Member Info for strictlybricks

PS

It seems the moderating filter here means that I'm not allowed to name the north London rivals of the Spuds...?

Or their past manager's first name....?

Strictly

Krusty et al,

As I suspect there might just be a teensy element of wind-up going on here (well, lejjb certainly seems to have provoked some responses, at any rate…), I thought it might be useful to apply a bit of salve by way of a few numbers…?

To draw two different comparisons ~ Barratt against Bellway both back in the day, and Barratt back in the day against Barratt now ~ might be mollifying…?

In the housing slump of 1990 to 1991, Barratt’s book value per share dropped from 150p to 95p, whereas Bellway’s increased from 100p to 102p.

No cigar for Barratt, then…?

The team running Barratt back then was replaced/retired (I don’t have the details on that?), and the house-building equivalent of ****ne Wenger arriving at ****nal was brought in, and the new boys took Barratt’s book value per share up to 646p by 2006.

They then retired (as did Wenger) and Barratt brought in the house-builder equivalent of Unai Emery…

This was Mark Clare, who blundered in where angels feared to tread, and bought rival house builder Wilson Bowden using huge borrowings in 2006 (the financial equivalent of hiring a rowing boat just upstream of Niagara), leaving Barratt with balance sheet liabilities of 162% of tangible equity by 2007.

So, they duly went over the metaphorical falls and the upshot was that a combination of leverage, landbank write-downs and an ensuing serious rights issue took BVPS down from 646p in 2006 to 188p in 2011.

Existential doesn’t really describe it, does it..?

Like Unai Emery (or Dick to his friends at ****nal), Mark also left in a changing of the guard at Barratt.

And now, as of the 2022 accounts, Barratt’s BVPS is up to 447p, and liabilities are just 56% of tangible net balance sheet ~ which is less than a third of the percentage from previously and is now fully in keeping with that of the sector ~ which, having been burned by lack of government support through the credit crunch, are now, on the whole, playing it much safer….

So, lejjb may be right ~ though the numbers don’t imply that he is ~ or alternatively he may just be having a chuckle at the expense of some here..?

But, speaking personally, while I do not currently hold any Barratt shares, I remain fully invested in the house-building sector (financially painful though that may have been so far this year…!)

Strictly

Londoner,

Okay ~ if you have a change of mind about the blog, just let me know.... probably best to do that on either the Persimmon or the Bellway share chats....

Hmmm, Galliford eh,...?

If you did join the blog, and read back, you'd no doubt find that I've been somewhat less than complimentary about that company & Bovis in the past....

But, as I mused before, has Greg Fitzgerald now turned water into wine there...?

I'm guessing I'd want at least a year or three of watching & waiting to see and, in the meantime, I'm definitely not holding my breath ~ but some say that miracles DO happen...!

With regards to metrics, our home grown one is our currency for house builder shares which is weighted book value…

It’s only really applicable where you’ve got house builders with similar dividend policies, so Persimmon doesn’t fit into that based on their past but if they now come more into line then not only does it bring them closer to being able to be easily included, it also makes them inherently better value from an investor’s perspective.

And, finally, while I’m on metrics, the other thing I do is to follow the progress of a single share for each company, i.e. how does the book value per share move over the years, once adjusted for dividends reinvested at the share price on the day paid…?

That really is the cold marble slab of truth of comparison over the long term…!

Gets tricky when there is a rights issue involved ~ and that’s another reason, apart from the Vicky Pollard aspect of their nature in the past, why I’m no fan of Galliford.

Though it is fair to say that they did have their time in the sun in the years coming out of the credit crunch when, as memory recalls, they kicked off with a shed-load of plots recently purchased at bargain basement prices….

But then, from 2013, it all went south ~ and Galliford morphed into Vicky…

Good luck with the timing, though ~ that's above my pay grade...

Well, I’m relieved you said Bond Street, rather than bandit country ~ I mean, south of the River….

Strictly

Londoner,

I've had a quick butcher's at your past posts here, and it seems to me that you like to take a serious look at companies in depth ~ and, in this, you seem interested in what other people have to bring to the discussion as well as being up for contributing in detail yourself...

Also, you are polite, friendly & respectful ~ something that can't be said for everyone who comments on the various house builder share chats here…!

You may have come across my making reference to a private blog ~ the name of which I use as my moniker here so, as you might imagine, it only concerns itself with the house builder sector.

