I really wonder if the UK is just repeating the same sentiments that was common here with the US homebuilders where they were a few years behind/outdated views on the industry. Eventually $LEN, $DHI, $PHM started to figure out the NVR model at their infrastructure and scale, and they were able to free up capital/delever the business and it took 3 or 4 years before the market recognized it.
Those stocks went on a tear, sometimes doubling in a year and still end up trading at 10% free cash flow yields. I don't think it took any sort of great insight, it was value in plain sight where the bear case at those price levels was assuming some business deterioration that was worse than the GFC.
Nice post. Just a tiny note to let you know, it doesn’t make sense to compare EV to TBV, because net debt is already included in TBV. By using EV instead of market cap, you count it twice.
i’m in this one lol
I really wonder if the UK is just repeating the same sentiments that was common here with the US homebuilders where they were a few years behind/outdated views on the industry. Eventually $LEN, $DHI, $PHM started to figure out the NVR model at their infrastructure and scale, and they were able to free up capital/delever the business and it took 3 or 4 years before the market recognized it.
Those stocks went on a tear, sometimes doubling in a year and still end up trading at 10% free cash flow yields. I don't think it took any sort of great insight, it was value in plain sight where the bear case at those price levels was assuming some business deterioration that was worse than the GFC.
Great post, keep up the good work
Nice post. Just a tiny note to let you know, it doesn’t make sense to compare EV to TBV, because net debt is already included in TBV. By using EV instead of market cap, you count it twice.
Great catch—fixed it. Thanks, Matt!