Future potential?

Just to back up my recent writings and possibly put in perspective all that is going on with TW at present.

Fistly there was the fall from 500p to 4.5p. Lots of fear here. Just about everyone ran for the exit most of all AXA who sold this one down from 10p to 4.5p. If not for AXA I believe we would have stayed around 10p.

Assets as of June 2008 4bn
Loans 1.9bn
TOTAL ASSETS WITHOUT DEBT 2.1bn
Cueent Mkt cap 226.4m
Just over 1bn shares in issue. Roughly mkt cap rises by 10m per 1p rise in share price.

Normally the mkt cap should be about equal to the assets 2.1bn would be a share price of 200p. Add to that the goodwill/trade/profits etc. However as we all know the assets value is falling almost daily. To allow for this I shall reduce assets by 25% Which should allow for the year from last Jun to Jun 2009. It could be more it could be less so I am trying to take a middle view here.

If assets reduced by 25% = 1bn Then share Price reduced to 100p on assets alone. Current SP 21p

Personally I've been surprised that a Venture Capital company has not come along and snapped up TW on the cheap because the assets far outweigh any debt here.

The fear has been due mostly to breaching of banking covenants and now the fear has been not achieving agreements with the banks. Also there was fear of a debt for equity swap wiping out shareholders These were the main reason for the fall. Current trading did play a part for a fall to 100p but not for any fall below that really except perhaps for future fall in value of assets.

News that the banks had extended the deadline saw the SP begin to rise above trend. Then we had the tax rebate news 90m coming our way worth 9p a share. Over the weekend we have the news that agreement has been reached with the banks just needs to be officially signed off.

ON this news the SP should rise to around 100p given the asset value. However SP's never do as planned so I think it may hit 80p or if it rises to 100p it may overshoot to say 110p.

The next issue is going to be how trade is how large losses will be etc. If the market believes that the worst is going to be this year but next year will see recovery then we should be looking for the future in 18 months time. Stability will be important here. So I'm going to stick my neck out here and say that it may stabilise in a years time. If the market thinks this then 100p should be sustainable.

Lots of variables in the mix here which can alter everything. Management may manage to sell assets close to book value and pay off debt quicker which will help or they may achieve low prices but within my calculations. Maybe some less than my valuation. So news this year on asset disposals or any losses will make a big difference to the SP.

For now though TW is one of the biggest bargains on the market. The debt is important as an issue but the assets are really what matter here. If they were about equal to the debt then you could justify 4p etc but that's not the case. Assets far outweigh the debt and the SP.

More factors in our favour are shorters. Currently we believe that 12% of shares are on loan for shorting. At some point they will have to buy back into the market to close out. That point surely must come shortly? So any sudden rise could lead to a short squeeze. We could see a steep climb at this point.

Then there is the ftse 250 entry. This will be updated in March. TW needs to be about 30p to re-enter. Any rise above this will see funds begin to buy ahead of any re-entry. So solid support should arrive somewhere above 30p.

TW has its risks for sure but the future is now a lot more secure than it was recently. The current SP though is far too low and currently provides one of the best potentials in the market for private investors to bag a good profit.

Great synopsis.

Rose tinted spectacles imo. "The debt is important as an issue but the assets are really what matters here". Land and buildings do not pay the wages and in the present climate the banks not likely to be generous for their ongoing support. I hope you are right, but personally I would wait for the detail of the ongoing financing.

Large trades after the close i.e. buy 6,000,000 @ 26.24 looks good for tomorrow.

When are they expected to announce the next update ..?

Will TW be in the FTSE250 with the next shuffle this week?

Taylor Wimpey are in FTSE 250

http://www.ftse.com/tech_notices/2009/Q1/FTSE_UK_Review.xls

I've just checked the doc and it lists TW as being included in the FTSE 250 and FTSE 350. Any ides which one it is?

Is this a good time to buy TW? are they paying any dividends at the moment?

http://uk.reuters.com/article/hotStocksNews/idUKL556751720090505

Shareholders have the op to buy "rights" at 25p - somewhat lower than Mkt-price, ( but some manipulation may account) - so the Question is - Should I av. Dn?

Mosty were bought at 1, in the (stupid )belief it couldn't get worse . . . . and so far I've not been convinced it is not getting lower, BUT maybe this is the turning pt. Shorters may be about to lick their wounds - and there is a small amount of confidence in the Housing Market ( v. small).
-Although B2L may add further empty properties, yet.

EDIT (17May09), I note that two Directors have bought shares in the last week - under 4k worth - Oh-er - NOT a good sign . . . maybe leave my money safe, eh?

Any views?