Member Info for strictlybricks

Typo Oops - that should have read: CRST, RDW and TEF on the first line below....

Terrace, I have CRST, RDW and CRST all within an absolute whisker of each other, and I mean less than a single percent between them, as of prices right now. So, in my world, Crest's price drop was bang on the money - but let's see what happens from here...? You may also have seen my response just now to your comment about Crest on the blog? Mythical earnings figures have been a bit of a theme for me lately, I've been having conversation about this of the Galliford share chat - Galliford being by far the worse offender of the builders when it comes to Alice in Wonderland numbers, but Crest aren't entirely innocent.

Philpot, I consider it a dog due to underlying performance which inevitably shows up in share price performance over the longer term though not necessarily over the short term... Long term Bovis's ROE has been 12.2% against my benchmark share Bellway ROE which has been 16.4% And, while I appreciate you've obviously caught a sweet period for Bovis, the poor underlying performance tends to reflect in the longer term share price performance - so, since the start of 2013, Bovis share price up 99% against Bellway 236% and Redrow 263%. Based on my way of valuing the builders against each other, Bovis is currently about 50% more expensive than Telford, Redrow and Crest and about 40% more expensive than Bellway. But, of course, I'm sure we all have our own methods of assessing these so I'm only giving you my take on these things...

Philpot, I just checked out the author of the piece, Robert Stephens, briefly (and I'm not an insomniac, given the time of writing this - I just happen to be away visiting family in New Zealand right now...). Mr Stephens also rates Bovis - which I consider to be an absolute dog of a share...! So I didn't read his pieces any further.... I guess the thing is to make a mental note to try to remember to look back in a few years' time to see how they've all performed..? But I'm still very happy in Redrow & Telford right now.

Peakview, Yes - and even with that, Galliford are still the most expensive share in the sector..... and by a big margin..... By my calculations, and of course estimating so far forwards they are likely to be well out but my numbers are based on a lot of strands of input, at today's price, they would still be not far short of a PBV of 1.5. And a PBV of 1.5 is the rough overall average for builderrs' shares overall over the long term, so, even without any pigs on the wing flying over the horizon in the meantime (to paraphrase Pink Floyd), that could mean that all there is to come from Galliford's shares for the next eight years is dividend rather than any overall price gain at all from start to finish... By contrast, my assessments put both Redrow & Telford at a PBV of around 0.6 - which should warm the cockles of the TEF Musketeers who are the three regular contributors on the TEF share chat...!?

Peakview, Yes - and even with that, Galliford are still the most expensive share in the sector..... and by a big margin..... By my calculations, and of course estimating so far forwards they are likely to be well out but my numbers are based on a lot of strands of input, at today's price, they would still be not far short of a PBV of 1.5. And a PBV of 1.5 is the rough overall average for builderrs' shares overall over the long term, so, even without any pigs on the wing flying over the horizon in the meantime (to paraphrase Pink Floyd), that could mean that all there is to come from Galliford's shares for the next eight years is dividend rather than any overall price gain at all from start to finish... By contrast, my assessments put both Redrow & Telford at a PBV of around 0.6 - which should warm the cockles of the TEF Musketeers who are the three regular contributors on the TEF share chat...!?

Peakview, have you considered that brokers, to paraphrase Kipling, may be either knaves or fools...? I can't answer that for you, only for myself, by my working basis is that they ARE either one or the other, and I take no notice whatsowever of their buy/sell recommendations or target prices and little to no notice of their EPS forecasts. Once you free yourself of the need to rely on the scribblers, and as an investor that is a liberating experience, you can then focus your attention on: 1) what the companies themselves are actually saying (because, on the whole, they really don't want to be seen overselling their prospects to the market as they're likely to get duly punished for that down the line). 2) what the long term track records of the companies are on the few, necessary key numbers - which are BVPS from year to year, dividends paid, and the consequent ROE that arises from taking these into account and completely ignoring stated EPS while also taking into account how much debt they've used to achieve this (over the long term, balance sheets are reality checks but P&L accounts can be great works of fiction). 3) the likely future EPS that makes sense taking into account 1) & 2) while also allowing that at some point we're likely to slide into the next down wave of the housing cycle but never mind as that of itself is not necessarily a reason to abandon holding house builder shares at any point - I've been holding them continuously through the past seventeen years and am more than happy with overall average performance. But NOT Galliford shares, mind.. my forward prospective EPS for them for the next three years are 110p, 115p and 120p which is very different to what the scribblers are saying... If we're taking real world numbers not Alice in Wonderland, these numbers are probably still too high but I'm not really bothered as they should be sufficient to keep me from being tempted to buy Galliford unless the price really tanks down into bargain basement territory - in which case I'd probably give the numbers more careful consideration.

PS I obviously ran out of character spaces... my last line should have read: Good luck with all this.

