These Are Good Times For Housebuilders: Persimmon

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These Are Good Times For Housebuilders: Persimmon
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  • Persimmon plc (LON:PSN) is performing well and throwing off increasing amounts of cash.
  • Sales rates per site are running 20% ahead of pre-pandemic levels and prices are rising by almost 5% p.a.
  • The group has upped its rate of land buying in the face of strong customer demand for new homes.

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Q2 2021 hedge fund letters, conferences and more

Persimmon Is Accelerating Their Cash Returns To Shareholders

Commenting on today’s trading update from Persimmon, Steve Clayton, fund manager of the HL Select UK Income Shares fund, which has a holding in the company said:

“Persimmon is performing well and throwing off increasing amounts of cash. Sales rates per site are running 20% ahead of pre-pandemic levels and prices are rising by almost 5% p.a. That’s enough to offset the cost pressures unfolding across the construction sector. The group has upped its rate of land buying in the face of strong customer demand for new homes.

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The cash is building up, with the group now sitting on £1.3bn of funds, with only £100m of land purchase obligations to meet. That’s an increase of half a billion pounds over the last year and the group are accelerating their cash returns to shareholders, bringing the next scheduled 110p per share payment forward to August. With Persimmon now paying a total of 235p per share, that puts the stock on a yield of 7.5%, backed by a business that is performing strongly with cash in the bank.

These are good times for housebuilders. The customers want to buy and financing is easy, with mortgage availability improving, at rock bottom rates. The challenge is to keep all the ducks in a row, because cost pressures are bubbling away, staff are hard to find and the government can change the degree of market support provided to homebuyers when it chooses. The market is choosing to fret about these risks today, with the shares dipping by a percent or so in reaction to the statement.”


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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