Member Info for Nige_W

Hi Ben
It's a competitive business and no doubt the Builders will get away with what they can, but I don't think there will be a significant drop in demand, so shouldn't make much difference.
Demand ultimately depends on kids leaving home and immigrants, who might not buy new houses but as people in the mortgage chain upgrade / downsize, nothing can happen until somebody buys a new house. My little daughter is going to move (not to a new house) but the house she buys means the owners have to buy somewhere else and as I said this chain cannot be broken until someone buys a new house.
Hi Bamps and troubles
No idea what draconian measures the Govt takes, but they must be seen to do something - council houses or HA's. Again who is going to build them? 1981 recession caused by a big increase in interest rates (causing Builders slump). Not like 2008 either cos banks still happy to lend. This is a unique situation, and since I hope it won't last too long, should not have as much affect as 1981 or 2008. Big Builders have far more cash, and even the small ones with loads of debt cannot be allowed to fail by Govt, cos they caused the problem.
So I remain a worried optimist.
BoL

Hi coffecups
Never seen such a total collapse in Sp's like this, even 2008, Brexit vote meaningless in comparison.
So you are now interested in builders again, (bet you wish now you stuck with them), and Imho best value by miles and have been for a long time. Due to panic selling all the main builders have decreased by a similar amount (% wise) and this means as a reaction follows, the best will increase by more than the worst, (which makes bdev my favourite at the moment).
Of the 5 I hold bdev, bwy, psn, rdw and tw (I avoid LSE Builders), the worst performers have been rdw and bwy, understandable cos they hold the least Net Cash, so could be the most undervalued, particularly since the Govt policy of destroying the Economy has also led them to making guarantees to companies which have closed down (cos of CV).
Tw and bdev are now completely different from the what they were in 2008 (massive debts), they started saving money and building up their land banks, having learnt their lesson.
Sales could be delayed or cancelled but the Govt cannot let the situation (lockdown etc) go on for long, and the Sales are no more than delayed, so not actually lost. It means the shortage is increasing cos the demand increases by ? 000 hoses per year, unlike some other companies like grg who have simply lost all sales for sarnies while they are closed.
So my suggestion for an investment plan: bdev 40%, tw 24%, bwy 16% rdw 10% and psn 10%, but also hold some cash. Could well have undervalued bwy and rdw, but doesn't matter what I think.
Not too worried about a big recession (doesn't really affect supply / demand), far more worried about Brexit. No doubt an agreement will be made, but what will be left of our service sector.
Keep well and BoL

Hi TMT
Lots of negative comments here recently, are these guys shareholders? Or like Exstatx who doesn't hold any shares at all.
Personally I don't like share buybacks, bkg been doing it for a while and am not sure this has increased Sp or Divis, so no more than unnecessary interference Imho. In theory it should work.
As regards the delay or cancellation of Divis, I think that is no more than a Govt requirement if Govt is to pay 80% wages to otherwise redundant employees, resulting in all Builders having done it.
Don't think psn need to conserve cash - they have so much, but what it does mean it could be added to 2021 Divis assuming the crisis is over then.
All of this (and more) has been discussed on tw Board, so even if you hold no shares there, I think its a good idea to watch that board.
Hi Owls
The Board of Directors are the share holders representatives who can hire or fire the management of the company, while the Executive manage the Company. Used to be a bit like Auditors checking Accountants work, but the relationship could have changed ie Fairburn's Bonus, (who was sacked along with the Directors who approved the scheme).
BoL

Hi Owls
I think it was Warren Buffet whose main principle was calc value from fundamentals and if your value greater than MrktCap Buy and hold. You don't really have to do all the calcs, just find a company with similar fundamentals and look at their Per, then if tw Per half of that, tw should be double the Sp (and so MrktCap).
I agree companies with high debt are hit badly in difficult times, profit goes to pay off debt interest until debt starts to gradually increase, so spiralling out of control, until the company goes bust. This almost happened to tw in 2008, but as you said cannot happen now.
High dividends can be a pre-cursor to drop in Sp, but that is generally cos the prospects are regarded as poor, while I regard tw prospects are excellent.
Haven't done my Value calc for a while but it was based on what I regard as a justifiable Per of 20. You can almost substitute the word prospects with the word Per in calcs - the higher the market regards the prospects, the higher the Per. So very round guess Say tw Per now 6 and just Per 20 then Sp should be 131 * 20 / 6 = 437, which is not far off 500. Still updating my system so don't know current Eps (which it calcs) so can't do an accurate calc.
Hi troubles
One of the reasons I think tw prospects are good (hence quick recovery as you said) is the shortfall of housing is a cumulative process, or if 10,000 short now, by Xmas it might be 20,000. A company I compared tw to was grg (who have also shut down). In their case there is no cumulative affect - if they lose 10,000 veggie sausage roll sales, those sales are all gone forever.
The whole housing market would grind to a halt if somebody somewhere does not build a new house (in mortgage chains) and every kid leaving home results eventually in a new house being built. Seems to me we could do with another 10 - 20,000 new nurses from E Europe or Far East, and same applies to them.
BoL

