hmmm that looks like a housing crash to me :S

Some more that I missed out:





For reference I'm also holding BBC & CRY but they're not near break out yet

Are my eyes going funny or are all them charts almost identical lol

http://www.timesonline.co.uk/newspaper/0,,...1450344,00.html

CRST, RDW, WLB & WMPY looking interesting today

PSN, BDEV, RDW & WLB all looking pukka!

SB

CRUCIAL PIECE OF NEWS - THIS IS WHAT THE BEARS HAVE BEEN MISSING

Current Housebuilding portfolio:

BVS 13%
BDEV 12%
MCTY 11%
WLB 10%
WBY 9%
PSN 8%
BWY 7%
WMPY 7%
RDW 7%
BBC 6%
CRST 4%
CRY 4%
GFRD 2%

Wowwee!

SB

Ok, just pinched myself to make sure I'm right to keep holding these stocks. It appears the market is coming around to value the stocks on normal market conditions (i.e. valued on earnings multiples rather than crisis level NAV multiples)

I reckon BDEV and WMPY deserve PE's of 7 and the rest deserve PE's of 8.

On that basis, here are my price targets:

BDEV 798 (26%)
BVS 720 (10%)
BWY 1058 (21%)
CRST 418 (12%)
MCTY 820 (35%)
PSN 923 (25%)
RDW 493 (19%)
WBY 624 (26%)
WLB 1584 (32%)
WMPY 546 (28%)

Very simplistic analysis, but makes me comfortable that the sector is not peaking!

SB

SB

I seem to remember you were planning to buy a house - based on your recent success with Brickies I naturally assume that has now been changed to a mansion purchase plan. Will you also be getting further assistance on any new build you do with some kind of Bricky Shareholder Benefits plan - 20% off every brick laid or similar?

Some other bullish points.....

I believe the new SIPP rules will allow residential property to be put in a SIPP. This will surely boost the buy-to-let market as it would avoid capital gains tax, and income tax on the rent (if I understand this right).

Consolidation in the sector is still very much on the cards. Barratt have not made takeovers, but the CEO recently hinted he might. Also Persimmon could buy at any moment - they have just upgraded their bank lines, and Duncan Davidson (chairman and founder) probably fancies a knighthood, so he'll want to be first into the FTSE100. (my speculation)

Anyway this breakout is great fun.....can't wait for next week.

Just BBC, CRST, CRY and WMPY left below their all time highs...

SB

Lovely Jubbly:

http://www.guardian.co.uk/business/story/0...1407900,00.html



Down Westbury way



Is a bid on the way for Westbury? That was the word in the City late yesterday as the share price of the Cheltenham-based housebuilder reached a record high.



Its stock closed 10.5p stronger at 513.5p on rumours that Persimmon, the UK's biggest housebuilder by market value, is poised to strike with a cash offer. Having recently refinanced £500m of debt, Persimmon, up 15.5p to 765p, certainly has the firepower to make a move. It also has the added incentive that the deal would create a company with a market value of £2.5bn - big enough to command a place in the FTSE 100.



However, analysts believe consolidation will only start when housebuilders are certain demand has started to stabilise after the recent slowdown.

Look at them go! Nice one SB mate. You must be doing seriously well.

http://politics.guardian.co.uk/homeaffairs...1408383,00.html

From Shares Mag:

http://www.timesonline.co.uk/newspaper/0,,...1481518,00.html

http://observer.guardian.co.uk/cash/story/...1411571,00.html

I've got the new house on order, here's an architect's sketch:

Extract from today's FT:

Received this e-mail …..
(IMO it is advert. but you know better then me)

Put the link here with the “Property Tycoons”….
http://www.in2perspective.com/newsletters/20050216.html


BTW I got a news today that someone (near mine) sell an Olive grove with a “rustico” (stone house) with 350 olive trees at €150.000 (cheap….IMO)

SB stones…. it is better then paper money walls….

An SF member was kind enough to email me a copy of the post below. It is difficult to detach your emotions from trading, but it a necessity.