This was originally set up, in 2016, to help my circle of family & friends who have joined me in this investing-in-house-builder-shares malarkey over the past couple of decades as they’ve followed the progress of myself along with those already in it…

In recent years, a few “outsiders” have joined, a number of whom I came across in LSE chat over time…

And I have kept that to just a few, as I don’t want to dilute the original basis of the blog too much, but it’s fair to say that the people who have joined have, mostly, brought something to the discussion ~ and I definitely have to be “on my game” these days with what I have to say there… though, now working with a 70 year old bit of kit (my aging brain) I am prone to more than the occasional senior moment ~ which keeps the more sharp-eyed amongst our crew on their toes…

This lengthy preamble is because my sense is that you want to dig into this ever deeper and I don’t want to be trying to reinvent the wheel here in these LSE share chats ~ which often seem to have something of a pre-occupation with short term price movements and which ain’t what it’s all about IMO…

But nor is the Hokey Cokey…!

So, anyway, if you are interested to do so and are happy to put up an email address here (even if only a temporary one to use just to make initial contact), I’d be happy to send you an invite to the blog and we could carry all this on there, probably with others chipping in there ~ though, if you give it some reading time, you’ll no doubt find that we’ve explored the ins & outs of a duck’s a.se on much of it over the years…

You’d probably be familiar with several of the others who have been contributors both here and in the Telegraph investing comments.

Incidentally, given your name, I live on Dartmoor these days (that’s “on” it, not “in” it, mind ~ which would be something altogether different) ~ but I hail from Ealing originally…

Strictly

Londoner,

I have tangible BVPS 31/12/21 of 771.61p, less further cladding reserve 22.49p per share = BVPS 749.12p, plus 60p div paid = 809.12p, less BVPS b/f on 1/1/21 of 659.38p

= EPS 149.74p = ROE on BVPS 659.38p = 22.7%.

My apologies in advance if there are any schoolboy errors or senior moments unintentionally incorporated within that..!

The low ROE for Bellway for 2020, which was 6.5%, was down to covid.

By comparison, the figure I have for Redrow for that period is 7.0%, Barratt is 8.6%, and Crest is a loss of (2.8%).

Re buying Countryside, I’m afraid I don’t really have anything to offer on this other than to say that I am both a simple soul and an investing wuss…

And I am already struggling with the notion that Bovis seemed to have turned water into wine when they bought Galliford ~ seeing that, as far as I and my investing fraternity are concerned, those two were the woofers of the sector.

So my intention is to stand well clear in case of any delayed booby traps there and also, maybe, now with Countryside…

I think this is a good example of one of Warren Buffett’s sayings about waiting for the perfect baseball pitch and ignoring everyone shouting “swing, you bum”

After all, with splendid companies like Bellway, Redrow and now, more recently, Persimmon, in the frame, why chance it…?

After twenty two years in this game, and being very happy with my annualised return over that time, I’m really not tempted by situations with any sort of question mark over them.

If you’ve read much of my other stuff here and can remember elements of that, you’re probably aware that the only time I’ve called a downturn during the twenty two years was for covid in February 2020 and that, beyond that, I remain firmly in my bunker, helmet on, remaining invested come rain or shine and as prepared as I reasonably can be to brass things out when it’s peeing down.

Strictly

"can’t believe this board is so quiet"

Giraffe,

The share chat does seem to move around between the different house builder pages to some degree from time to time, so you may need to click around for that ~ to PSN, TW., BDEV, VTY & BWY....?

For me, Redrow is a top share, along with Bellway and now also, more recently, Persimmon...

I was substantially in Redrow until a recent move earlier this year into Bellway and, from there, I'm also now partially in Persimmon.

But there's only a few percent in it in terms of best perceived value so ~ like you it seems? ~ I am certainly intending to pay attention to tomorrow's update...!

Strictly

Within our investing group, our not-so-affectionate name for Vistry/Bovis has been Battersea...

The reason for this is, since 1998, Bovis (because, when it comes to names, you can run but you just can't hide, I reckon….?) has made an average return on equity of just 11.6% against that of Bellway ~ our benchmark share ~ having been 16.4%.

This has translated into Bellway having grown its book value per share over the period more than threefold that of Bovis, along with having paid out nearly twice as much in dividend

The only shiny spot in Bovis’s comparative history is for 2021, when they declared profit such that this gave rise to an ROE of 22.7% against Bellway’s 6.7%.

Never mind that the previous year, Bovis achieved a negative return on equity of 16.6%.

So, the most recent set of figures for Bovis suggests their performance, after nearly a quarter of a century, has finally leapt ahead of Bellway…?

This was after having absorbed Galliford’s building division.

And our not-so-affectionate name for Galliford was Vicky Pollard given that there was always a “Yeah, but” story alongside the bad performances.

So, Bovis may have finally come good…?