Hi Troubles
Again this is not a disaster. Profits as reported in Interims no doubt will decrease and also 2020 Finals. The shortage remains (in fact getting worse) so doesn't matter too much.
The sooner this is all over the better, I'm hoping for good news May Jun as it gets warmer, so hopefully a decrease in new cases.
BoL

Hi Tom
I've not bought/sold any ggp - now 62% up so very happy. Should buy some more but no spare cash.
Hope you and family well and BoL

Hi Troubles
Interesting post. Two points first a bit too complicated, second it does not quantify the factors ie X 30% Y 20% etc so cannot work anything out from it.
I like to simplify things so as a daft example suppose my little village with 10 houses and does UDI.
The kid in No 6 wants to buy Number 9, and number 9 wants to buy number 5... but nobody can move cos No 5 will have nowhere to live.
But No 3 a builder, builds a new house on part of his land No 11, then everyone can move cos No 5 moves to No 11.
So every year there is a requirement for X new houses (regardless of Brexit...), and it doesn't matter whether they rent, move to HA or whatever as long, as the population is increasing. I think this is the main driver.
BoL

Thanks Tom
I put Sp movement down to my post - value 500
BoL

Hi Tom
There is no contradiction in what I have said.
I calculate the value of a share by the companies fundamentals and prospects, completely separately from the actual value = no of shares * Sp = MrktCap.
My Value Calc will never = MrktCap leaving a company either overvalued (if my Value less than Mrkt Cap) or undervalued (vice versa).
"The virus could have had a massive affect on builders " yes Sp and Mrkt Cap.
"The flu / viruses will have NO effect to Builders..." think I said "almost no" but I was referring here to my Value.
Sp and so Mrkt Cap are just over half Pre CV highs, so yes - massive affect, but my Value only decreased by about 5%, and they were undervalues at Pre CV highs anyway.
You know my Value for tw is just short of 500, now only 5% less than that. Not much point in revaluing this cos the difference is so great, and the Market is not going to change it's preconceived misconceptions any time soon.
BoL

Hi troubles
"An unbalanced economy, reliant on 80% GDP from service sector is always going to struggle - something this lot has not had the know-how or made any real attempt to address."
Given the current crisis and Brexit, which could lead to a reduced Service Sector, I totally agree, there could be a major recession on the way, but think I am about the only person who thinks this will not have a great affect on demand for houses.
The population is still growing and they need roofs.
BoL

Hi Crazyworld
Tw only has about 5000 staff, probably most in head office who will probably keep on working as normal (or from home).
Don't know how many site staff they have, who might or might not be laid off. The point is given held cash and No Divis it will make almost no difference to tw.
Much more important is how the self employed tradesmen and subcontractors are treated. and also the material suppliers. They need protection, I feel sure suppliers will be OK, and probably subcontractors as well, but if tradesmen not paid they could leave the industry, like in 2008, so although demand for houses bounces back we might not have the people to build them again.
On a more positive note, I think this disaster will be over far more quickly than the banking crisis, so we shouldn't lose too many tradesmen.
BoL

Hi JamesP
I think most (if not all) the big Builders have delayed or cancelled Divis and suspect it is a condition of Govt aid for employees out of work (though not seen any proof of that). As with house sales which will be delayed, I think next years Divis will be greater cos picking up this years as well.
BoL

Hi Ben
Think that is cos a bit of clarity has now emerged. The virus could have had a massive affect on builders but now cos of Govt action it is seen as not so much of a disaster, so I think it could be a mistake to sell hoping for further losses.
Have you found out how it affects you (like are you claiming from Govt, or tw on your behalf, and how do they calc your wages - including bonus...)?
Tw max pre CV 237, now 124 so still almost halved in value, which I think is an overreaction.
BoL