Hi Sam (someone tipped me off as to why my ears were burning!),

In mid November I looked at the market and the stocks on my watchlists and out of 200 or so stocks, there were only a handful (about 8 stocks) that looked considerably undervalued. This is the first time that had happened since I started investing just over 2 years ago. As a general rule I only invest in stocks which are both undervalued and technically positive. I was tempted to go mainly into cash, but I believed that a lot of cash would be coming into the market over the coming months and wanted to be fully invested, but where?

So, I looked at the handful of stocks that I'd classified as undervalued. Two of them were Housebuilders and I ended up spending the entire weekend (and consequently the next 3 months!) researching the housebuilding sector. I couldn't believe how misunderstood this sector of the market was (and still is).

The difference between now and mid November is sentiment. In November, sentiment was as low as you could possibly get. Many stocks traded on PE's of 3 and below Net Asset Value (many stocks are still trading below tangible NAV). I even bought one small housebuilder (OKD) on a PE of 1.5x 2005 earnings (the stock is now up 75%, but still trades on around 3x earnings!) Now, sentiment is uncertain. It's not completely negative, but it's generally not positive either.

I could write pages on the fundamentals of the sector, but I won't. You'll have to trust me that Housebuilders should be valued on a normal PE ratio of 12-15x earnings, as they used to before the "housing crash fear factor" set in. House prices matter very little to Housebuilders, the industry is very different to the early nineties and whilst a housing crash would probably cause share prices to drop in the short term as sentiment again turned negative, the long term effects would be incredibly positive for housebuilders over the longer term as their earnings figures showed they are able to keep making profits in a housing slowdown. Their PE ratings should then return to normal levels. Thus, over the longer term there is at least another 50% rise to be had, excluding the effect of further growth either organically or via acquisition. There is also a lot of value locked up in the balance sheets of these stocks, which is likely to be released via share buy-backs/special dividends and significantly earnings enhancing aquisitions using cash.

But, at the end of the day, regardless of how undervalued I think the stocks are, I will only hold long positions if I believe the technical signals favour a rise and that changes in market sentiment/psychology are working in my favour. When entering the sector in November, I waited for a trigger to reverse the direction of the share prices and entered in size as soon as I noticed the trigger.

Yesterday, many housebuilding stocks were hitting support levels (either rising trend lines or former resistance levels). There was panic selling both of a technical nature and a fundamental nature as the inflation figures indicated a greater likelihood of an interest rate rise. As I'm sure you appreciate, the best time to buy is when others are panicking. Ironically, the one housing stock I did sell yesterday was BVS, which closed at a new all-time high today.

After a hefty rise in the stocks followed by a couple of days of weakness and then yesterdays panic selling, the obvious conclusion is that all those who want to be short, are short and any weak holders have sold. Therefore sentiment and psychology favours a rise in the absence of any further fundamental news. (The next major news for the sector is due on Tuesday with Wimpeys results).

So, I've covered the fundamentals, sentiment and psychology aspect. Finally here's a few charts:


Plenty of bears (including Mr Burns) were calling the top in this at £6. Note the strength of the breakout. I agree that BVS is looking technically overbought, but it's an obvious candidate for Corporate Action and it's looking like it may come sooner rather than later.


Another technically perfect stock, breaking out to a new high, and bouncing off that level on the restest - also in a lovely 3-month upward trend.


Good luck with your trading and thank you for your concern,

SB

Results season is on the way:

KIE 21st Mar
BDEV 23rd Mar
CRST 8th Apr (AGM)
WMPY 14th Apr (AGM, approx)
BWY 19th Apr
MCTY 20th Apr
PSN 21st Apr (AGM)
WBY 26th Apr

Share Bear

I don't really follow the housing/building sectors, but have been captivated by your enthusiasm and good timing.

You might be interested in post 7115, and a few follow-up posts, on the ADVFN "Really useful Gold thread EPIC "GOLD".

The gist is to do with early signs of a possible collapse in the housing market in the US. I don't know whether the adage "when the US sneezes the UK catches a cold (or flu)" applies to the housing market.

Food for thought, though, perhaps.