Really….?

On the basis of just a single year’s performance it seems like a Harry Callahan job to me…?

I mean, as in the question to be asked: “Do I feel lucky…? Well, do ya, punk?”

Me ~ I DON’T feel lucky when it comes to Bovis, so I think I’m going to just wait a couple of years or so before re-evaluating them as a potential serious prospect for investing….

Having said all this, Persimmon came good after surviving the reign of King Jeff, despite my doubt & concern there, just that they remained too expensive for the likes of me until now.

So I DO live in hope ~ but well tinged with doubt & cynicism.

But the fact that Vistry seem to have now swerved this latest trading update hasn’t helped.

Strictly

AngerSharkZ & johndean,

No, and as johndean had also referenced today as being the day, I feel reassured that it wasn't just a senior moment on my part that I had then down for the update today...

Especially as this was the time for one last year and also the same time is scheduled for next year...

So, does the plot thicken, or are they just a bit delayed...?

I'm imagining that, if the pundits & press pick up on this & make an issue of it, Mr Market might award Vistry a black mark..?

Strictly

PS
Potential senior moment there, on my part ~ I've just re-checked my notes and it was down as due tomorrow.

Still, it's no longer mentioned in Vistry's diary as far as I can see..?

Strictly

What happened to the trading update that was due from Vistry at 7am this morning...?

It was scheduled for today ~ certainly until recently, when I last looked ~ last year's was issued 9th November and next year's is now in the diary for 9/11/23....

Does anyone know about this..?

Strictly

Crossley,

I am currently about 60% Bellway 40% Persimmon...

In an ideal world, Captain Hindsight would have had a word in my shell-like and suggested that I held off buying the Persimmon until after the trading update this morning ~but there you go, I can't odds that...

I am happy that they intend moving to a more normal dividend policy rather than carrying on with 235p a year come hell or high water…

So that is a plus for me…

As are their superior margins… to use a boating metaphor, they have more freeboard than the other house builders ~ which implies they can cope with bigger waves…

Not all of my investing crew, on our blog, are convinced about Persimmon…

But then they are all over 18, and old enough to fight & die for their country, and they necessarily have to make their own minds up and then, like everyone else, take responsibility for their decisions.

Anyway, having listened to the recording of the Persimmon & scribblers telephone love-in this morning, I thought the presentation was pretty frank and, okay, they are no doubt going to take a kicking on next year’s earnings.

But the current sh.tstorm might develop into a hurricane and, much as I dislike paying the still relatively high price in PBV terms for Persimmon as compared to Bellway or Redrow, they have such high margins and such a low priced product they’re like the Ryanair of the house building business…

And look how well Ryanair have done in recent times as compared to some of the other airlines…?

Strictly

Crossley,

Well, at current prices, it will be interesting to see if Persimmon do carry on with a full fat div payout ~ though they've obviously already paid out both of the two parts of the dividend mentioned in the company comment you've pasted there below...

When Persimmon were priced at 3 x book, as they have been for much of the past few years, their big dividends were a nightmare for any investor seeking best value ~ but this is something I've referred to before here so I'm not intending to bore on about that again now...

But, at a PBV of around 1.2, it's a whole different story....!

And this is particularly in vogue for me and my investing circle at the moment because I've just spent a good few hours putting together a spreadsheet ~ in the process of also being road-tested by the others ~ to evaluate the changing relationship in terms of best perceived value between Persimmon on the one hand and Bellway & Redrow on the other as the share prices of both move up or down...

The thing is, if Bellway and Redrow's share prices doubled, the value relationship between them would remain pretty constant (though now shifting slightly as Bellway up their div payout ratio a bit over the next couple of years…) but the value relationship between Persimmon and either Bellway or Redrow would alter radically if both share prices doubled.

And, even though I’ve now made a substantial investment into Persimmon shares from Bellway (where I was previously invested 100%), it’s fair to say that it does make for a more complicated value relationship ~ and one that a wussy investor like me finds a tad unnerving…

Strictly

Crossley,

In their previous November and January trading updates, Persimmon made no mention of dividends ~ so I suggest that you don't hold your breath on that for this time....

However, on both occasions, they did update their current cash position, so we could reasonably anticipate for that this time too, I’m guessing…?

And, from that figure, Mr Market may make an inference about what that means for 2023 dividends…?

What do I know about this, of course…?

But we only have what we only have to go on…

And a full fat Persimmon dividend would be about an 18% yield at current prices ~ and the market doesn’t tend to do FTSE100 companies having yields that high, does it..?

Helmets on, then, maybe…?

