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Oi_Oi_, Madikwe & Vlad,
Thanks all of you for all your points here about Henry....
As, at least, Oi_Oi_ and Vlad know ~ based on all the stuff I've written previously here & elsewhere over the years ~ I'm more than happy going into the in's & out's of a duck's a@se when it comes to crunching any which way the numbers I use from a company's figures (just four of 'em, the financial equivalent of cyan, magenta, yellow & black) but I'm not up for questioning the balance sheet itself as that then opens Pandora's Box in a way I've never needed to do to date.
The aforementioned four numbers (providing you gather them every year and over a long enough time scale) have always told me everything I need to know about a company for the past twenty one years that I've been investing, and have served me more than tolerably well...
As it so happens, it's the subject matter of my next blog post, so the two of you may like to come back at me about it when it appears...? :-)
And, separately, I'm pretty much with Demos in respect of his comment here about Inland last Monday...
If I'm being brutally honest, and no doubt like Demos, if I'd had a crystal ball at the end of last year, I no doubt wouldn't have been buying Inland back then, but we are where we are ~ and all that's neither here nor there, now, as it's a matter of when & what I (we?) do next...?
Strictly
Vlad,
As I said in my previous comment, I'm happy to be 100% in one share if it comes to it (and I'm not intending to try to justify that, as I'm not handing out investing advice here) and, until such time as it seems to have become necessary to do otherwise, I don't call out balance sheets.
And thirdly, the 78% extra value that Henry would have to have tucked away off balance sheet in order to match Bellway's performance over the past eight years is hardly a trifling amount.
So, while I acknowledge that you have caught my attention in respect of Henry, I'm happy to be an observer rather than a participant ~ and I stand ready to be shown to have made the wrong decision in that...
And I am interested to read what Oi Oi has to say on this if he expresses a view about this here...?
Strictly
Oi Oi,
Vlad the Impaler and I have been having an ongoing discussion about the relative merits, or otherwise, of Inland and Henry Boot...
It's fair to say that Vlad is far from being a fan on Inland, so let's not get into that one... :-)
Whereas, when it comes to Henry, on the one hand Vlad sees substantial hidden value in his balance sheet and, on the other hand, I have never called out a balance sheet for investment purposes any time during this century, beyond dismissing goodwill & intangibles.
And through that time I've done okay without feeling the need to resort to that....
However, as this is your area of understanding given that it's part of what you do for a day job, do you have a view on how much potential upside there may be to Henry's balance sheet in respect of the land plots that Vlad reckons are under-valued..?
Currently, Henry and Bellway (as I think you know, Bellway is my benchmark share for all other shares) are in the same ball park in terms of PBV.
However, by my calculation, Henry has made an average ROE of 10.2% against Bellway's 18.4% for the eight years to the end of accounts year 2020.
So, if you ignore divs paid for this exercise in order to not unnecessarily complicate things, over that eight years, Henry has turned £100 into £217 and Bellway has turned £100 into £386, i.e. 78% more.
So, in order to be on a par with Bellway, and given that at the point of the above calculation, Henry's BVPS was 237p, he would have to find 185p per share of hidden value to take his ROE up to match Bellway at 18.4%.
Given your experience in this area, what do you think the likelihood is of this..?
And I'm not for a moment suggesting Henry isn't a good share to hold ~ I've owned it at times in the past myself ~ but unless Vlad has got this seriously right in seeing something that's not at all obvious, Henry is far from being on par with Bellway value-wise and, as someone prepared to not only put all my eggs into one basket, but also happy to commit to just a single egg (I think I've got to brass it out with my other holding, Inland, until I see the end of year figures, otherwise right now I would say I'd be 100% in Bellway), I'm far from being tempted to buy any Henry at respective current PBVs.
Strictly
Thanks for adding me to the blog - hopefully, I can add some worthwhile commentary.
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Denid, I've just sorted a blog invite for you, along with a separate email to explain a few things, so please let me know here if they don't arrive...?
Strictly
Looks like none of us are "out on the weekend". Sorry!
How can I get access to the blog?
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Denid, as it happens, I'm due out for a paddle up the Yealm today, and a pub nosebag afterwards, which I'm really looking forward to, but that's not until after lunch.
Re the blog, it's a private one and requires an invite to join from the blog itself to gain access...
I set it up around six years ago to help the many of the family & friends who've followed me into this investment malarkey over the years having seen how well it's gone...
In more recent years, I've also invited a few people from firstly this LSE chat and also one or two who have followed Bogdan/Vlad across occasionally from the Telegraph to here...
I've mentioned him because of the holdings you've listed - they're similar to his so I'm guessing you've read some of his prolific comments in the Telegraph..?
