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Done some fact finding earlier on previous highs and lows within the house builder stocks.
I found
BDEV - 2008 crash we saw 23p yes 23p a share.
High of £8.90 12yr later. 37x upside!!!!
Persimmon - 2008 crash £1.80 2020 high £33.20 18x
TW - 2008 Crash 4p 2020 high £2.37 59x
£10k in TW in 2008 recession sees you with £600k +
Amazing what money is made when prices drop. I don’t think we will see these gifts of prices but the lower the drop the more I will buy. Strong balance sheet here, will be brought into heavy if we are gifted anymore. The big house builders have a demand they can’t keep up with. The maternity wards in the SE England are only getting busier and I guess this is the case across the country.
Property market may slow up with rising rates and inflation etc but this is a cycle and it will only go back up one way!
Great LTH here IMO
"BDEV - 2008 crash we saw 23p yes 23p a share.
High of £8.90 12yr later. 37x upside!!!!
Persimmon - 2008 crash £1.80 2020 high £33.20 18x
TW - 2008 Crash 4p 2020 high £2.37 59x
£10k in TW in 2008 recession sees you with £600k + "
..................................
Indigo,
The difference between Persimmon, on the one hand, and Barratt & Taylor Wimps, on the other, is that Persimmon had to do a 20% plus write down on their landbank which, okay, was painful enough.
However, Barratt & Wimps were under existential threat as they'd seriously gone Pete Tong with their balance sheets in respect of far too much leverage, and each had to undertake a serious rights issue in order to survive.
If either of them hadn't got their rights issues away ~ and it certainly wasn't a given back then considering the state the economy was in ~ then they would have likely gone belly-up, and the 23p, or 4p, invested in each of then respectively would have no doubt gone to ratsh.it once the banks and secured creditors had been there first....
And I speak as a past sinner in respect of Barratt ~ though fortunately I had baled out of them and into other housebuilder shares well before the bottom, it was still a very painful financial experience for me, having to sell the family home in order to swerve having to cash in any shares at stupidly cheap prices...
It was a happy outcome in the end, mind, so I have no regrets about all that given how house builder shares have performed since... :-)
Strictly
"Looking on the Stockopedia ratings to these companies I wandered if you had any views on their “Rankings” of these stocks? I know you favour BWY although they seem to lean towards TW and rate Bdev the weakest. "
...............................
Tim,
To be honest, I don't really pay any attention to what the scribblers have to say..... being cynical about both their motives & their competence, I prefer to use Mathew 7.16 as my guide (I'm not religious, BTW, but I'll still leave you to look that one up?).
Bellway is affectionately known as "Ghost Dog" in our circle (and that's intended as a compliment to them..... another thing to check out, maybe, if you're not familiar with the film of the same name?).
Go back 40 years... Bellway have averaged a return on equity of around 16% over that time... they were the only house builder of note to keep paying a dividend throughout the credit crunch.
By contrast, Barratt nearly went broke twice during that 40 years, and Taylor Wimps also nearly went belly-up due to the credit crunch and have yet to fully recover.
Yet, on a PBV basis, Bellway are cheaper than both ~ that’s what I mean by Ghost Dog…
Tim, I obviously don't know how long you've been in this investing malarkey but, for me, it's now over 22 years ~ and it's given me a good living over that time and, for nearly all of that, investing has been my sole source of income apart from an OAP in recent years...?
But if, like me, you're only interested in a very few companies ~and for me that's about half a dozen at most ~ it's surely worth digging as far back as you can into each of those companies' figures on their websites to form your own view..?
I have no idea how good, or otherwise, said scribblers are, but if they're on a level with the financial journalists writing in the Telegraph on-line (where I post an occasional comment under the moniker Gunga Din, usually in response to, or in support of, a prominent & sometimes controversial commenter there who goes by the handle of Bogdan and who thoughts expressed there, in my view, are well worth reading) then that wouldn't be much of a commendation.
I don’t know how far back you’ve read on my stuff here on LSE…?
You no doubt know that you can click on any poster’s name and scroll right back through their stuff… I tend to comment here in fits and starts, often when it’s peeing with rain here (I live 1,000 feet up on Dartmoor, so we get a fair bit of dampness…) so I’m not getting out for a walk or a paddle…
And, as ever, DYOR and all that fine stuff….
Strictly
Thanks fellow posters for your ongoing insightful comments on here & other LSE boards. Strictly, like you I live on high, almost 900 feet above sea level on the beautiful Quantock hills, I’ve always loved Dartmoor since visiting on a London school visit in the early 1970’s.
Enough reminiscing I would be grateful for any opinions about house builder Vistry, the man in charge over there is certainly up beat as he’s spending large amounts buying his own company shares at the moment, good to see. Thanks in advance.
