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Strictly,

You put a post up here about PSN a few months back which I found very interesting, explaining how king Jeff did something that was unsustainable which bumped the share price up, but I can’t remember the details?

On a side note, I’d be interested to know your thoughts on the crest TU? I wasn’t impressed with the SPOW rate still being lower that everyone else, and how the net cash is dwindling so I jumped ship…

Steve, past performance is no guide to futures returns. There was something that led to this being pumped up to £29 that won’t happen again. Strictly put a post up a few months ago explaining, but I can’t remember the details.

Afternoon crossley,

I had a stop loss set at 185 for my remaining holding, so I’m out completely now. Don’t get my wrong, I still like the company, but it’s drifting back to 170, I don’t think it will revisit the 150’s, but who knows in this market? Anyway, there’s no point being in a falling knife.

I think you’re right, there’s not going to be enough cash in the pot to pay a divi. Springfield recently got in a similar situation and had to scrap the divi, and the share price went well below 0.5x book (I think about 0.35x?).

The trading update could’ve been worse, but could’ve been better.

I sold half my holding yesterday afternoon, and am just keeping the powder dry for now.

I see long term gain here, but I think it’s inevitable this will drift back down to 170 in the short term. Nothings really changed since it was 170 only 2 days ago. The fall in inflation was expected anyway.

I am probably in too heavy here, although it has played out very nicely thus far. I may sell half my holding later today and buy back in the morning just to make sure I can get some sleep tonight.

Thanks Crossley. Do I take it you’ve sold the holding you bought yesterday then? I’m in profit as it stands so shouldn’t go underwater if the TU isn’t favourable.

I will admit, I am a little nervous about tomorrow’s update. Looking at the website, they seem to be giving a lot of incentives on properties (around £25k) in an attempt to get them sold.

The market is so fickle at the moment so there could be some pain tomorrow, but I’m in for the long term.

Morning Crossley,

Crest had a dry spell on the last trading update, with a SPOW of just 0.25 and the market threw the baby out with the bath water.

There can be no doubt crest is still the best priced housebuilder, even after the rise, it’s still trading at c.45% discount on its net tangible asset value. Absolutely crazy.

The update could well have been leaked. What’s particularly interesting is it that it looks pretty clear to me the last update was leaked. It fell sharply from 226 to about 190 in the run up to the update, and then fell a further ~10% to around 170 on the day of the update.

Any company can have a dry period for sales, particularly with the economic headwinds it’s had, but times are changing with inflation now at 4.6%, mortgages will reduce, sales will pick up.

Always remember the strength and security is in the balance sheet here.

Slow,

You’re on the wrong board. This is PSN, a housebuilder.

P.s we’re not interested in a dead cat bounce.

So, the inflation data is out on Wednesday.

There’s an article in the Telegraph (behind a paywall) explaining the below. I won’t copy it word for word I don’t infringe any copyright, but here is the general gist of it:

They’re tipping a big drop in the inflation rate on Wednesday from last months 6.7% to around 4.7%, mainly due to the changes in the energy price cap.

Last October the energy price cap was increased by 25%, which has so far added about 0.9% to the YoY figure, which of course won’t be included in future YoY figures.

Added to that, the ofgem price cap was reduced by 7% last month which is expected to knock another 0.3% off the headline inflation rate.

A few days ago, Kantar also reported that food inflation has dropped below 10% for the first time since July 2022.

The last time there was a big drop in inflation was in July, when all housebuilders shot up by around 10% on the day of the announcement, so it should be a good week.

Hold on to you hats!

Crossley,

The trading updates put out by PSN and TW this week were well received by the market. The reason Redrows wasn’t quite so well received was that the figures weren’t quite as good as the FY2023 figures it was compared against, which were exceptionally good considering the market conditions, and beat all analyst expectations at the time.

Crest has already prepared the market for the worst, hence the share price is on its a*se. This phase will pass, and I’ve no doubts this share price will rerate back to around £3-£4 by the end of next year. Mortgage rates are reducing, wages increases now higher than inflation, and both parties will be keen to win votes so we could well see the promise of a return of help to buy or something similar.

The budget is the week after the inflation data, so a lot to look forward to in the next couple of weeks.

Afternoon Crossley,

When you say “long, long ago” I assume you mean about 3 months ago? Yes, I am a little stumped the crest share price is still down here, but when it jumps, it jumps big. The trading update next week, along with the inflation data should see it move up nicely. Long term, I still think crest has the furthest to bounce. It jumped about 150% from this level within about 18 months coming out of covid. The only other housebuilder to see anywhere near that return was Vistry, but that’s already about 35% up from the mini budget trough.

WT

You mention all these bankers; which ones are putting their money where their mouth is and buying some shares? I don’t see the CEO, or any of the bod for that matter, buying any shares.

The only professionals I see putting their money where their mouth is - the shorts.

The results suggest to me the contracts aren’t bring in any value, so how to value those contracts?

Strictly,

I’m surprised slow hasn’t piped up to call you a complete novice, followed by some pie in the sky theory about what might, or might not, happen in the future.

If it doesn’t pass the sniff test (PBV too high, too much leverage) then it’s best to just stick to what you know and move on.

Back to the house builders, I’m expecting the winning steak to continue into next week when inflation should come in sub 5%.

Hello again strictly,

Re: bvps

You prove the point I made a few posts down this thread that bvps means nothing in the financial industry because they’re all so highly leveraged.

Take the last lgen figures ending 2022 when the pbv wasn’t too shabby. £501b of liabilities against £513b assets. If those assets get impaired by just 2.4% the entire book value is wiped out.

So what do you assume to be a fair price for Phoenix , and how do you arrive at that number?

I’m not going to lower myself to start getting petty, and I’m not going to discuss how much I have invested- it’s irrelevant.

My first research is to always check pbv and profit on yahoo finance. If I don’t like it why bother going any further?

Mike, Steve

Well this aged like milk. Hope you’re not too down about missing out?

With regards to phoenix, I lm not interested im reading any updates. I don’t buy loss making companies, or anything trading over 0.75x book.

It may well be a good buy, but due to the above, it’s not something I’d personally be comfortable investing in.

slow,

i don’t go for the *** end approach- i.e i only buy solid, profitable companies on the cheap that the market has simply overlooked.

i have to admit, i don’t usually do stocks unless i feel like i’m getting a real bargain. such opportunities are few and far between and as such crest is the only stock i’m holding.

i bought the stock at half net tangible book value, with low debt, plenty of cash, high profits every year (relative to market cap), and a 10% dividend yield. what’s not to like?

when i can sell my holding at 0.75x book value (which will give me a 50% return) i’ll just sit on the cash until another bargain opportunity comes along.

Afternoon crossley,

Pbv means nothing in banking. They’re so highly leveraged that if just a small fraction of the loans go bad, the entire net asset valuation can be wiped out.

Just look at metro’s PBV.

Crests debt to assets is only 40%, so plenty of room for error.