And that's where I bumped into him (in the virtual sense), when he wrote a considered comment last year late February or early March about the coming covid iceberg and I'd thought "Bl..dy hell, I could have written that myself as I'm exactly in agreement with it!" so I copied & pasted it into the blog and so Bogdan because famous there on Strictly Bricks.
Having read what you've written, Denid, my instinct is that I'm happy to send you an invite (I'm not looking to open some sort of floodgate here, mind...).
I'll need an email address to send an invite to, though, so if you have an old one to use temporarily might be an idea as I wouldn't want to put my main email address up in a public forum like this - although that might not bother you of course... :-)
Strictly
Don't bring Neil Young into it..!
Sain.... are you living abroad...?
Or is it that you can't sleep...? :-)
Strictly
PS.
I hadn't intended to sign off twice on the previous comment... just a senior moment on my part...
I haven't got a stutter....
Honest...!
Strictly
"Whoa, that's conviction."
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Denid, as the name implies, I only invest in house builder shares, and that's what I've been doing for the past twenty years and it's my sole source of income (apart from an el basic OAP these days) and also is for a number of others who've followed me into this game...
If the house builder shares weren't there, there are a few other companies I feel I could safely invest in though expect significantly lower long term returns...
But 90% plus of the FTSE100 scares the pants off me - I see it as Kipling's "Trap set by knaves for fools"
Have you been at this ~ I mean, investing for yourself ~ for long...?
I ask because you've only just started commenting here but, at the same time, it was many years before I ventured a view on LSE chat...
Strictly
Strictly
"Am I missing anything? Anyone else got any thoughts?"
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Denid, if you scroll back through the chat here, you should find plenty of discussion about this between me and Oi Oi...
But, for what it's worth, my holdings are currently 78% Bellway, 22% Inland.
That's it, nothing else....
Strictly
"Surprised that there has been relatively little merger activity in the sector"
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And let's all pray that it remains that way...!
How's it going with the estate agents then...?
You're always welcome to comment on that on the blog - we do have a number of people investing in "other", for better or for worse, these days...
And you can see how everyone is doing in Strictly Wacky Races and, let's face it, there's a full spectrum of outcomes there for the year to date, but at least you can benchmark against how you're doing yourself...
Strictly
"Anyone paying the slightest bit of attention to what’s going on in the world of economics & finance should surely be aware that there is a wall of cheap money looking for a home these days…?
Especially when there are cheap opportunities around…"
Dick Dastardly or Lazy Luke could be throwing some oil and tacks down on the track as we speak!
I guess if that happens those Tandoori prawns would never taste so sweet
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Sain, are you trying to impress by demonstrating that you are actually reading the blog AND paying attention...?
I've got another post nearly finished that covers the Inland situation and my thoughts about it, which should be up on the blog imminently, so you might like to add a comment there when it arrives...?
I'm mindful that several there, and especially Bogdan/Vlad ~ that great fan of Henry the Hybrid ~ don't see Inland in a similar light to me...
Hmmm... I guess we'll have to wait and see what the Fat Lady and the Captain each think about that...?
And while I'm more than happy to have bought Paul his ruby for this year as he's had to buy me enough over previous years, hopefully I'll be the comeback kid next year...?
After all, I reckon I've got to earn your seeming faith in me... :-)
Strictly
"Still plenty of time for The Prof to come in for a late rattle in Wacky Races and burst through"
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Sain, I've just conceded defeat to Paul, aka The Ant Hill Mob, in the annual curry contest last week (the first time he's beaten me) and bought him the tandoori king prawns he coveted, and he's also got to be odds on to win Strictly Wacky Races too this year so, even though it's very kind of you to express such faith in me, don't hold yer breath on that and definitely don't put any money on it... :-)
Strictly
Yep - totally agree with your sentiments strictly bricks. I'm heavily in RDW too (the only other housebuilder I'm in).
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I'm currently 79% Bellway, 21% Inland, having sold out of Redrow late last month following the sellout rumour ~ I tend to ignore these things and go purely on perceived value ~ which took them just below Bellway, IMO, in terms of value....
No other shares held...
Unfortunately, from my point of view, Mr Market has been keeping Bellway and Redrow neck and neck in perceived value this year, so, if I want to trade for advantage, I've necessarily had to do it on rather thin round trip gains....
Hard to credit when I consider how far out of whack he is on some of the other house builder shares...
I think we both require some patience here....?
Strictly
Wrong Horse?Today 09:42
"Really beginning to think I've backed the wrong horse"
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Oi Oi, clearly, as things stand this year so far, it's hard to argue with that sentiment....
And I write as someone also holding a shed-load of Inland shares and, because of that, I'm being duly hammered in the investing competition we have on our blog, Strictly Wacky Races.
