Simon Caufield of SIM Limited presented his thesis on Barratt Redrow (UK: BTRW) at European Investing Summit 2026.
Thesis summary:
Barratt Redrow is the UK’s largest housebuilder, with about £6bn of revenue across three brands: Barratt for first-time buyers, mid-market David Wilson (acquired 2007) and up-market Redrow (acquired 2024). A year after Simon pitched it near £4, the shares trade at 292p, a £4.0bn market cap against £6.2bn of tangible net assets that include £770m of net cash. At 0.65x net tangible book, the stock has fallen from half to a third of his liquidation value.
Simon calls Barratt the best operator in the industry. Scale funds off-site factory production of kitchen and bathroom pods, timber frames and roof cassettes, while three brands and price points widen appeal, speed sales and make larger sites viable. The culture stresses efficiency, return on investment and a strong balance sheet, and land buying is signed off centrally by the CEO or CFO, a guard against overpaying for land. A Competition and Markets Authority study puts the 12 largest UK builders’ average ROCE above 20%.
Simon argues the bearish housing macro is irrelevant. Sites of about 200 plots take four years to sell, so builders hold three to four years of land as inventory, and each lost sale means four fewer plots to buy, releasing “oceans of cash.” Falling prices are offset by a disproportionate drop in land costs, with a three-to-four-year lag. In 2008-2009, Barratt’s volumes fell 29% and EBIT 94%, yet operating cash flow hit £408m, above its market cap, as land prices fell 55%.
Simon sees a hidden, slow-motion shock since 2022 that was worse than the GFC: completions fell 23%, and flat prices against 27% inflation imply a 44% real revenue hit, while EBIT fell 56% and the shares 65%. Land bought cheaply in 2022-2026 should lift margins. In July, under pressure from Phoenix Asset Management, Barratt announced a £386m buyback, about 9% of its market cap, and a buyback-led return policy. New CEO Dean Banks has launched buybacks three times before.
Simon estimates that halting land purchases and building out inventory would release £12bn over three to four years, or 3x the market cap, and puts intrinsic value above 4x the share price. The stock trades at 7x EV/EBIT and 12x earnings, after falling 25% in a year as five-year gilt yields rose 100bp. Risks include the Renters’ Rights Act, distressed selling by Vistry, a CMA price-collusion lawsuit, cladding remediation, build-cost inflation and a payout policy of 50% of earnings.
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European Investing Summit 2026 was held from October 20-23, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
