MRP   McAlinden Research Partners  | THEME TRACKER 

Sticking with UK Stickbuilders

Launched: May 5, 2015, Updated July 17, 2015

If the housing market is getting hot in the US   as today's strong housing starts and permits attest it's blistering in the UK. House prices are soaring   especially around London   while mortgages are the cheapest on record. As today's Daily Intelligence Briefing details, housing construction is running around 40% below what is needed, leaving the stock of houses for sale at the lowest in decades.

MRP recommended a long position on UK homebuilders on May 5, 2015, just before the parliamentary elections: "If there is one thing that all the politicians can agree on, it is that the UK needs more housing." The Conservatives won with an unexpected majority and are now following through with a slew of policies to further promote housing construction, including a speedier approval process by local authorities. 

As a group, UK homebuilders have already rallied sharply both in absolute terms (first chart on top) and against the broader UK stock market (the chart just below that). Valuations have moved up as price gains outpace earnings estimates (the third chart in the top row). Rather than boost their earnings forecasts, however, the analysts have been reducing their aggregate ratings on the stocks (the third chart in the bottom row). Given the powerful fundamental backdrop of pent-up demand, cheap financing, and ever more government policies designed to boost home ownership, MRP affirms the recommendation for a long position on the UK homebuilders.

Last updated July 17, 2015

MRP's roster of Active Themes
MRP's latest monitors: MacroSector and Country
Joe McAlinden's current Market Viewpoint

Warren Hatch, PhD, CFA
Portfolio Management and Global Investment Strategy
McAlinden Research Partners

Follow me on Twitter
Follow MRP on Twitter

The information provided in this presentation (the "Report") is not to be reproduced or distributed to any other persons. This Report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, sources for public data include Bloomberg, Trading Economics, and FRED (Federal Reserve Bank of St. Louis Economic Data). McAlinden Research publishes daily, weekly, and other periodic reports on the economy and the markets. Catalpa Capital Advisors, LLC (CCA) is a Registered Investment Advisor which manages client accounts. References to specific securities, asset classes and financial markets discussed herein by McAlinden Research are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Securities discussed in the Report may or may not be held in accounts managed by CCA and/or its associated persons, and changes in those accounts may be made at any time without notice to its subscribers. Neither McAlinden Research nor CCA is under an obligation to inform research recipients if any accounts managed by CCA subsequently purchase or sell securities discussed by McAlinden Research and they do not anticipate providing such information.

230 Park Avenue | New York, NY 10169 | (212) 231-8701 | Inquiries: