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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

The PIN Fund Outperforms in the First Quarter of 2017

Peter Hemple reviews the performance of our fictional PIN property fund in Q1

The Property Investor News Fund, consisting of 10 listed property-related companies, had a great start to the year, returning three times more than the FTSE 100, which has also been performing very well of late, closing at an all-time high of 7,430 on the 20th of March this year.

Regular readers may recall our article on historic ratios in the February issue of the magazine, which highlighted the fact that the FTSE 100 has been the worst performing asset class over the past 20 years (compared to both UK & London property, gold and oil), but there was plenty of value to be had if the right shares were bought. Using historic ratios as a guide, the article estimated that the FTSE 100 was almost 16% undervalued and that it should be around 8,200. It appears to be on that trajectory at the moment.

Within our Fund, the housebuilder shares rebounded considerably, with Taylor Wimpey soaring by 26% and Barratt, Persimmon and Berkeley Group all rising by 18%, while the FTSE 100 increased by 2.6% during the same three month period.

Taylor Wimpey is on track to meet its 2017/18 targets and in 2016 it achieved profits before tax (PBT) of £733.4m. It has a short term landbank in excess of 76,000 plots.

Jefferies Building and Residential Services says of the firm: ‘Taylor Wimpey remains our top pick. In our view, when it comes to UK housebuilders land is king and Taylor Wimpey not only holds all four kings it also holds the majority of the court cards, a hand even better than a full house. Almost two thirds of the short term land bank was strategically sourced and the average plot cost is 15.4% of the selling price. The short term landbank is supported by a strategic pipeline of some 108,000 plots. In our view and bearing in mind
UK housebuilding was, is, and will continue to be a cyclical industry Taylor Wimpey’s landbank provides it more flexibility than any other housebuilder we follow to manage the cyclical twists and turns.’

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