Strictly

Gary,

Firstly ~ don't get too carried away with this...!

Especially as although I moved recently from 100% Bellway to a split of 70% Bellway and 30% Persimmon, there is a part of me that feels I overdid that slightly and would probably be more comfortable with an 80%/20% split, so I may retreat back to that split...?

So I'll now have to wait and see what Mr Market does on that, and perhaps with next Tuesday's trading update in mind too...?

But it does seem to me that Persimmon's best in class ROE could be helpful for whatever sh.tstorm we are currently heading into ~ in that, if house prices suddenly dropped 10% and remained down for an ongoing period, then this would likely wipe out the greater part of most house builders’ profit for a while but only the lesser part of Persimmon’s? ~ and I can see that this largely comes from their impressively low plot cost as a percentage of sale price, which I hadn’t previously been particularly focused on.

The huge shortcoming of Persimmon in recent years, IMO, has been that they largely spaff this superior ROE in paying out very big dividends (88% of earnings over the past five years, compared to typically just a third of earnings paid out by Bellway & Redrow) against a high PBV of typically 3.0 ~ so they don’t, IMO, represent good value for a buy & hold value investor as such ~ but right now that doesn't apply particularly as the PBV is around only 1.2 and, from a personal point of view, I'm currently happy to take the extra div at that level.

Also, while I consider myself to be a seeker of best perceived value, I seem to have had a bit of day trader mindset creep into this ~ which is probably what is making me feel a tad uncertain….?

By which I mean, if Persimmon do stay up at a 235p dividend ~ which I am doubting, given their current level of cash (they like to keep about £700m in their skyrocket) and also they’ve now upped their game on land buying so there’s more cash going into that ~ then it seems likely that the market would soon reward the share price handsomely, such that a value tart like me could move on.

Alternatively, if they have had a shift whereby they now intend to retain more of their earnings over the longer term in order to grow the business faster then, providing they can maintain their existing high level of ROE, this to my mind makes them inherently better value than previously…

Obviously though I don’t possess a crystal ball here…

But at least, to paraphrase Led Zeppelin, “Yes there are two paths they can go by”.

Strictly

"I have no idea what you mean by "However, I use a book value weighting against Bellway (a home-baked yardstick) and Crest is on minus 30%"."

.......

Slownsteady

By the above, I mean that 100p of Crest book value is only worth the equivalent of 70p of Bellway book value to me...

These weighting percentages do shift from time to time ~ it's a judgment call ~ so at the end of the day it's about aiming to get it more right than wrong....

The thing is, like Lindisfarne, house builder share prices do all tend to swing together...

But not absolutely so, and therein lies opportunity if you can get it reasonably right in terms of assessing best perceived value in a way which requires zero ability to call the market... (because I have zero ability to do that)

We have had less relative volatility between the companies in recent times but, over the longer term, doing this has given an average extra 6% a year gain above Bellway's ~ a reasonable recompense for being something of an anorak with this, I would say, as compounding means you would double on the capital you would otherwise have had over twelve years.

Re Bogdan, he and I have had a fair bit of off-piste discussion by email and also via a private blog as we very much see eye-to-eye on this investing malarkey, though not necessarily 100% so ~ and especially when it comes to Henry Boot where he reckons there's a pot of gold buried in the balance sheet and about which I've given him a fair bit of friendly stick....!

He has written on here, LSE I mean, under the moniker Vladimir something or other (I can't remember the second part of the name ~ but it's not Putin…).

He did comment recently in the Telegraph that, apart from being still heavily into Bellway, he's much more otherwise invested in the USA now, hence the reason for keeping rather schtum lately, I would say..?

And yes, I imagine that, like me, he’s taken a share price kicking this year…?

But it’s not about that, is it…?

I mean, if that’s going to freak someone out and make them a flaky investor, they probably shouldn’t be in this game in the first place…?

It’s surely about always seeking best perceived value ~ bumpy though the ride may be…

Unless, of course, you happen to be drinking buddies with Captain Hindsight…

Strictly

"Any thoughts on Crest Nicholson (CRST)?"
…………………..

Slownsteady,

Yes, I do ~ but let me first caveat this by saying that this is just how I see things as opposed to trying to give any investment advice here to anyone (I don't do that for family & friends let alone on open discussion boards like this).

As of November, by my calculations (and mostly these work out to be within plus or minus 2%, come the actual results, which is good enough for the trading gaps I look for), Crest is currently on a PBV of 0.59 as against Bellway (my benchmark share, and which is where I currently have two thirds of my investing capital ~ so I can tell you that I've taken a right kicking this year thus far..!) which is on 0.66 PBV.

