Taylor Wimpey Share Discussion Threads

[sarahbudd] 23/7/2018 17:09

2.7m sell..

[purplepanther] 23/7/2018 16:47

Well I think buybacks definitely help growth companies over value companies. Lloyds problem is that the U.K. economy is moribund and it's a competitive banking market so there is absolutely no loan growth in real terms to speak of. So the only source of their earnings growth is really cost cutting which they have to do anyway to stand still against the evils of inflation and rising IT expenditure; or interest rate rises which haven't really been happening.So the market probably rightly lacks any faith that there will be rising earnings going forward. So they are a little running to stand still with the buyback programme, and it does little more than dampen volatility a little.I do believe the housebuilding sector is a little different in that it's a beneficiary of inflation and rising demand from future population growth in this country plus a chronic shortage of housing availability which has been going on for years. So I'm buying TW one should be buying into a rising earnings stream.

[fenners66] 23/7/2018 16:45

Ask Pidgley how his buyback is going at Berkeley Homes .

But he managed to offload some of his whilst the share price was (falsely?) held up.

They are now losing money on the share repurchase and the shareholders have been denied the dividend yield.

The - now - Non-shareholders are happy though!

[fenners66] 23/7/2018 16:42

I acknowledged that is a part of it - BUT "reduce (usually by a tiny %) the number of shares in issue"

If they were to announce that they had already agreed and tendered a price to buy back half of the shares before agreeing it with shareholders - fair enough we would see a significant increase in the next years eps.

But even that fantasy comes with a load of caveats.

1, What do they pay for them with ? Cash or more borrowings.
2. How can they be sure after burning all the cash that they will still have the same earnings in a years time ?
3, If they do announce it in advance - as they have to - if market likes it - the share price will go up and they overpay.
If market does not like it shares go down and they are just wasting money. It has to be the most inefficient way of buying shares ever - telling the market you are in for say 5% of the share capital.

Often buy backs are for an insignificant % - but with a very significant value of cash.
Then they announce a bond raise - with associated £ms in cost - together with a replacement bond raise in a few years to extend terms or secure rates before they rise always before the original bonds are due and always at huge "Exceptional Cost" (even though they always do this).

[m4rtinu] 23/7/2018 16:39

PP - as you prob know, Lloyds are doing a buyback. share price has dropped from 70p - 62.5p (approx) in that time, though to be fair it fell a bit at the start of the year (from c. 72p). Also during that time, very roughly 500 - 600m shares have been bought back BUT 300m shares have been issued (for bonuses).

Also, to finance the buyback the special dividend was cancelled (or hopefully, at least, suspended).

You could argue that share price would have been even lower, if no buyback, but I do wonder.

[steeplejack] 23/7/2018 16:38

https://www.thebalance.com/cash-dividends-vs-share-repurchases-357439Could be a lengthy debate!

[purplepanther] 23/7/2018 16:27

I have to disagree with that. Buybacks reward the long term shareholder for precisely the reason that earnings are shared between a smaller number of shares

[steeplejack] 23/7/2018 16:10

Long term studies show that share buy backs are not as productive as company's might wish.A good yield is far more supportive of a share price.

[fenners66] 23/7/2018 16:07

As you said a small minority selling brings price down.

A small minority (of shares in issue) brings price up - when they do buybacks.

And the next day the share price will fluctuate any which way it likes.

Buybacks effect the shares on the day, reduce (usually by a tiny %) the number of shares in issue - which long term has little effect on share price when compared to say profitability , cash flow, debt to equity ratio and dividend yields. None of which can be absolutely certain a year away.

But cash on the balance sheet for future dividends , or invested in better businesses is a far better use than buy-backs that would not affect me in any meaningful way - unless I was selling !

So buybacks are to reward the sellers of a company - dividends reward the owners - no brainer.

[purplepanther] 23/7/2018 15:54

But why on Earth should it - it's hardly the management's fault that a significant minority element of its shareholder base are over leveraged disruptive idiots who panic at the first sign of weakness whilst their long term institutional shareholders are more seduced by earning 1.26% in ten year gilts than supporting a company whose success is rather important to the U.K. economy. Only thing I'd criticise them for is their failure to consider using free cash flow to fund buybacks, which might actually help the shares perform in the long run.

[gbh2] 23/7/2018 15:47

Not to worry guys, the share price drop will not make any difference to Directors Bonuses and or Pay increases :))

[purplepanther] 23/7/2018 15:44

Not sure it's the right one though from a stock market perspective but it feels like this year's numbers are pretty much in the bag and paying £5.1bn current enterprise value for a business which made £660m in 2017 and £589m in 2016 or even £490m back in 2015 does not seem at all excessive.That's a multiple of 7.7x historic 2017 numbers; or 8.6x historic 2016; or if you feel the need to go that far back 10.4x historic 2015 numbers.So I'm inclined to believe the worst is baked into the share price here, and the yields would still comfortably be 8.5% to 9% on anyone of those profit numbers.No idea what reasons are for weakness today other than it's summer and not much risk taking

[garycook] 23/7/2018 15:36

Purchased more here.Bargain at these levels with the 10.7%. Dividend yield.

[m4rtinu] 23/7/2018 15:29

PP - cheers for your view. MU

[purplepanther] 23/7/2018 15:11

Well it was perceived to be too good to be true last year and the yield pushed out to 9.7%. This years it's 10.7% which is remarkable and that's providing no defence to the downside on the shares.But which ever way you cut it, even if pricing and sales vols drop back to 2016 levels TW looks inexpensive

[steeplejack] 23/7/2018 15:10

The special dividend has just been paid and some income funds might feel they can move on.It's Summer and stocks can drift in light volume especially when the property market,particularly in the South East,is becalmed and asking prices falling.Politically,the UK stinks and uncertainty doesn't promote unquestioning faith in house builders.That said.Have added.

[marksp2011] 23/7/2018 15:04

Bbc article is pretty typicalMost valuations seem to be based on post code, property type, no of rooms. Friend of mine did a very high quality refurb on a house in Feltham. Complete waste of $. It was still a 3 bed in Feltham and it was still valued as suchTw are involved heavily in the second hand market through their easymove scheme. Only logical that trouble in the general market would reflect on new builds but I am not seeing problems in my area except estate agents pricing for immediate sale to get their commission quickly

[m4rtinu] 23/7/2018 15:02

Seems like a fall across sector. But, could it be the TW. yield is being perceived as too good (to be true)?

[dr_smith] 23/7/2018 14:47

Decades ago I worked in Banking and one task was to value property being used to secure bank loans. We worked on "forced sale value". No internal inspection was done, but a drive by would be indicative of price bracket from similar local sales, and note was made as to whether exterior appeared to be well maintained, replacement windows etc. It was then assumed the property would have to be sold under adverse market conditions and via auction, to be seen to be getting "best price" if bank was forced to sell to pay debt off, and deduction also made for costs of selling.
This means "FSV" is typically below market value by a margin.
In my scenario the bank could be a 2nd mortgagee behind a b/soc.
The key part is whether FSV is greater than loan value.
B/societies may use market value, but their rules usually require a deposit of say 5-20%, whatever percentage, this was their buffer should the sh*t hit the fan and property have to be sold.
I am out of touch with current b/soc practice, along with surveyors and/or valuing agent they use, but BOE in recent years have been putting increasing pressure on sector to be more resilient to adverse market conditions, so this "buffer" may be under increased focus.
It also acts as a buffer so that prospective homeowners/upgraders, don't over extend themselves. Typically it would be first time buyers with near zero equity that may be hit by b/soc requiring larger deposits. Struggling house savers may find it hard but from morgage co point of view, this is resposnible lending - as co-erced by BOE.

IMO :-)

[baracuda2] 23/7/2018 14:40

Just bought more, seems a good opportunity to me.

[jugears] 23/7/2018 14:34

fenner66- Unfortunately these days if the mm's see any possible opportunity to knock a sector down to make money they will do,I Can't see this has any effect on Tw. as they are selling new houses & this refers to what I would call the second hand house market, Where IMHO prices are allways way over valued.

[baracuda2] 23/7/2018 14:32

Looks like it's been overdone yet again, another opportunity to buy more at a ridiculous low price!

[purplepanther] 23/7/2018 14:27

Can't see that article has any relevance of any significance to warrant what's its doing to the sector today, but nonetheless feels like the 160s now beckon in TW and a yield over 11% ...

[fenners66] 23/7/2018 14:16

From the article of surveyors not agreeing a valuation as high as the agreed price....

The Royal Institution of Chartered Surveyors (Rics) said: "The market value is based on comparable market evidence, usually a minimum of three sales transactions of similar properties in the local area, and also the professional's knowledge of the local market including supply and demand dynamics.

You would have thought that in a rising market the first part of that method would always be a fail.

If there were far less conflicts over the last few years - then it's not the"three sales transactions" making the decision.
Therefore it's all down to surveyors guessing what will happen in the market.

That's why they are surveyors and not property millionaires ?