https://www.ukvalueinvestor.com/2019/12/invest-in-uk-housebuilders.html/
My take:
- Crunches the numbers and reports BWY financial results as ‘astonishingly good’
- Seems to argue that the housing cycle is largely responsible for the amazing results (9% due to BWY, 14% from cycle)
- Discusses impact of HTB on housebuilders and potential impact should (when?) this ends
- Article concludes with a suggested purchase price for BWY at 2200p or less – interestingly the last comment on the article (dated 31-Oct 2020) highlights that this happened only to then re-evaluate to 1500p (admittedly a back-of-the-fag-packet guess) !!
As I say, article is just over a year old but what are your views on this, in particular the points on housing cycle and government intervention (HTB).
Cheers
MontyPy
Strictlybricks
Thanks for the link to the Telegraph article, I had read this article but didn’t actually follow the youtube link to the Python clip . . .
I am currently reading ‘The Little Book of Common Sense Investing’ by Bogle (about 75% read). I get all the stuff on low-cost, compounding results etc and these are illustrated well with graphs/tables throughout the book. The bit I am struggling with is the concept of only needing an ‘index tracker’. I accept the analysis and the simplicity is attractive . . . so why don’t I believe?? Think at the moment it is a mix of ‘It can’t really be that simple, can it?’ and ‘logical analysis must be able to improve (by focusing on quality)’ ? May be over time and becoming even more of a lazy-git will convince me?!
I think this is where I am at now . . . but I have this idea that I can use a few IT/Funds alongside a few shares and do better? Was thinking in the range of 5-10 different holdings but obviously selecting the ‘quality’ is the key!! Is this a common investing mistake though . . .
Anyhow, next on the book shelf is ‘Beyond the Zulu Principle’ by Jim Slater and then I have ‘Investing’ by Glen Arnold (FT guide) . . . . which should keep me busy for a while.
Cheers
MontyPy
Strictlybricks
Many thanks for the replies – I’m a little younger than you (mid-50s) and relatively new to investing. Currently trying to educate myself a bit by reading articles online and a few books. Reason for this is two-fold: first is in relation to managing SIPPs/ISAs through retirement (although I am one of the few with a final salary pension from a private company!!) and secondly, I have started a JISA for my son and want to try and get him interested (as I think he really is going to need all the help he can get).
I read the articles in the Telegraph and whilst I don’t find them too helpful, what I find more useful are the comments (at least some of them!). What I appreciate about the comments from you and Vlad is that you state what you are invested in, describe why you have made those decisions and how it has benefited you - these posts stand out from the others. I didn’t notice the clip you posted – which article was that against?
As to making that additional 10% the immediate answer would be ‘Yes please’ . . . but thinking about it a little bit more, I guess it would depend on the time/effort required to achieve that. Although I can create spreadsheets and enjoy a bit of number-crunching I really don’t want to be sat at a desk all day, overly worrying about this. A few hours now and then, no problem . . . guess I’m a bit of a lazy git too! Scratching me bum for just 14% . . . punched into a spreadsheet isn’t too shabby . . . sure I can sell that to my son !! Explaining how to get that +10%, whilst obviously worth it, might require some improvement in my home-schooling abilities . . . . but for him, this knowledge or understanding could be immense.
Thanks again for taking the time to reply
Cheers
MontyPy
Hi Strictly,
Like a few others, I have read your comments (and those of Vlad/Bogdan) on the Telegraph and followed you here. As a relative new-starter to investing, I really do appreciate the detail in the posts and the ‘mathematics’ supporting your view to investing.
I do have a few questions though:
1. Many (most, all?) financial sites contain financial data including BVPS, EPS. P/E, ROCE . . etc
Can you rely on these numbers (eg. the ‘BWY fundamentals’ page on LSE) or is there something additional in the way that you have calculated them? Do you always go back to the company balance sheet and DYOR?
2. You certainly have me interested in your process for identifying ‘value’ but, why is it that others aren’t so convinced? If BWY have been performing like this over such a period of time, and the numbers support this, why haven’t others noticed? Investment trusts/funds must have teams of analysts/researchers so why aren’t/haven’t they seen the light??
3. In your posts you say that you are trying to beat BWY performance – to achieve this I imagine that you have to ‘trade’? What sort of rules do you use to help this decision process? Do you have a SP that you would buy/sell at or do you solely rely on calculated/estimated BVPS/ROI?
(To be honest, I am not sure that I would spend the amount of time you obviously have for this so would be happy with continuing BWY performance – simple buy and hold!)
Just to add that I now have a holding in BWY and a slightly smaller one in FORT (and LGEN although that isn’t brick stuff ?? ) – thanks to some profit taking on SMT and BG American (cough, splutter . . . sorry)
Cheers
MontyPy