So, judged just by the metric of PBV, Crest is cheaper.

However, I use a book value weighting against Bellway (a home-baked yardstick) and Crest is on minus 30%, which, in turn, takes Crest out of the frame for me on current prices.

I’m very largely a rear view mirror investor… far less fog to be seen in that direction than through the front windscreen.

So, while I do take some notice of the scribblers’ forecasts, I don’t factor them in too much with regards to taking a view on a company.

For example, Crest’s book value per share went absolutely nowhere for four years from 2017 to 2021, starting & finishing at 307p.

By contrast, Bellway increased their BVPS by 38% over the same period, from 1,786p to 2,471p.

And that included taking covid, cladding & Gove all on the chin during the period, as I adjusted for writing all those off by the 2021 figures so they move forward cleanly.

As the name implies, I only invest in house builder shares.

Furthermore, if you’ve also read back on some of my stuff, you’d no doubt have seen that I don’t consider myself clever enough to call the market, so my investing strategy remains putting on a tin helmet, gritting my teeth, and remaining invested throughout.

But this game has been my sole income (apart from an OAP in more recent years) for more than two decades and I’m still here…!

Strictly

Slownsteady,

There's a Persimmon update due on 8th November that may, or may not, comment on dividends to come, but a few things to mull (even though I can't really offer a forward view on this, I'm afraid).

Persimmon's chairman stated ~ early on in the 2021 annual report ~ that they have a general policy of holding around £700m is cash and above that to pay the rest out to shareholders as dividends.

The cash balance at the 2022 half time whistle was £780m, which is £540m short of the £1,320m in the bank at the end of previous half….

Persimmon have now recently upped their game on land buying, and during the first half 2022 bought land plots at 130% of replacement requirement ~ I don't have a figure for the increase in land spend, but it's probably in the report somewhere...?

But clearly that’s likely to be where at least a big lump of the cash has gone…?

Incidentally, now I'm the proud owner of Persimmon shares ~ as of last week ~ I've been looking at the numbers more closely.

One thing I've found is some detail on their impressive building plot buying track record.

In 2010, their average plot cost was £42.8k and that was 25.6% of sale price.

They steadily brought this cost per plot down, and, by 2021, the average plot cost was £31.3k and that was 13.2% of sale price...

And, looking forwards, they’re talking about 12% of sale price for the building plot…

So you probably don't really need to look further to understand Persimmon's superior ROE...?

After all, Redrow's average plot cost in 2021 ~ and Redrow are one of only two other builders right in the frame for me ~ was £83k and that was 21.2% of sale price...
………………………

But anyway, getting back to it, as I've said, Persimmon are currently sitting on less cash because they've reinvested more in land this year, and there's also whatever's currently coming down the pike at us in terms of inflation, interest rates, and the like...

So I’m imagining there may be some caution being deployed about that too…?

So, if I was a gambling man ~ which I ain't ~ my money would likely be on that Persimmon are unlikely to be paying out the full monty in dividends in 2022, even though the business seems to me to be in fine shape...

Or I wouldn't have bought into their shares last week...!

Strictly

Crossley,

I don't have the back up of any research on this, just a sense of things based on that my daughter & son-in-law live in Christchurch, New Zealand and have seen a serious bounce up in the value of their house.

The impression I have is that NZ has been something of a global version of running away from covid to the country here in the UK....?

So, they had a big price lift but, as with the country properties here, the froth seems to have now come off with people return to towns, cities and the office...

And, as someone who lives on Dartmoor (rather than IN Dartmoor ~ which has a whole different connotation... :-) ), and who enjoys the relative peace here (I used to live in London but, these days, all I usually want to do when I go there is get away again...) I can't say I'm complaining about that...

So, that bit of long-windedness was to suggest that any surge & subsequent fall of house prices in New Zealand may, or may not, prove to be an exaggerated version of what may happen here...?

I have no view on that, though ~ as I said in an earlier comment here today, my investing strategy is to remain fully invested in house builders ~ through thick & thin ~ until such time as Captain Hindsight signs me up as a drinking buddy so as I can see what's coming down the pike before everyone else can....

Chances of that...?

Rather slim, I'd say... :-)

Strictly

Humpty,

" I don’t know where reference to a 5% deposit is coming from. "

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

Here's a link for that:

https://www.persimmonhomes.com/news/good-news-for-homebuyers-as-lenders-return-to-95-mortgages

Strictly

Paddyboy,

Senior moment on my part....

I had intended to include this link:

https://www.morecrofts.co.uk/be-careful-when-you-are-buying-a-new-build-house/

Strictly