Member Info for strictlybricks

Offset by the large Dunfermline 1900 plot site?

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Crossley,

That would account for it... duh...!

Strictly

Crossley,

The most interesting takeaway for me from the update was that last year they paid £53k per plot but the year before they paid £73k per plot.

That is one huge difference, though I didn't try to look further into what might be the reason? (I'm down in Cornwall for a stay and am about to head off for paddle up the West Looe River, so time is short this morning).

Strictly

“I would add one thing though; You appear to be suggesting that Bellway is still overpriced by some 20%, in your opinion(?) taking it to around £14.”

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SG,

And here’s my final point to hopefully round off this conversation…

As things stand, depending (apart from anything else) upon the share prices of the insurance boys at the time (as that is where I’m now invested), and also providing that the ongoing decline in Bellway’s forecast future EPS figures has been arrested, then Bellway starts to look interesting to me as from a price of around 1,500p or lower.

But I make no forecast about the future.

As you correctly identify, my investing approach is mainly via the rear view mirror, and you are not the first person to be unimpressed by that but it has stood me in very good stead for more than twenty six years in this investing malarkey now.

Along with, as I’ve said, I leave future predictions in the hands of the scribblers ~ after all, why should I expect to be able to do that better than them…?

So, as you suggest, let’s wait and see how this pans out…?

.....

But thank you for keeping the discussion civilised ~ it doesn’t seem to always work out that way on these share chat forums.

Strictly

“Now you're suggesting, the current SP doesn't represent good/great value? I'd say you couldn't be more wrong and it is clearly one of the best short/medium and long term bets in the market once the middle east noise dies, which it will.”

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SG,

Without wishing to pursue this too far, let me be clear that I don’t try to predict the future ~ I leave that to the scribblers and, as I said before, it’s the trend of their forecasts that I consider to be the most useful rather than any particular set of numbers…

To bring the numbers precisely to bear, Bellway are currently on a forward P/E for 2027 of 9.33 based on the current EPS forecast of 189p.

Historically, one has mostly been able to buy Bellway at a lower P/E than that even when they were in their pomp and around three times as profitable as they are currently.

Whereas, if you take the forecast 2027 EPS of 277p, as it was in October 2024, this equates to a P/E of 6.38.

On the face of it, much better value with a resultant ROE of 8.9% instead of the 6.1% that it is now.

But then allowing that the forecast EPS for 2026 had been falling for at least a year, that was not, in my view, safe to buy into.

So, it might be helpful to separate the numbers from the opinion here…?

The numbers belong to the scribblers, seeing I have just extrapolated the ratios starting with their forecasts as a basis.

I’m not sure whether you are arguing that they are wrong, though?

Whereas, taking a view that Bellway isn’t a safe share to buy as things stand is merely an opinion ~ mine ~ but then I’m not trying to make investing decisions for anyone else and my main aim was to simply lay out the numbers for others to form their own view.

If everyone thought the same, we wouldn’t have such a thing as the market, would we…?

Strictly

Or is there an ulterior motive perhaps??

....

Yes, there is ~ to the extent that some of the people on our blog also read this share chat, and several of them were very late out of house builder shares seeing as most of us came out of those in early 2024 and they may now be tempted once more.

Of course, that’s entirely their decision ~ but, thus far, being out of Bellway rather than in it for the past two and a half years has been the right call.

And whether you choose to believe it or not, I really would like to see a Bellway recovery.

Not only because I like the company and its integrity and its track record even though it largely remained unnoticed by the commenting public (not for nothing do we refer to it sometimes as Ghost Dog) but because a recovery for Bellway et al would also probably be a good thing for the UK economy overall…?

But the scribblers are telling us that that ain’t happening ~ and they are the folk who are all over these companies like a rash with slide-rules…

Strictly

Any thoughts on where we might be sitting?

…..

Crossley,

You may have seen my recent comment on the blog about this…?

If we take it that scribbler EPS forecasts usually start out well off the mark but gradually move closer to the actual results as time goes on, then surely part of the benefit that they provide is with regards to the direction of travel…?

And, sadly (because for twenty plus years I was a big Bellway fanboy), the direction of travel has been relentlessly downwards for the past two and a half years and counting.

The scribblers 2026 EPS estimate has slid from 225p in November 2023 to 184p currently.

The 2027 EPS estimate has fallen more sharply AND over a shorter timescale ~ the forecast has slipped from 277p in October 2024 to 189p currently, which translates into a fall in forecast ROE from 8.9% to 6.1%.