Hi Pokerchips
In the old days it would mean a currency devaluation and pressure on Inflation, but I think since most Govts in the same boat, it will have less affect than the Banking crisis (cos mainly UK issue), but the National Debt will be frightening again.
I think the Govt's point of view is just print the cash and hope for the best. No idea what will happen, but at least BoJo listens to the experts, who know far more than me.
Hi Helena
Just noticed only 2 posts. Is it still you (Helena6, now Helena7)?
BoL

Hi TMT
Think it could be a condition of receiving Govt Subs that you can't also pay big Divis. Much more info on this on tw board, always worth a read. As I said there it hardly matters cos if that is the case, it will mean no more than a delay until next year, like new house sales. Totals will remain about the same.
Tw have stopped building even though no Govt ban yet, but I expect they all will (for a month or two). One thing I could hardly believe is the crowds still on the tubes. It makes a mockery on the ban on Pubs, Restaurants etc when people there are still jammed together.
BoL

Hi Pokerchips
I agree, can hardly be handing out big Divis when taking Govt subs.
Then like houses needed, it only delays the issue, bigger Divis next year?
I'm not saying this is the bottom, but I don't expect builders will fall much more, as the details of the RCF become clearer and summer approaches (hopefully decreasing the number of new cases).
BoL

Hi Crazyworld
If you got in 2009 you must be miles up, and now we are in a similar situation - loads of houses needed, but not being built. The houses will still be needed, so no more than delayed. I admire your foresight.
Btw I calc tw Sp should be almost 500 now just from fundamentals and justifiable Per of 20, so still huge potential. I suggest you have a look at bdev and rdw cos I regard them as being the most undervalued now.
I hope you keep well as well and BoL

Hi Crazyworld
WiganW is completely correct in what he said. The problem is at the moment tw won't know to what extent they will be compensated for loss of revenue, and who has to claim what when...
As long as tw believe the compensation does not cover the lost revenue the dividends will remain at risk.
Tw and the big 3 have loads of cash so can't go bust, but more importantly the Govt cannot let any builders go bust due to their actions. So if Govt closes sites it is almost a guarantee of their survival, which makes their Sp's look even more ridiculous now.
UBS downgraded all Sp forecasts for Builders then put in Buy (from Hold) recommendations for them all, cos Sp's have already dropped by more than their new targets.
Never known anything like it, and can't even drown sorrows now, it is a Crazyworld.
BoL

Hi Tom
I never said the virus won't affect the Sp, and think that builders must be about the last industry to close down.
Possible silver lining there, Govt must compensate tw for lost revenue, while the backlog builds up.
No idea where this is going and what the cost will be, but guess who will be paying for it all.
BoL

Hi ilikehb
First of all thanks for your recent analysis from Brokers. Personally I take little notice of them cos in the past they have generally been anti Builders. Should you ignore things you don't like to hear? But as you say Jefferies are devaluing builders by 15 to 25% cos of disruption happening now, but making them all Buys cos Sp dropped by 50 to 60%, confirming a massive market overreaction again.
One thing I think is that if a company has loads of cash, there is no chance of them going bust. But not quite as simple as that, you can have loads of money in the bank but also a lot of debt - hence Net Gearing. My numbers for net gearing do not agree with UBS numbers (which are all far lower than mine - maybe they have a more accurate way of calculating them than me).
So, if the safest companies are the ones with lowest Net Gearing then according to UBS:
bkg -31, psn - 4, bdev 9, bwy 16, tw 17, bwy 17 rdw 18, vty (Bovis) 40, crst 41.
Bearing in mind that when panic selling starts happening and the market converges regardless of results / performance thereby creating opportunities, cos the market is wrong, and in these troubled times one would expect the biggest losses in the highest NG companies. Just got my Relative strength graphs working again which produce anomalies.
Of the 5 companies I watch the big gainers (unjustifiable) are psn and tw, the biggest losers bdev and particularly rdw (even more undervalued), bwy steady in the middle as usual.
Hi Tom
Don't know of any reason for rdw loss, particularly last week, it usually does take longer to react than the other companies but well behind the rest now. I have recommended bdev to you before, now also rdw.
Hi Bamps
I think it was reported here but Uni of Brisbane have been testing a combination of existing vaccines which they say are successful, and don't need extensive testing cos already done. I think progress will be faster than you think.
BoL