Saucepan,

Thanks for the link I'll have a look, cheers! Ironically the reason the Housebuilders sold off today is because House Prices are seen to be rising. (Rightmove reported a 2.3% increase in asking prices over last 5 weeks)

At first that sounds like good news for brickies. However, rising house prices means rising bond yields and takes away the possibility of an interest rate cut. It also means the number of transactions will be lower as affordability becomes even more out of reach of the first time buyer.

But, if house prices fall, margins will be hit and Net Asset Values will drop. So, in basic terms, housebuilders are screwed whatever happens.

Therefore sentiment is nearly always negative towards the sector. Of course, this is not the case! When they all announce record profits and growth in volumes and margins, the city might wake up to the fact that Housebuilders will make good profits whatever happens, and rate these companies on a sensible PE in the teens. When this happens, share prices will be twice their current levels.

It's just a matter of when, imho.

SB

Stonking results and outlook from WMPY, at 9am:

WMPY +6.0%
BBC +3.4%
CRST +3.4%
TWOD +3.1%
PSN +3.0%
BDEV + 2.3%
MCTY +2.3%
WBY +2.3%
WLB +2.3%
RDW +1.5%
BVS +1.3%
BWY +0.9%

LONDON (AFX) - Shares in George Wimpey PLC rose by more than 3 pct in
initial deals after the housebuilder announced full-year profits at the top end
of analysts' forecasts, dealers said.
In response, Citigroup Smith Barney reiterated its 'buy' stance, saying the
results for 2004 are strong, as expected, and there are some encouraging early
signs that the UK market is improving from the very slow autumn period.
In a note to clients, the US broker said pretax profit of 450.7 mln stg was
above its own estimate of 440 mln and consensus of 442 mln.
It noted the dividend has also increased by 31 pct to 16 pence, in line with
expectations.
Meanwhile, Panmure Gordon also stuck to its 'buy' advice, as it highlighted
that core UK operating profit was up 11 pct.
It said completions were also up strongly in the US, with prices also
higher; it expects a minimum 20 pct profit rise from this division going
forward.
The broker also said the outlook looks good, with a recovery in the sales
rate.
Earlier, Wimpey said pretax profits rose by 19 pct to 450.7 mln stg in 2004,
at the top end of analysts' forecasts for a 435-450 mln stg profit.
Morrison Homes in the US achieved operating profits of 188 mln usd, a rise
of 59 pct. Completions at the US unit rose by 21 pct to 4,422.
The group announced a 31 pct rise in the full-year dividend to 16 pence.
Chief executive Peter Johnson said the group has entered 2005 in "far better
shape than we have ever been before".
At 8.08 am, shares in George Wimpey were up 13 pence at 445-1/2.

http://u.tv/newsroom/indepth.asp?id=57009&pt=n

Evo speaks about the sector in it's research note (ADD) on WMPY today:

UK-Analyst:

