Daily Stock Market Report (Tue 24 Dec 2024): VTY, WNWD

24th Dec '24 by Megan Boxall

53 comments 3992 reads

Good morning and Happy Christmas Eve!

A profit warning and a takeover offer today have provided quite an apt summary of the UK markets in 2024. But for those looking for a bit more festive cheer I would encourage you to read one of the review articles we've published in the last few days:

Graham has published his watchlist, including a review of the ten stocks in his 2024 list and an updated list for 25. You can read that here.
Ed has reviewed the winners and losers in the StockRanks. Click here to read that.
And Mark has provided a poignant summary of 2024 through the eyes of risk. Click here for that.

I am going to wrap up the news coverage here at 11am and we'll be taking a couple of days off from the daily report while the markets are closed for Christmas.

I'll be back on Friday and in the meantime we'll be kicking off our '12 Stocks of Christmas' - a deep dive on 12 companies that our analysts are looking at for 2025, one for each day of the post-Christmas lull. Have a lovely Christmas.

Companies reporting

Name (Market Cap)	RNS	Summary	Our view

Vistry (LON:VTY) (£2.2bn)	Trading update	Profit warning. Delays in expected transactions means FY24 adj PBT now forecast at £250m, from £300m previously	RED/AMBER
Harworth (LON:HWG) (£550)	Disposal	Completion of the sale of 278-acre site for £53.5m.
Windward (LON:WNWD) (£129m)	Takeover offer	All cash offer at 215p per share (47% premium to yesterday’s closing price) which values the company at £216m. Offer from a bidco set up by private equity group FTV which has been recommended by the board.	PINK
Kooth (LON:KOO) (£59m)	New contract	$1.45m pilot contract awarded in the US
Roadside Real Estate (LON:ROAD) (£43m)	Final results	Nearly negligible ongoing revenue flat. Profits from discontinued operations of £43m. The company has transitioned to focus on joint ventures.

Vistry (LON:VTY)

Down 16% - Trading Update (profit warning) - Megan - AMBER/RED

The cynic in me thinks that any company choosing to announce a profit warning on Christmas Eve is doing so in the hope that fewer investors will be around to see it. But as this is the…

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Scloner

24th Dec '24

Exactly. Nothing wrong with the business model or market demand and supply dynamics. Look ahead 2-3 years and this will all be forgotten. Yes, management have messed up but IMO this is a great opportunity to capitalise on a low valuation on normalised earnings.

timarr

Hi Rusty

Your crystal ball is working well looking backwards, as usual.

What about pointing it forward for a change? What do you think is going to multibag in future?

yiannos1

Hi BnB,

This is not going to come down very well but I have the impression that the average UK investor does not understand the concept of share buybacks. A brief look at the US market and how buybacks are properly executed (enhancing EPS) will enlighten everyone.

Perhaps the execution of buybacks here in the UK by average CEO’s, managing well below average companies that will not grow faster than the money committed in the buybacks, does not help.

All the best

Certainly not true of the US, where the multibaggers huddle together at the top of the indices, merrily buying back their own shares.

Yes, different rules apply there at the moment. Maybe it's a sign the market there is overblown, maybe it's a sign that we're entering an era where we're finally able to reengineer the world around the microprocessor rather than just using it to improve old processes.

Frankly I have no idea, but I'm quite happy to hitch a lift.

And, of course, different rules around dividend taxation in the US.

Pimlico on Thames

That doesn't excuse Vistry (LON:VTY) consistently buying their shares as the price kept hitting new highs

Hi timarr,

You have actually beat me to that!

No one really cares about the past or anyone’s past trades.

Tell us something about the future , although to be fair to Rusty, he has made the effort to provide 3 US stocks for 2025.

What doesn't?

I agree with your statement, though. The only thing you can say about this is that the directors spent a fair amount of their own money buying shares, so it seems they believed the equity was worth more than the market did.

They were wrong, of course ...

Rusty2

Well l have owned Yu (LON:YU.) for over 2 years.

Future multi baggers, that is a good question. Not sure at the moment, there too many uncertainties. Maybe Games Workshop (LON:GAW) if the Amazon deal really takes off. I have listed my top picks for 2025 on Ed's article today.
I expect a US correction at some time next year. After that l see opportunities in the US market.