Philpot, I'm responding to your comment from 27th October which caught my eye just now... this is the first time I've taken a look at the Galliford share chat here, though I do pay regular attention to several of the other house builder share chats and comment on those from time to time.... Your comment was: "You have to say that based on broker ratings this is grossly under valued, but sometimes the market is just sour on a share for unknown reasons." If you are genuinely bemused by the lack of progress on Galliford's share price, I reckon it's worth digging into the numbers a bit. If you look at the five years to 2017, from the perspective of Galliford's world down the rabbit hole, they made total EPS of 470p. However, back in the real world, I mean calculated by taking starting BVPS of 429p and ending with BVPS of 480p, that's an increase of 51p, plus all the dividends paid out during the five years being 293p, that's actual total EPS of 344p - which is somewhat different to the Alice in Wonderland figure. And that means that not only is the real average ROE for the five years only 14.4%, as compared to Bellway 19.1% and Redrow 20.0%, it also means that Galliford have given away nearly six sevenths of its earnings in dividend throughout a really sweet period for builders during which Galliford should surely have been retaining as much of its earnings as it could get away with without complaints from such shareholders as don't think through the numbers. The upshot is that, over the past five years, both Bellway and Redrow have seen four times the share price rises of Galliford yet Galliford is still stupidly expensive, relatively, at a PBV of over 2.4 compared to Redrow, a far better performer, at around 1.4 PBV. I appreciate I've thrown a lot of numbers out here.... it reflects the time I've put into it, but it's very much worth the legwork in order to try to avoid being stuck in a p... poor performing share for years on end. The controversial bit is that the scribblers have Galliford in for EPS for the next three years at around 163p, 183p and 200p... This would take their ROE up towards the mid thirties.... Surely someone's having a laugh here? This would put it about 10% above the likes of Bellway and Redrow whereas it's actually under-performed them by more than 5%. I guess we'll just have to wait and see where Galliford's BVPS ends up after taking dividends paid into account and compare the two. The FTSE100 as a whole has got away with mugging investors in this way for decades, so I'm not holding my breath on this one! The bottom line for me is that, even though Galliford has no doubt been very disappointing over five years, their share price would still have to more than halve, relative to the others, for them to start to look attractive as a prospective investment. And, if you're holding Galliford shares, you might want to check my numbers in case I'm talking out of my rear end..? Good

Nige, I've spent many years trying to come to a view of what fair price is for builders' shares... My ball park assessment is based on taking a view of Bellway, which is the most consistent builder over decades but which doesn't seem to get commented on much on these boards. Long term average ROE is around 15%, so a PEG ratio of 1 for that gives a P/E of 15 and a PBV of 2.25. Bellway doesn't go up to 2.25, so never reaches the above concept of fair value... and it doesn't seem to like getting too close to a PBV of 2.0 - it didn't quite reach that level pre-crunch and then fell away big time from there, and more recently touched it in December 2015 and again in October 2016 and fell away quickly both times... So, at its current PBV of 1.8, it's below fair value as defined above but is still at the top end of what the market has been comfortable with to date. How ongoing very low interest rates affect long term fair value and prices of shares in general and builders shares in particular going forwards, well, we're in uncharted territory at the end of a journey of progressively lower interest rate troughs and the world has taken more than 200 years to get here so, realistically, who knows? And if there's a big bad boy coming down the pike again soon, there are other shares that probably have further to fall due to having higher PBVs against performance past and present, such as Taylor Wimps and Galliford. But my bottom line is, yes, in essence, I agree with you - builders are undervalued.... as they are pretty much all the time! By the way, Nige, still waiting to see your spreadsheet... :-)

Face, I had a quick look at Urban & Civic..... for a whole raft of reasons, they're not the sort of company I would personally invest in, the most pertinent being that they are a real estate company and I only invest in builders with land banks (hence the name, Strictly Bricks!). I have a separate blog of the same name, so if you're interested in looking at that together with maybe a debate on this then perhaps consider putting an email address up and I can send you an invite for the blog - as it's a private one and otherwise you can't get into it... A few of the others on here on this share chat are also on there, and have commented there from time to time, as it exists to consider & discuss the house builder investment opportunity as a whole rather than just from a Telford perspective.

Terrace, Hopefully you saw my response on the blog to your putting this on there as a comment together with the specific numbers from my own figures for the past six years..? Hardly left room for doubt, did it, given how well the builders have done each year from April to October on average..? And I did google the author of that inspired piece, Holly Black... Self-described as a free lance journalist and and part time dog walker... Rather disconcerting that she has the platform of that illustrious bastion of financial reporting, the Daily Mail, to broadcast her considered thoughts on and to be subsequently read by thousands, ain't it..?