Sadly, neither you nor I drink with the Captain, who, as we know, is never there when you need him, so we are where we are, I'm afraid...
However, if we didn't have access to what had happened to share prices this year so far before today, but only today's price along with the long term company performance figures for the different house builders, we could see that Inland is well up there near the other successful builders with an average ROE of nearly 16%, just three percent or so behind the best value to be found in the big boys which, IMO, is Bellway and Redrow.
And it's significantly ahead of Henry Boot (I have to get that in, just in case Vladimir/Bogdan happens to read this), which is on 10%, and well ahead, out of sight, of Battersea, aka Bovis, aka Vistry, which is on a stomach churning 5.6%.
Well, stomach churning if you've been holding their shares continually over the eight years... this year, so far, Mr Market has come well off his meds on that one.
And yet, Battersea is on a PBV of 1.7, Bellway and Redrow between 1.2 and 1.3, and Inland is only on 0.6.
I would say this puts Inland into Ben Graham "Cigar butt" territory, though I make no prediction about where the price might go from here in the short to medium term and I, too, am sitting here a tad nervously, awaiting the full time whistle for this year to see if they do in fact achieve what they've suggested they will when they were handing out the oranges at half time.
Strictly
Strictly - I am sure that I have spoken to you before somewhere!
Surely - 'Vladimir, stop calling me Shirley!' - the fund managers who hold RDW would realise that 900p would be far too cheap. I know that fund managers have a poor record of realising the value of what they hold in this kind of potential situation, but RDW, with all that consistency of equity growth, 900p! surely not?
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Valerie, sorry, Vlad, if we take stock market ownership of companies as being essentially the fund managers, then sadly they have serious previous for these situations...
The fund managers sold Debs to private equity at a bargain basement price in 2003, the PE boys stripped out all those splendid high street freeholds for leaseback, then still sold the shell back to the fund managers just three years later for more than they paid for it having also trousered £1.2 billion in divs...
And didn't Debs do well thereafter...?
Typing this, I've got the theme tune from the Muppets swirling round in my head....
That probably tells you something...?
And why do you suppose it might be different this time if it happens...?
It seems to me that either these fund managers live in some sort of parallel universe to the likes of you and me when it comes to assessing value, or that they're incompetent, or that there's something darker at play that we're not privvy to...?
But what do I know ~ I'm just a humble private investor, out in the boondocks down here on Dartmoor....? :-)
Strictly
I'd be very surprised to see Redrow taken out - myriad reasons but not least because it's a massively expensive way of buying land.
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And a seriously cheap way of buying long term high return on equity & growth....
And that's my concern, Oi Oi, so I'm keeping my fingers crossed it doesn't happen ~ as it's very bad news for us investors if one of the most invest-able players in the sector is taken out...
But no doubt it will be what it will be, and we, as minnows in the investing world, just have to suck it up....
Sadly...
Strictly
Oi Oi,
Ah, apologies for the double reply (well, three now, really...!) as my first effort went through, after a delay, while I was typing the second attempt.. :-)
Strictly
It's been very quiet in here (on here?) recently; is that because everyone is making a mint elsewhere, or perhaps because there's literally nothing to say about INL? :)
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Oi Oi, I did just write you a reply to this here but the system didn't seem to like it so it evaporated before appearing and I don't want to type it all out again....
But the short story was that it seems to me that we'll probably have to wait for the full time whistle to find out how Inland are doing and how that compares to the rather upbeat half time talk, and, I suspect, take a view from there...?
In the meantime, there has been some discussion about this on the blog in recent times, but you may not have picked up on that...?
Strictly
"It's been very quiet in here (on here?) recently; is that because everyone is making a mint elsewhere, or perhaps because there's literally nothing to say about INL? :)"
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Oi Oi, I suspect we've all been a tad disappointed by Inland's half time whistle...?
However, they have talked up their full year prospects and, personally speaking and having taken quite a relative knock on the share price (relative to Bellway and Redrow, that is, as I'm entirely unbothered about short term share price movements of themselves), I haven't moved across any of what is a substantial holding in Inland shares in the meantime.
As I'm seeing it, the likelihood is that we'll have to see to what degree management's expressed optimism manifests into reality around the end of the year at the full time whistle.
If they end up achieving the company performance they've implied then that's one thing ~ irrespective of how quickly or otherwise the share price catches up seeing as price is an entirely different thing to value.
However, if it seems that Inland are morphing into Vicky Pollard, well, that's quite another matter, and I guess may require a view to be taken at that time....?
All depending, of course, on what that old nutter, Mr Market, has been up to in the meantime...?
We have discussed this to some extent on the blog in recent times but perhaps you haven't picked up on that...?
Strictly