I am aware that some here don’t appreciate the message, but I’m only giving the numbers that I’ve tracked ~ especially as, if folk didn’t keep note of them at the time, I don’t know how you’d now be able to retrieve them going back…?

Boring they may be, but also pretty vital in my view.

Strictly

“I'm happier keeping the discussion open to everyone.”

…….

Couerdelion,

Fair enough ~ I’ll give you a response here then… 😊

I do consider myself to be a wussy investor but, at the same time, going back to the start of “discovering” house builder shares in 2003, I’ve always been happy & comfortable to be invested in just one share.

And it is something that I’ve pondered about myself, and I’ve concluded that it has to be because I was in business for myself from the age of 23, in firstly record then video film wholesaling from the mid-seventies to the mid-eighties.

Rather than being employed and having a proper job, I mean.

It was a risky, low margin game ~ a 2% of turnover bottom line and then that was only if you got it right ~ and most of my competitors hadn’t survived by the time I sold in 1984.

Up against this, the company was committed to the bank on big borrowings with their holding a fixed & floating charge on the assets along with a charge on my house, and I and my partner were also jointly & severally guaranteed.

Banks are good at belt AND braces.

So, when I considered it recently, about what multiplier of risk was involved with, on the one hand, my company which, in any bad twist of events, could have gone belly up at any time and with everything on the line along with my also being just about the most unemployable person I know (and I’m not being funny there) to, on the other hand, being invested in a company that was/is surely at least a hundred times safer given that it’s one of the oldest companies in the FTSE100 and, arguably (you and Meco would probably have a more informed view on this than me?) the most conservatively managed of all..?

And separate to my investments, these days I do have property unencumbered by mortgage or charges along with uninvested cash reserves (I mean, in the bank not under the mattress) so I’m not as “all in” as I was back in the day.

And being prepared to commit fully to my best perceived investment opportunity at any time ~ which has been the case since 2003 which is when I decided that I trusted myself enough in what I was doing ~ has been very rewarding…

Even allowing for getting it badly wrong in the credit crunch in 2008.

Strictly

Mike ~ and neither of us has mentioned the great crested newt ticklers yet...

Strictly

Taverham, it seems that you and I are very much on the same song sheet on this…?

Then bear in mind that, back in the housing slump in the early ‘90’s, after just a couple of poor years, Bellway had regained their mojo by 1993 even though for house price/average incomes, the price earnings ratio fell to just over 3.

Now, it’s over 5, yet the house builders are still struggling and are forecast to continue to do so into the future…

So, that’s a conundrum, isn’t it…?

I imagine the reason to be a convoluted one (and I would be pleased to be enlightened by any more learned souls reading this) but probably includes that, whereas before, you needed brickies, hod carriers, plasterers, chippies and roofers, etc., now you need all those plus bat whisperers, soil samplers, ground water tasters and a plethora of so-called experts bringing their collective three halfpence-worths to the pot as well as all the extra tax, the Ed Miliband stuff and the rest.

It’s like we all want a car but we can all only afford a Skoda.

And the government says “Skodas aren’t good enough mate, for all sorts of reasons, so it’s going to have to be Mercedes”.

But how many folk can afford a Mercedes?

Strictly

Couerdelion,

Firstly, call me slow-witted ~ but I’ve only just realised what your moniker means…!

Duh… 😊

As it happens, you’re touching on a topic that I’m about to have off-piste conversation about with Meco and a couple of others who comment here…

It’s something I’ve given some consideration to and have what might be considered to be a minority viewpoint about it ~ and I am confident that we don’t make for a cheery consensus (as Buffett puts it)

To some extent, I’m out of steam for detailed discussions here as they largely seem to fall on stony ground and sensible conversation tends to get lost amid all the day trader chatter and then soon becomes the online version of yesterday’s newspaper headline.

I mean, today’s virtual chip wrapper.

So, without wishing to blow smoke up your backside, I am impressed with the general calibre of what you write here (and there aren’t many that I’d say that about) and if you’d like to join in an off-air discussion then please let me know…?

That would no doubt entail an initial contact through maybe a temporary email address to get started.

I’ll leave that with you ~ but the offer’s there.

Strictly

O.T. @strictlybricks Where do you think the cycle is with house builders? Obviously they depend on what's happening in the wider economy, but generally I'm expecting interest rates to trend down and make mortgages cheaper.

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1234,

The concern for me is that I’m not looking at this as being just a cyclical thing but something significantly worse and likely much longer lasting than that…

Maybe even matter of long term national decline depending on how the nation votes in three years’ time…?