"I would be grateful for any opinions about house builder Vistry, the man in charge over there is certainly up beat as he’s spending large amounts buying his own company shares at the moment, good to see."
...................................
Gary,
Funnily enough, I wrote about Vistry/Bovis on our private investing blog just a few days ago ~ they've always enjoyed the derisory nickname Battersea in our circle...
This is because, from 1997 to 2019 (when I last updated the particular spreadsheet, Bellway had achieved an average ROE of 17.4% compared to Bovis's 11.9%.
I'm imagining you already well understand the magic of long term compounding, so would quickly understand how big this makes the gap between the two over time..?
From the start of the period, Bellway turned 183p of book value into 2,373p and threw in 975p in divs on top, whereas Bovis achieved a very pedestrian increase from 185p to 855p, with 509p in divs on top.
And this takes no account of 2020, when Bovis evaporated 180p per share of book value due to the purchase of Galliford's house building arm.
Hence the name "Battersea"
Anyway, hopefully the item I've copied & pasted below from the blog helps...?
And as it implies, maybe Bovis will make it into the fold of sensible house builders ~ and that is a very small fold indeed..!
.........................................
CHANGE OF NAME….!
Battersea, aka Bovis, aka Vistry, blew their half time whistle this morning….
I’ve calculated BVPS as £2,366m balance sheet less intangibles £669m = £1,697m tangible equity divided by 221.195m shares in issue = 767.2p BVPS.
767.2p BVPS now less 749.12p BVPS b/f (which was adjusted for cladding reserve) = 18.08p plus 40p div paid in the period = 58.08p reality check EPS for the first half as compared to the declared EPS figure of 39.1p which, without digging into it right now is, I’m imagining, the different timings between Bovis and me on the cladding reserve and also I haven’t checked whether there was any change now on the amount…?.
The upshot is it looks like Bovis could be on for around a 16% ROE for the year as it’s 7.8% for the just the first half.
Bovis have also reduced their balance sheet liabilities from 85% at the start of the year to 69% at the period end… oh that Inland could manage such feats..!
So, all in all, no cigar when they’re compared with Bellway and Redrow, perhaps, but I also feel that maybe it’s time to bring Bovis in from the cold….?
Not too hastily, mind…. I still have them on a somewhat cautionary minus 20% weighting (somewhat improved from my previous rather prejudicial minus 40% for them and this compares to Barratt minus 10% and Taylor Wimps minus 30%), but sufficient for them, IMO, to no longer be known by their epithet Battersea….
So, Muttley, it seems you’ve now found a home…! ??
Strictly
PS.
Tim, it looks like you haven't knocked the intangibles off Bovis balance sheet..?
I've got PBV at 1.02
Strictly - Excellent analysis thank you & it will be interesting to see what this companies return on equity for part two of the year amounts to. In addition what I feel may be beneficial particularly as we enter a period of unknowns in the economy and housing market in general is VTY’s growing “Partnership business”. Prior to the recent acquisition this rose almost 10% and so by adding Countrywide I can only see this meaning positive and sustainable growth in the years ahead.
For those readers unfamiliar with the Partnership side this involves construction and development work with local authorities and housing associations which is highly profitable. Countrywide, which VTY now owns are involved with mixed tenure projects, which combine private ownership with social housing, these are large fixed-volume projects with good profits priced in. Undeniably demand for social and affordable housing is only likely to increase, perhaps this is another reason the CEO here is buying up his own shares.
Gary,
My take on all this is that you just need to take four numbers from a company report and that you could then reasonably bin the rest....
Sifting the nugget of truth from the mountain of dross, if you like....
Those numbers are:
1) The net tangible equity on the balance sheet
2) The amount of dividend per share paid out (rather than declared) during the year
3) The number of shares in issue at the year end
4) The total liabilities on the balance sheet....
These, along with a current share price and having the past track record over a long enough period of time for any company ~ preferably decades ~ gives me the essential numbers sufficient to put together all the metrics I require....
I do, of course, read much of a company report too, but I really would be okay about binning it, if it came to it, after having extracted those numbers...
And, for me, give or take, it has been thus so for more than 20 years....
So, I'm happy to track these numbers for Bovis, but probably still need another year or two to see how they are truly shaping up now that Greg Fitzgerald is in charge...?
But I'm probably too wussy to invest in them before that, unless Mr Market somehow presents me with a screaming buy opportunity that I find too compelling to ignore...
Mind you, I'm not holding my breath on that happening...!
Strictly
"Strictly, I’m struggling with your 1.02. Would you mind please sharing your figures with me? It would be most appreciated"
........................................
Tim,
If you scroll down several comments to one from me with a sub-heading "CHANGE OF NAME" the calculation is there...
The other company with a shedload of goodwill & intangibles before you get to net equity is Barratt....
Anyway, hope that clarifies it...?
Strictly