Housing data was rather disappointing. Building permits for the US Single family homes – representing the biggest part of the housing market – showed a slowdown.

Building permits declined by -7.7% last month, and Housing Starts declined by -8.8% last month.

As permits serve as proxy for future construction, it seems that there is a little chance for pick up in housebuilding.

We have been long in and out WOS LN since June 2014. With construction demand on a slowdown,the general macro backdrop deteriorating and WOS exposure to US, we feel it is time to close it.

Closing for +11.3% profit.



Wednesday • 30 September 2015 • 09:58

Yesterday Wolseley’s stock fell 12% on earnings release which were good, however the US growth, or lack thereof, shook the investors’ confidence.

We still see Wolseley as a strong company and we believe that the company still has a great value and potential to grow. The US and UK housing markets are still strong, and we see feel that yesterday’s sell-off was an overreaction.

FY trading profit rose 14% to GBP 854M, EPS rose +18.1% to 230.2p. WOS also announced further share buyback program in the amount of GBP 300M. Company further said that they expect to see LFL revenue growth of 4% in 1H.

During the conference call, Company said that “we think the 12% fall in the stock was an overreaction to what is a slightly more  –  cautious outlook for the group” – confirming our view.

We reiterate our buy call and are happy to add here.

Currently + 6.94%.



Tuesday • 27 November 2014 • 13:57

WOS results were good yesterday and although the stock traded slightly lower this was driven mainly by high expectations going into numbers.

Strong US sales were encouraging as it grew its markets share in an expanding US housing market.

Citi downgraded them today but it feels more of a profit taking move. They themselves say they expect the company to “deliver strong earnings growth”.

Bullish technical momentum with the 50DMA breaking above the 200DMA as the stock trades at its highest level since 2007 – we think it will break higher in 2015.

Stay long.



Tuesday • 25 November 2014 • 11:09

Company has Q1 2015 sales & revenue release tomorrow at 7:00GMT.

We are still bullish US housing, driven by an improving US construction & economic backdrop.

WOS and CRH are our favourite names to play US housing and dollar strength.

Currently +6%, staying long.



Monday • 02 June 2014 • 08:11

WOS has been a serial Underperformer vs peers and has been in an earnings downgrade cycle. We feel that they are at an end.

Recent US housing data in May is supportive as it shows we are recovering from the winter lul and we expect this to accelerate in H2. WOS earns 58% of revenue from North America.

Housing starts unexpected jumped to 13.2% vs 3.2% expected MoM whilst building permits were also better rising 8% vs a modest consensus of 1.3%. The Case Shiller Home price Index also making new highs post recession.

AIA: Architecture Billings Index increased which is a leading indicator and is showing growth ahead. “The unusually severe weather conditions in many parts of the country have obviously held back both design and construction activity,” “ We are hearing reports of projects that had been previously shelved for extended periods of time coming back online as the economy improves.” AIA Chief Economist Kermit Baker, Hon. AIA, PhD.

Average 30 Year Fixed Mortgage Rates decline to 4.08 .  With all the talk of US rates declining and what that says about the overall economy (we think it is more a technical and supply issue than showing a slowing economy) the beneficiary will be potential buyers and the rate declines will encourage them to lock in the low rates. Cheaper to borrow better to buy.

They are also heavily in the renovation market so they don’t just benefit from new builds. All bases covered.

A hidden gem within Wolseley is It is the fastest-growing online home improvement retailer in the US. It is also the 80th largest internet retailer in the United States. In terms of numbers it is not massive on overall revenues. However e-commerce is the future and if you use internet multiples it would have a massive impact on mkt cap. However most analysts don’t even mention it.

The Sector in the US is becoming a lot more bullish about this quarter and the rest of the year.

AWI said 2014 was a turning point for the commercial market at the recent Investor Day due to  improving nonresidential data. Saint-Gobain and USG, expect a rebound in 2Q in both commercial and residential activity. Headwaters and AWI both say the construction recovery is still in the early stages with sales bottoming in 2010 and volume bottoming in 2013.

The NAHB Remodeling Market Index improved  10% YoY for April.

Q3 Interim Management Statement Tuesday 3 June 2014.

We would be buying them here for the US and european H2 construction recovery.