On the occasions I’ve attempted to open a sensible discussion here about this I’ve mostly been shot down… someone even accused me of using AI to write ~ maybe they thought I was a bot ~ which made me laugh out loud… 😊

So, let me just put it this way…

I “discovered” house builder shares twenty three years ago and thought ~ with the recognition of that opportunity ~ that I was largely sorted for life as far as big investing decisions go apart from always being a seeker of best perceived value within the sector which has worked brilliantly for me…

Until it didn’t…

Being slow on the uptake, it took me four years of house builder sub-par performances combined with scribbler forecasts going forward three years to face up to the fact that I had reached the second line of Kenny Rogers’ “The Gambler”, and I switched into the insurance boys ~ hence I mostly now comment here on LGEN.

And that has been a good move thus far ~ I’m now 115% better off than if I’d stayed in Bellway (100% invested there at the time ~ which folk here don’t approve of… 😊).

But, having said all that, obviously you have to call it for yourself.

However, if I can give you, and others, just one useful pointer than it’s this:

Whatever investing platform you’re on ~ I use Barclays ~ I’m imagining you can pick up broker forecasts going forwards for three years…?

That being so, I suggest you start keeping a note of the EPS forecasts for the builders you’re interested in ~ for me that was primarily Redrow and Bellway ~ and see how they change.

Obviously, the scribblers aren’t drinking buddies with Captain Hindsight so they don’t get the figure bang on.

But what matters is the direction of travel.

I’m sad enough to have been monitoring this stuff for years… for the numbers on Bellway, scroll back through my old posts.

Strictly

Katie,

Perhaps I shouldn't have mentioned my holding as you've focused on that ~ whereas the point I was essentially making was about trying to be clear in yourself about why you would go to cash...?

But good luck with whichever way you choose to go...

Strictly

“Now I'm really in a quandary, the two most respected posters on this board Mecon & Strictly have differing strategies with this company :) Ha!

What's a girl to do? (I sold £5K of my £20K investment here last week) FWIW I'm staying, sort of.”

…….

IMO, the question to be asking yourself right now, Katie, is: “Do I have somewhere that I perceive to be better value to move my money to…?”

If you do, then why aren’t you already there…?

Whereas if, like Meco has said, you’d be looking to simply go to cash well, then you’re calling the market aren’t you…?

Nothing necessarily wrong with that, but I do think that it’s helpful to recognise and acknowledge that that is what you’re doing.

I am a self-confessed investing wuss.

And my mantra for myself is:

That I am more fearful of being in cash when I should be in shares than the other way around.

Having said that, I have called the market twice in my investing career ~ once in 1998 and the other time in 2000 and both of those proved to be right.

But for the first of those, the market overall had reached unprecedented expensiveness, and something had to give ~ I stayed out for about two years.

For the second, well, we had the covid tsunami on its way and also the builders were significantly above average PBV then.

But, owning my sins, I didn’t call the market when I very much should have in 2008, and that cost me my house that year.

But that worked out alright in the end.

So it seems it’s hard to get it right all the time?

And I did also call time on twenty years of investing solely in house builder shares in early 2024 in favour of the insurance boys, and that has been right ~ but that WASN’T the same as calling the market as I had better perceived value to go for.

I don't understand the insurance boys anywhere near as well I think that I understand the house builders ~ Meco's your man for the insurers ~ but LGEN’s long term track record and dividend yield don't suggest to me that they're expensive and I'm too cowardly to try to call a short or medium term price movement that might well go the other way...?

And then what the f... do you do...?

So, do you have somewhere better to go with your money right now ~ or is Dirty Harry pointing his .44 Magnum at you and asking the question…?

Anyway, hope that helps…?

FWIW, I’m 100% invested in LGEN currently… nowhere else apart from cash reserves that don’t go into the stock market.

Strictly

"I will declare that I’m (temporarily) no longer invested here. "

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Risky business, calling the market, Meco…! 😊

Unless you see better value elsewhere?

Maybe a conversation to be had off-piste...?

Strictly

Paddy,

I honestly don’t have a view on where the price may go..?

But I am keeping clear until and unless the future for house builders looks more promising…

And bear in mind that Vistry are clearly in very bad shape at the moment and if they collapse then I don’t imagine that that will do sentiment for the sector a lot of good if you are concerned about share prices…?

Strictly

Paddy,

If you’re interested enough to do so and care to click on my moniker and scroll back far enough through my past comments here, you’ll probably notice two things…

Which are firstly that I have been a very big fan of Bellway in the past and secondly that I like a few numbers to back up what I am saying… 😊

Bellway were my benchmark share for twenty years… up to six years ago, they’d averaged a return on equity of 16% going back forty years...

In my humble opinion, that was an awesome track record and which would make them a screaming buy at the current PBV of only 0.6.

But they ain’t making 16% ROE these days, or anything like it.

And it’s getting worse.

Some more numbers.

In November 2021, the scribblers had Bellway’s forecast 2024 EPS in for 422p… scroll forward to the actual figure and it was only 144p

In November 2022, the forecast for 2025 was 268p but it ended up at only 145p

Now we’re into predicting the future from here.

In November 2023, the scribblers’ EPS forecast for 2026 was 226p, but that has been ebbing away slowly and now the forecast is for only 187p

Similar stories for 2027 and 2028 forecast EPS.

These have dropped from 278p to 210p for 2027 and from 279p to 252p for 2028.

Bellway’s actual return on equity, the most important metric when it really comes down to it, was only 5.0% for 2024 and also 5% again for 2025.

Their forecast ROE for 2026 which, as shown above, will be sliding along with the falling EPS, is now currently only 6.3%.

And the direction of travel remains downward.

……

Now, how you call it on all that is obviously your responsibility, but my view is that Bellway are but a shadow of their former selves and, like the rest of us, they have likely still to endure a further three years of the lunatics being in charge of the asylum.

And I’m currently still not holding any Bellway these days ~ whereas there have been times in the past when I’ve had 100%, my entire share portfolio, just in that one company.

Strictly

"Does the graphing tool allow you to consider dividend reinvestment?"

...........................

Fleccy,

Yes, just click the "Total Return" button on the left near the top and Robert's your dad's brother....

And you can put up other shares, for any time frame, against any LGEN or any other share...

It really does sift the wheat from the chaff, and I'm only sorry i hadn't come across it many years before I did ~ it could have saved me a lot of work...

Hope the link below works..?

Strictly

https://www.londonstockexchange.com/stock/LGEN/legal-general-group-plc/company-page

Fleccy,

Being something of an anorak for these things, when I was investing solely in house builder shares for more than twenty years ~ hence the moniker ~ from start back in 2000 I have the calculations for the gain for Bellway if every dividend since had been reinvested on the day ~ Bellway being my benchmark share...

So we're talking about calculations for over fifty dividend payments here, having first checked on what each dividend payment was and what the share price was on the day....

But the upshot is that I have a figure for the total return for Bellway going right back to 2000 and I can tell you that it does indeed match the figure given for the total return for Bellway for that period on the Stock Exchange graphing tool.

And, whereas the figure on the Stock Exchange graph is achieved at the press of a button, to do the number crunching from scratch again the way I've done it for Bellway for a quarter of a century would involve hours of work...

Unfortunately for me, I only came across the graphing tool within the last couple of years or so ~ but it is a brilliant bit of kit...

Strictly

"42% ?? Are you sure?"

.......................

Divi,

If you check out the Stock Exchange's graphing tool ~ a splendid bit of kit and what is more it's free ~ and make a total return graph for LGEN since 31/1/20, i.e. just over six years, then the gain shown is 44%...

So, I would suggest that MrMath is worthy of his moniker... 😊

Strictly

“There was a time when NAV was a useful guideline,

it no longer appears to be the case”

……………..

FP,

I would say that you are essentially making the same overall point as I was in my recent flurry of contoversial comments here ~ so perhaps you are on the same song sheet as me on this…?

Before covid, Bellway’s average return on equity was 16% (and that’s long term ~ going right back to the ‘80’s) and while the price to book moved around a lot due to big fluctuations on share price, it averaged somewhere in the region of around 1.3.

So, put those two numbers together and you get an average overall price earnings ratio of around 8, despite that the actual number tended to move around a lot given the high share price volatility of Bellway and the sector generally.

Whereas, for the past two years, the reality check return on equity has only been 5% ~ and it’s looking similar for this year.

If the return on equity doesn’t significantly improve, in order to maintain the long term average price earnings ratio of 8, the price to book value would have to be right down to 0.4.

I am not imagining that the return on equity will stay that low, and the scribblers have it as improving to 7.2% for 2027…

But that’s still only a price to book value of around 0.6 to get to a P/E of 8.

Whereas, if they in fact do better than that, but the market holds the share price pegged back to still being around where it is presently (i.e. around 0.6) then, at that point, I would say that for me Bellway would be starting to look something like fair value based on its historical pricing..?

What do you think..?

After all, you have expressed a concern that NAV (and, presumably therefore, PBV?) is no longer a useful guideline, but do you, as above, instead insert P/E as your main alternative yardstick..?

Strictly