What are your multibggers?

BnB

What are your multibaggers?

Acknowledging that we’re all happy to come across one of these at an early stage in its journey, I think it pays to plan like Geoffrey Boycott, rather than reaching for the moon:

“Don’t go out onto the pitch to score 100, aim for 10. When you get there, target 20…”

Look for companies that you can be confident will deliver 10% growth year after year after year. The UK isn’t the best hunting ground but one only has oneself to blame if one ignores better markets. I don’t expect a single share in the BnB fund to double next year, maybe one or two will, if fortune smiles, as it did on AI beneficiaries this year and last. But I have a high level of confidence in the average growth rate of eps across the fund, without trading, absent a recession. Virtually every holding has been compounding at that rate for more than 10 years, and is the hurdle for entering the fund (outside some cyclical plays and a bit of fun money on stuff like Vistry, maybe!)

Fair question.

Currently - Alphabet (NSQ:GOOG, Apple (NSQ:AAPL), James Latham (LON:LTHM), Cerillion (LON:CER), PayPal Holdings (NSQ:PYPL), Warpaint London (LON:W7L), Meta Platforms (NSQ:META), Pearson (LON:PSON).

This year has been as odd as any - my biggest gainers have been CMC Markets (LON:CMCX), Meta Platforms (NSQ:META) , Trustpilot (LON:TRST), Cairn Homes (LON:CRN), Petershill Partners (LON:PHLL), Garmin (NYQ:GRMN) and PayPoint (LON:PAY).

Of those I might have predicted CMC as a big gainer, the rest I wouldn't have. That's normal I find, I have no idea what will happen in future.

I expect next year to be extremely volatile, I'm more concerned with downside protection than making huge gains, but if pushed I'd go for Wise (LON:WISE), Foxtons (LON:FOXT) and Treatt (LON:TET) - the latter mainly because I still can't believe it hasn't received a takeover offer. But frankly there's so much value in the mid and lower reaches of the UK market we're spoiled for choice.

The US is more difficult. I can't help thinking that there's an indexing effect in play here - the more it grows the more money it attracts. That said the US is home to the best companies, the deepest capital reserves and a pro-business culture that we can only admire from afar. Assuming China doesn't invade I'd go for Taiwan Semiconductor Manufacturing Co (NYQ:TSM), Alphabet (NSQ:GOOGL) and Palantir Technologies (NSQ:PLTR) .

So I wouldn't go for any of those, if I were you.

Thanks, l hold a number of those. I lost patience with James Latham (LON:LTHM) held for a number of years. No multibaggers this year, 2 are quite close Serabi Gold (LON:SRB) and Synectics (LON:SNX). Synectics (LON:SNX) was the surprise, only bought in August, has almost doubled.

A lot of ones l had high hopes have gone south like Zotefoams (LON:ZTF) or just treading water. CMC Markets (LON:CMCX) has fallen back quite a bit, like PayPoint (LON:PAY.). I do hold Wise (LON:WISE) but won't buy at this level.

US looks over valued, but there was a bit of a correction, many of the top momentum stocks, are down 10-15%, in the last 2 weeks.
Ed's top trending US folio is down 10%.

Discodave4

Hi Rusty, not aware that Yu (LON:YU.) have ever done a share buyback least of all this year. Could you confirm when was this buyback you mention, thanks.

Yu (LON:YU.) Well that is what it says here: https://uk.marketscreener.com/...

it was mandated at the 2023 AGM.

sparkler

Yiannos, I was a Fund Manager for plenty long enough to understand all the theoretical merits of buybacks and sure, if the company performs consistently (e.g. Next) buybacks can enhance eps. However they are a dangerous weapon when placed in the hands of senior management at many average companies who have short term agendas to prop up ailing share prices and reach share option triggering eps targets.

I have no doubt that the US has many better businesses (especially in the tech sector) that have utilised buybacks successfully, but let's maybe have this debate again when the US market as a whole has emerged from its current 'bubble ' and many share prices are floundering rather than the 'one way bet' environment they currently occupy.

Here the same-still i am (unfortunately!).

This is exactly what I am saying as well.

I will give an example for people to clearly understand.

Oxford Metrics (LON:OMG)

They have announced a £6m buyback!
This company will not make any way near this figure in 2025 so the buyback is just a deceiving attempt by the management to try and keep the price as high as possible before it goes further down. This is not a buyback-this is turning shareholders cash into toilet paper!

Whether this was a buyback or a dividend or a special dividend or anything else you want to name it the outcome is the same. Buyback announced at 60p and the price is 53p now.

I could name another 100+ UK same cases.

There is nothing better than a buyback but it has to be done when a company grows and there are signs that it will keep doing so Hence the US comes into play here.

Merry Christmas to everyone and your loved ones and have all the health in the world.

Lochinver

Vistry boss: Our affordable homes strategy looks like a winner

The Timeshttps://www.thetimes.com › ... › Companies

5 Sept 2024 — The boss of Britain's biggest housebuilder has claimed that his decision to go all-in on building affordable homes could start to look “inspired”

This was the CEO/ Chairman slapping himself on the back in front of the Times’ photographer not long ago.

Personally I find it astonishing that this guy can possibly have any credibility whatsoever remaining when , less than four months later, he has presided over three big profit warnings and the shares have lost almost 60 % of their value.

As for the significant directors’ share purchases made within a day of the first profit warning , which came by all accounts within only two days of the first discovery of accounting/costing/pricing blunders, I dont think I can ever recall a more arrogant and embarrassing move by a CEO who clearly has no idea of what is going on in his business

The idea that the company’s problems over this period of time are anyone’s fault and responsibility other than their own is laughable

The Phoenix

Great to see some of the top table posters having a virtual fireside debate on run up to xmas eve.

Without blowing the proverbial smoke the top 25% of posters on this platform are outstanding and happy to share the knowledge, throw in Wolf's pearls and I can see myself hanging around stocko for a good few years.

Thanks to all the posters on this platform for what you bring to the table hopefully 2025 will be healthy for us all, a kind market and maybe the world at large will see more lasting peace, than the last two years.

As an aside Tim I know you are pretty clued up on UK financial sectors and started a thread on Abrdn (LON:ABDN) a few months back just wondered if you have a top three financial sector picks for 2025 assuming at some point these UK companies see positive inflows again.

abtan

"A brief look at the US market and how buybacks are properly executed (enhancing EPS) will enlighten everyone."

I find that most share buybacks in the US are simply camouflaged management remuneration. I recall one of the fund managers interviewed by Paul Hill (sorry, can't remember his name) said exactly the same thing, which made me more convinced that I wasn't imagining things.

Don't quote me on this as I haven't looked at them in a few years now, but Match (NSQ:MTCH) and Check Point Software Technologies (NSQ:CHKP) come to mind as I write this.

Their cashflows looked excellent on the surface, but when you accounted for their share buybacks as an operating cost/management bonus that did not appear in their P&L, and that those shares would come back into the market eventually (thereby depressing EPS), the picture did not look as rosy as it first appeared.

For completeness:

Check Point Software Technologies (NSQ:CHKP) was an excellent holding for me for many years - buybacks perceptionally look like a good thing here.
The Match (NSQ:MTCH) share price has completely tanked since they started buybacks in 2021.
I feel the same thing happens in the UK too (shares paid out to management, which then come back onto the market), so for me geography doesn't really matter.
I like share buybacks from 'good' companies, irrespective of geographical location, but only if they are cancelled. Otherwise I don't really see the point.

27th Dec '24

Thanks. Believe on 17th May 2024 it issued 254,120 shares following g exercise of options and then bought 234,978 to be held in treasury for future option exercises.

They haven’t as yet, unless I’m mistaken, implemented a pure share buyback program, in other words they haven’t bought shares and cancelled them to reduce the shares in issue and thus increased their eps. Thanks for the feedback.

Daily Stock Market Report (Tue 24 Dec 2024): VTY, WNWD

Companies reporting

Vistry (LON:VTY)

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Megan Boxall

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Vistry boss: Our affordable homes strategy looks like a winner

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