In this episode of Yet Another Value Podcast, host Andrew Walker welcomes back Adam Patinkin of David Capital for his third appearance—this time for a much-requested update on British homebuilder and regeneration specialist Vistry (RY). Adam originally laid out a bold thesis in early 2024 that Vistry’s transition to a pure-play partnerships business could mirror the NVR success story. But after a string of profit warnings and a collapsing share price, listeners wanted answers. Adam walks through what went wrong, why the company’s current valuation doesn’t match its fundamentals, and why David Capital doubled its position. The discussion probes management credibility, capital allocation, and how UK government policy is now aligning with Vistry’s strategy.______________________________________________________________________[00:00:00] Intro and sponsor message for upcoming AI & finance webinar [00:00:40] Andrew welcomes Adam Patinkin for a follow-up discussion on Vistry [00:01:29] Context and disclaimer before discussing UK-listed stock Vistry [00:02:18] Adam gives a quick overview and update on Vistry's journey in 2024 [00:02:58] Explanation of David Capital doubling their position in Vistry [00:03:59] The original investment thesis in Vistry: value plus catalyst approach [00:04:51] Breakdown of Vistry’s two segments: partnerships vs. housebuilding [00:06:58] Thesis: Transition to a pure-play partnerships business [00:08:34] Discussion on profit warnings and their impact on investor sentiment [00:10:13] Details of Vistry’s missteps and housebuilding write-downs [00:12:29] Analysis of the market's reaction to one-time losses [00:15:29] Third warning due to delayed land sales and management's response [00:16:34] Clarification of misunderstandings around ongoing losses [00:17:57] Adam frames the four-part thesis and which parts still hold [00:19:09] Reaffirmation of medium-term targets for partnerships [00:20:54] Discussion on pace of housebuilding exit and management's actions [00:23:34] Ongoing share buybacks and potential for expansion [00:24:37] Breakdown of customer segments in the partnerships business [00:26:19] UK government's budget and policy impact on affordable housing [00:31:14] Overview of supportive labor government housing initiatives [00:35:05] Cash flow expectations from capital employed reduction [00:36:29] Valuation commentary and mispricing opportunities [00:37:54] Assessment of credibility and investment upside [00:41:51] Discussion on net debt figures and transparency [00:43:40] Capital structure comparisons with other builders [00:46:21] Considerations around lower buybacks vs. future flexibility [00:49:10] Why Vistry still represents compelling value despite concerns [00:52:08] Differentiating Vistry from UK housebuilder peers [00:55:05] Clarification of the NAV not falling due to deferred land sales [00:57:21] Framing margin of safety by cash flows rather than asset base [00:59:54] Summary of company positioning, tailwinds, and outlook Links:Daloopa Webinar: daloopa.com/yavwebinarDavid Capital: https://davidpartners.com/See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer
