Category Archives: $TWOD

Post Brexit: What’s priced in to UK Builder Taylor Wimpey

With the political and economic chaos created by Brexit, it seems too crazy to look for buying opportunities….

As stops get hit, exit positions and hoard cash and look for opportunities – 2CentView stopped out in $SPD (Sports Direct), but took profit in Gold position and took off some Currency Hedge, now 20% in Cash, down 4% since Brexit as US Markets also get whacked.

Taylor Wimpey stock has dropped from 190 pre Brexit to 115 – this assumes a 25% Cut in EPS and Dividends – the company said Brexit Impact would not be that high as there is still huge demand for Housing in the UK.

Assuming a 10% EPS and Dividend Cut, Fair Value = 165, Yield around 4-6%.

Trade: Buy here at 118, take profit 160 Stop, 95.

2CentView Performance in 2015

The 2CentView portfolio was up 1.5% and flat if you exclude dividends for 2015, which matched the S&P500 but above the FTSE100 which was down 5%.

The portfolio was up nearly 10% mid year, but then the Chinese stock market plunged and was followed an amazing drop in commodity and oil prices, the scale of which no one predicted, sees stocks like Anglo American, Glencore and BHP Billiton drop to record lows.

The objective of the 2CentView system is to outperform the index in rising markets and be at least in line when the major index is flat or falls up to 20%, and outperform if the market corrects more than 20%. The portfolio is benchmarked vs. the SP500 (50%, flat ) and FTSE100(50%, down 5%), so the outperformed by 2,5% in a flat year. Overall return since 2013, 74%.

The exposure to USD/GBP exchange rate is also something to keep an eye on – and 2CentView started using the PUS3 3x Leverage ETFS Short USD, Long GBP to hedge foreign exchange risk, locking in at 1.52.

Where it did badly:
2 Core positions were savaged – SAVE (down 60%), $YHOO (down 50%), $TWTR (down 50%) which cost the portfolio nearly 5% – 2CentView exited these positions, when the 50% threshold was hit. $ACA (Acacia Mining – Gold) was also down 40% due to lower gold prices.

Trades in $AMBA (Amberalla), $GNW (Genworth),$KORS (Michael Kors), $BHP (BHP Billiton) and $AAL (Anglo American) were all stopped out. In the case of $GNW, $BHP and $AAL, these stocks continued to fall and the stop loss system saved the portfolio from losing a lot of money.

Trades in $FIT (FITBIT), $HSBC were hit their targets and were profitable.

Core positions which did well: $FB up 40%, $MRKT, $DLG (Direct Line, up 30%+dividends),$NFLX (NetFlix), $TWOD (Taylor Wimpey, up 50%), $GOOGL up 60%.

Other core positions in $AAPL, $NASDAQ:AAL (American Airlines), $SWKS, $MS, $CELG and Ionis pharma were fairly flat.

Main lesson learnt from 2015 – STICK to your stops – downward moves can be savage – Analysts forecast can severely LAG the market on the downside as well as the upside, so do not fight the market, exit at your stop, re-evaluate and come back in lower down if you still like the stock.

Happy 2016 from the 2CentView team.

UK Housebuilder $TWOD (Taylor Wimpey), $BDEV (barratt) FV update following help to buy budget.

George Obsorne announced a furtjher boost to UK housing market, offering first time buyers a help to buy ISA – the scheme can pay anything between 400 and 3000 pounds from the government…

This seems a bit a of an election gimmick – given the cost of houses today – and reflected in the very modest rally in UK Housebuilder shares…

The real risk for holders of UK Housebuilders is the Tories losing the general election and the next government scrapping all the help to buy schemes – could see a 20% drop in the shares if this happens.

$BDEV FV = 520 4.25% Dividend Yield
$TWOD FV = 180 6% Dividend Yield

Taylor wimpey still cheap to Fair Value, but would not buy ahead of the election unless you are sure the tories will win.

If you have a core position, hold for now – the tories have a lead in the polls, but it this changes trim your position.

2CentView has a core position in $TWOD (Taylor Wimpey)

UK Housebuilders hit their FV’s – take some profit year – next year my estate agent..

reckons that the Help to Buy scheme could be cut short if the Cameron loses the election.

FVs:

$BDEV = 450 (from 425)
$TWOD = 135 (from 125)

Look to take some profit around these levels but keep a core position for now – they still have great yields and have done very well this year both up over 20% this year with dividends and capital returns.

Be careful as we come up to the next general election as there is a risk the help to buy could be cut if the tories lose.

2CentView has a core position in $TWOD.

UK Housebuilder down 25% from their highs…is it over done?

$BDEV FV = 420 (Barratt)$TW. FV = 125 (Taylor Wimpey).

These were on a high following governments extension of the Help to Buy Scheme, but the prospect of higher rates sooner has seen a sell off!.

Higher rates sooner rather than later, should see a flattening of the yield curve in the 3-10Y area, which is good for housing market long term and should see lower 5Year fixed rates.

Barratts report 12th may – may be worth a margin trade in the hope for some good numbers.
Buy here at 350, Take Profit target 400, Stop 320.