LONDON (AFX) - Taylor Woodrow PLC's preliminary results next Tuesday will
show a marked contrast between its UK and US housing operations, with buoyant
trading conditions in North American and Canada off-setting a weak performance
in its mainstream UK housing division.
The group recently pointed to a slowdown in fourth quarter UK home sales and
said that while home completions in the year to Dec 2004 would be 9,053 units,
up 18 pct up on the previous year's figure but down on October's expectation of
9,400 completions. At the beginning of 2004, the group was looking for 10,000 UK
completions.
As a result of the slowdown, the group revised its guidance for investors
and now expects pretax profits for 2004 -- after exceptional items and goodwill
-- to come in at the lower end of analysts' expectations which range from 387.5
mln to 411.3 mln stg. In 2003, the group reported profits of 324 mln stg. A rise
in the dividend from 8.9 pence to around 10.5-11.0 pence a share is also
anticipated.
In contrast to the UK performance, the group's North American operations did
well in 2004 lifting completions by 30 pct to 3,634 units at an average selling
price of 375,000 usd.
The US operations now account for about 28 pct of group operating profits
and the company plans to step-up investment and add another 10 pct more sites to
increase its penetration of the market in 2005. At end-December, the US order
book stood at 1.24 bln usd.
In contrast, the UK order book stood at 407 mln stg at end-Dec -- down 32
pct compared to the end of 2003 -- illustrating the sharp slowdown in the UK
market over the past twelve months. The group said it would be holding off
increasing the number of new UK sites in the first half of 2005 and would not be
chasing volumes at the expense of margins.
The group also said the first six months of 2005 would continue to be
uncertain as UK customers remain reluctant to commit to purchases. Analysts will
be hoping for an update on trading in the first few weeks of 2005 and whether
buyers are returning to the market ahead of the all-important Spring selling
period.
The slowdown in the UK market has also prompted some speculation as to
whether Taylor Woodrow could become vulnerable to a takeover bid. Some analysts
reckon Persimmon PLC could be a potential predator.
"Taylor Woodrow has fallen short of its volume targets in the UK and its
margins at 16.5 pct are below the sector average," stockbrokers Seymour Pierce
said in a recent investment note. "A strong player such as Persimmon could
probably quite quickly bring margins back into line with its core business,
while it would also give the bidder access to the Wilson Connolly landbank," the
house added. Wilson Conolly, which was acquired by Taylor Woodrow in September
2003 for 480 mln stg, has a landbank of around 16,000 plots.
Suggestions of a fresh round of consolidation amonst UK housebuilders has
recently propelled Taylor Woodrow's share price to a high of 312 pence, but
Seymour Pierce reckons that -- based on a similar rating to the last round of
consolidation -- a bidder may have to pay as much as 400 pence a share. This
would value the group at about 2.2 bln stg.

WLB Results Preview:

--- by Malcolm Locke ---

LONDON (AFX) - Persimmon PLC, one of Britain's biggest housebuilders, today
called on the Chancellor of the Exchequer to raise the threshold on stamp duty
in his forthcoming Budget on March 16 to stimulate the housing market and help
first-time buyers get a foot on the property ladder.
Group chief executive John White said it would be a relatively easy "quick
fix" for the chancellor to raise the threshold on the lower band of tax which
currently kicks-in at 1 pct on house purchases between 60,000 stg and 250,000
stg.
"If there was one single thing he could do to to help first-time buyers it
would be to raise the threshold at the lower level," he told AFX News in a
telephone interview this morning.
His comments came as Persimmon unveiled record profits for 2004 and echoed
recent proposals from the Liberal Democrat Party who have pledged to raise the
threshold to 150,000 stg if they win the next General Election. The Lib-Dems
reckon that by lifting the rate around 400,000 home buyers would be exempt from
tax, while the average saving for a new buyer would be 1,000 stg.
The average price of a Persimmon home last year rose from 154,810 stg to
172,431 stg and the group sold 12,360 units nationwide in 2004.
White said he expected house price inflation to continue at about 3-4 pct in
2005, while the group is targeting a volume increase of around 5 pct -- implying
close on 13,000 homes.
Pretax profits at the group last year grew by 33 pct to 470.4 mln stg on
sales of 2.13 bln stg -- the highest profit ever recorded by a UK building
company.
White said that while market conditions slowed in the closing months of
2004, there were signs that trading had picked-up in the first few weeks of
2005.
"We've made a positive start to the year with a marked upturn in demand for
our homes. We have currently sold 1 bln stg for 2005 and I'm confident of
another year of progress," he continued.
As a mark of confidence, the group is lifting the 2005 total dividend payout
by 50 pct to 27.5 pence a share. In the stock market, the group's shares rose
5-1/2 pence to 804 at 10.15 am.
Group debt reduced further to around 200 mln stg for gearing of 15 pct in
2004, but White ruled any large acquisitions today. "We're in organic growth
mode at the moment," he said.
However, the group's low level of debt and strong cash flows has given it
increased flexibility to make acquisitions and it has recently been mentioned as
a possible predator for a number of rival housebuilders, including Crest
Nicholson PLC, Westbury PLC, Bellway PLC and more recently Taylor Woodrow PLC,
which also reports annual results this week.