Korg, I think I would agree with your second sentence but not necessarily with your first...? I do consider that Telford is well priced right now relative to other builders (though relative to other sectors, or relative to going to cash, like nearly all builders nearly all of the time, it is very cheap), but I think the disappointing element has come from a couple of factors. Firstly having been relatively expensive, compared to other builders such as Bellway and Redrow, back in May 2015 there has been a necessary relative overall adjustment in price performance downwards against them which, IMO, is now fully done to reach relative value. Secondly, and this has been a much discussed issue here between myself and the Telford musketeers, IMO there has been an element of profitability sacrifice in return for de-risking. And back in May 2015, although projected figures showed Redrow's profitability overtaking Telford's, at the time in terms of actual numbers achieved on latest accounts, Telford's ROE was still ahead of Redrow. So, all in all, that was a shed load of adjustment that needed to happen to pull Telford into a good price range for value and, as I've said and to the best of what is visible, I think that has now happened - though obviously events can change on a dime and especially these days it seems..? I guess that if push comes to shove, and a seriously big black swan wings its way over the horizon, we'll all find out how good Telford's claimed de-risking really is - but it did stand up as well as any other builder's balance sheet last time, so I live in hope! And, as we know, the market is driven by two things - fear and greed. And if, right now, it is overall being driven by greed but that then changes to fear, well, given that IMO Telford represents great value against other sectors or cash, I guess we'll all find out what the underpinning value of the de-risking really is..? So I conclude that the disappointment you mention has been rather temporary rather than ongoing for the long term, during which time I guess the faith of the musketeers has been tested, and hopefully that disappointment is shortly due to end..? But this is in no way any sort of prediction...! :-)

Terrace, I think I was saying pretty much the same thing in my reply to your comment on the blog just now..?

Nige, your comment "I expect it will Tony P at bvs, even longer to turn bvs around. (Not surprised he was selling!)" Nige, are you perhaps confusing Bovis with Berkeley here..? I'm not aware that there is any turnaround at Berkeley required, though it's not a company I invest in as, smart operator that Mr Pidgley may be, his personal financial interests are a lot less well aligned with those of his share holders than Steve Morgan's are at Redrow - as was demonstrated recently with shareholders at Berkeley becoming rather naffed off with the big bonuses being paid to directors there (whereas Steve Morgan doesn't even take a salary...) Nothing like that going on at Redrow. I'm interested to see how your notion about pre-announcement price hikes works out for Bellway coming up, as I imagine that's why you're favoring them above Redrow? Though I currently have Redrow at a few percent advantage over Bellway in terms of value. I'm also bearing in mind that the scribblers only have Bellway in for a single digit growth in EPS for this year already completed - I have them in for a bit more than that but still a lot less than the 26.7% that Redrow achieved for 2017 or the similar figure that Telford are down for for 2018... The TEF Musketeers seem to be thinking that the first half for Telford won't be so great - but for the past three years they've only averaged 30% of their profit in the first half so I guess if it's any more than that this time then that's a bonus - though I have no idea what the market might make of it..? At a PBV of 1.44, a tad lower even than that paragon of house building efficiency, Bovis, Telford are currently the lowest in the entire sector... So, given all the potential there, surely that must mean a fair bit of potential for bad news is already priced in? But what do I know - or care, in the short term anyway...? Completely separately, Nige, don't know if you still read my blog..? If you do, I wondered if you might be interested in the full monty weighted book value workshop I've talked about on there..? The one that is already planned is now full but I anticipate doing more next year if this one goes well - and clearly, from your various comments and the fact that you have this grand analysis project under way, you're surely a true spreadsheet aficionado, so that's not likely to be a problem for you..? :-) If it appeals, perhaps come back to me directly by email, or via the blog, rather than on here....?

Nige, "Hi Razor As you might see from my prev post the founder, biggest shareholder and Chairman of rdw, Steve Morgan has sold a bunch of shares and is saying he is taking a back seat in the company. Last time he stepped down the Sp collapsed until he returned and got the company going again." Nige, it might be helpful to be careful with any memory of the numbers here lest any inaccuracy in this has an inappropriate impact on current decision making..? Steve Morgan stepped down in November 2000, or thereabouts, and the share price was around 150p. From there, in common with the other builders, the priced sailed comfortably up to peak at around 550p in around January 2007. So far, so good, and no negative impact from Steve Morgan having gone A.W.O.L. as, at the peak point then, the PBV was up around 2.0. Come the deluge, and it was like Warren Buffett's pithy maxim "It's only when the tide goes out do you discover who's been swimming naked". And so it was - as the boys left in charge of the Redrow farm had made a complete dog's breakfast of it and Captain Steve then took back the reins in March 2009. (sorry about all the changing metaphors :-) ) And who could complain about progress there since..? But the point I'm making is that the market didn't noticeably react to his leaving last time and, thus far, only seems to have been temporarily spooked this time - perhaps given that it coincided with that master of calling the property cycle, Tony Pidgley of Berkeley Homes, also outing some shares. But Steve Morgan hasn't stepped out he's just stepped back a bit, he still owns a shed load of shares, and he's more recently announced a big company share buy back agreement which on the one hand, at current prices, hurt the net asset value of his personal and charitable holdings in Redrow but, on the other, increases his percentage holding. So, I for one am not seeing any lack of commitment by Steve Morgan in that and for me Redrow remains right up there with Bellway and Telford... Moving on, Nige, you did recently ask me on here about what I thought about the current price of Redrow...? If you were asking me is it good value then my view is yes, absolutely, I think RDW, TEF and BWY are all stonkingly good value at anywhere near their current prices. If you're asking me if the price of Redrow makes it a good buy against what the price will be tomorrow, next week, next month or next year then I have to tell you I have absolutely no idea and that it would terrify me to be buying any share on that basis.... :-)

Terrace, �TEF appears to offer the best option for those of us who prefer not to dance in and out of different stocks. Obviously if you have a unique level of foresight, switching can be very advantageous, but for the normal stiffs,it is about keeping it simple.� You and I have bumped up against this topic before on here�.! :-) I agree with you that buy & hold in a fine company like Telford is a sound strategy, and I would also accept that there is a degree more work & monitoring involved in switching investments between different builders� shares as compared to just holding the one share (though clearly, going by this share chat, a lot of time is spent watching & commenting on the progress of that one share by the regulars here given the hundreds of posts every month�). However, I do not agree with you that this requires any foresight � as I certainly don�t possess any - but rather just some junior schoolboy level analysis of the numbers going back over time and feeding these into current stated performance to gain a perspective and take a view... Though I�ve posted on here a fair bit lately, my main place for comment, as you know, is my Strictly Bricks blog � and that, more & more as time goes on, is mainly aimed at people of the next generation down within my circle. While most of them don�t have a shed load of capital to invest, they do have something that us old scrotes don�t have � which is time! My target is to add an average 10% a year to underlying share performance through trading - with the aim that people on my blog will hopefully follow, to the extent that they are tracking my trades... That may or may not sound a lot, and it's fair to say that, since the start, I�ve not achieved it as an average - but over the past eight years I�ve comfortably beaten it, and so I think it�s hard to call for the future, but it is my target and hopefully do-able for the long term? For someone somewhat younger than me starting out with a modest pot of money to put in a pension plan at the start for 30 years (and never mind starting a pension when you�re young, the trick is to finish paying into a pension when you�re young but then achieve a cracking rate of return thereafter...), which is the timescale discussed on the blog, an additional 10% a year means a pension pot that�s more than seventeen times bigger at the end than it would have been with just a buy & hold strategy with the same underlying company performance. And, if the underlying performance of builders does carry on for the next thirty years as it has for the previous thirty years, well, you only need to pay in a very modest sum indeed to pee all over the result that investing with the usual suspects in pension industry is likely to produce..!

Nrimmer, if you're looking at digging into the game of house builders shares somewhat deeper than the typical, rather naff, day trader banter that pervades some of the other builder share chats on LSE here, you might find the Telford share chat worth a visit...? A lot of detailed discussion & useful analysis there, from time to time, and not always just about Telford, and, though the regulars there seem to collectively all have a different investment strategy to me (they are big time Telford buy and hold whereas I am a perceived best value tart), we share a respect for Telford as a company and as a long term investment prospect and that seems to help keep the conversation there civilised and informative... :-) But yes, for me right now, Redrow, Telford and Bellway are all neck & neck - and with Crest just a length behind.... And, IMO, Galliford is terrifyingly overpriced, and with Persimmon, Taylor Wimps and Barratt all expensive relative to Redrow et al... And we don't talk about Bovis...!

Sain, Any heads-up comes via my blog, which you have access to.... But, as I'm sure you will understand, I don't put trading comments out until AFTER I've traded...! As it happens, I put one there about a Bellway/Telford trade about ten minutes ago (though, for some reason, the blog has timed it at 8.07am so I guess it's old fashioned and doesn't recognise BST?)

Terrace, I consider Telford by a whisker to be currently best value in the market for builders.... but that's based on budgeting at 10% EPS growth a year post 2020.... If Telford managed to achieve 15% a year EPS growth along with the suggested 15% or more sales growth a year as has been mooted, and bearing in mind one third of earnings paid in dividends, that would make for a return on equity of more than 20% by 2025. And it would also mean that Telford were currently better value, IMO, than the other builders, by somewhat more than the above whisker... And also, on your other post, IMO Taylor Wimps are way more expensive than the likes of Telford, Redrow and Bellway in terms of value, and who should know that better than the directors...? So who could blame them for selling a shed load of shares while the going's good...? Wonder if they might re-invest in Telford..? :-)