LONDON (AFX) - Shares in Taylor Woodrow PLC were higher in early deals after
the housebuilder saw full year profits increase, driven by a strong performance
in it North American division, dealers said.
In response, Morgan Stanley reiterated its 'equal-weight' stance and said
the results were in line were expectations following the trading updates in
November 2004 and more recently in January 2005.
However the group has now more visibility concerning average selling sites
in 2005 and currently has 216 sites open - greater than the last estimate of
200.
Referring to current trading, the broker said the year has started well for
Taylor Woodrow with net reservation levels slightly ahead of 2004 in the UK.
In the US, the group has a record order book
of over 1 bln and is very
confident about prospects in 2005, which should help to drive earnings
for Taylor Woodrow in 2005 and help to mitigate any weakness in the UK market.
At 8.03 am, shares in Taylor Woodrow were 1-1/2 pence higher at 301-1/2.

Excellent results from BBC this morning especially if you consider that these builders already build "affordable 1st time buyer housing" and so are unlikely to be hit by a slowdown in the 2nd time buyer markets.

Regards

MSB

MSB, I agree, and what a great buying opportunity that was this morning.

Another Housebuilder SELL rating, that's what we like to see:

http://www.kbcpeelhunt.com/pdfs/mmeetings/Taylor01Mar05.pdf

In a note on housebuilders JP Morgan has raised its rating on George Wimpey to neutral from underweight raising target price to 480p from 416p, reiterates its underweight rating for Barratt, raising its net asset value target price to 540p from 493p, reiterates its underweight rating for Persimmon, raising target price to 634p from 509p and reiterates its neutral stance on Taylor Woodrow, raising target price to 348p from 278p.

The FT runs an article on the Housebuilding sector today, concluding with:



http://news.ft.com/cms/s/a37c6906-8bff-11d...000e2511c8.html

Sector consolidation:

http://observer.guardian.co.uk/business/st...1431303,00.html

LONDON (AFX) - Redrow Group PLC will be the first large UK housebuilder to
meet the government's challenge to sell new homes for 60,000 stg, when it
announces its results this week, according to the Financial Times.
Redrow will start its new range of housing, called Debut, at a site in
Rugby, where the cost of a one-bedroom apartment will be 54,995 stg, rising to
119,995 stg for a two-bedroom, two-storey home, said the paper.
New methods of construction will cut cost of building new homes to about 55
stg per square foot - just over half the cost of a standard build, the Financial
Times quoted chief Paul Pedley as saying.
John Prescott, deputy prime minister, last year lambasted the housing
industry for making record profits at the expense
of first-time buyers who were
being priced out of the market.

LONDON (AFX) - Shares in Redrow PLC moved lower in late morning trade as
enthusiasm over the group's solid interim results was tempered by a lack of
outlook and caution over the housing market, dealers said.
Redrow reported first half to end-Dec pretax profit of 69.1 mln stg, up from
56.7 mln a year earlier and ahead of expectations for profit of 68 mln.
The company said it is seeing good levels of interest from potential
customers but the time taken to convert sales has lengthened and this has led to
a reduction in forward sales at the end of December of 6 pct.
In reaction, Citigroup Smith Barney reiterated its 'buy' recommendation and
470 pence target, arguing that the interims were ahead of expectations.
It added however, that although the interims should be supportive of the
share price, there is little incremental new information on the housing market
overall from what it has heard from other housebuilders in the recent results.
Cazenove meanwhile, repeated its 'outperform' recommendation, arguing that
the group continues to trade well and believes it is set to outperform in the
tougher market conditions now being seen in the UK housing market.
The broker added that despite the reduction in its EPS estimates for 2004/5
and 2005/6, it is still estimating growth even in the first half of calendar
2005.
Overall, Cazenove noted that the group is well placed to benefit from its
regional spread, its relatively low ASP and ability to grow volume into the
medium term.
Morgan Stanley was more cautious however, reiterating its 'overweight'
recommendation, arguing that overall the results are excellent, although the
outturn of the Spring season is still an unknown with no real guidance from the
group so far.
By 11.40 am, Redrow shares were down 6-3/4 pence at 403-1/4.

Lol, well done Numis!



SB