Christian Olesen of Olesen Value Fund presented his investment thesis on Bellway (UK: BWY) at European Investing Summit 2025.
Thesis Summary
Bellway is a UK-based pure-play homebuilder, the fifth-largest in the country by revenue. The company was founded in 1946 and focuses on single-family homes, typically at a lower mid-range price point. Christian highlights that the company maintains very little exposure (less than 5%) to the London market. This is relevant as UK home prices outside of London do not appear to be meaningfully overvalued, reducing the risk of large land write-downs compared to London-focused peers.
The UK homebuilding industry is highly cyclical, characterized by volatile demand and a slow-adjusting supply. Christian notes that the UK’s complex and slow “planning system” creates high barriers to entry, making it difficult for smaller builders to operate. This uncertainty requires builders to maintain a large pipeline of sites, favoring scaled operators like Bellway. This dynamic has contributed to industry consolidation and a more rational land market post-GFC, with fewer, more disciplined bidders for land.
The opportunity stems from a cyclical downturn in UK housing, driven by interest rate increases since 2022, which has depressed the stock. Christian views Bellway as one of the highest-quality, most conservatively managed builders in the UK, noting it outperformed peers during the GFC. The business possesses a strong, almost unlevered balance sheet (approx. 6% net debt to cap) and generates positive FCF during downturns as inventory (land and work-in-progress) is freed up. This financial strength minimizes tail risks. The company has a long record of compounding book value per share (plus dividends) at a 15.2% CAGR since 1994. Management recently updated its capital allocation framework to include a new £150 million buyback and a greater focus on capital returns.
The shares recently traded at 0.87x P/TBV, which compares favorably to its 22-year historical average multiple of 1.26x P/TBV. Based on an estimated 13% mid-cycle ROE, the stock trades at 6.7x mid-cycle earnings. Assuming a two-year holding period and an exit at the historical 1.26x P/TBV multiple, the investment could generate a 35% annualized return. A more conservative six-year hold under the same assumption would yield a 17% annualized return, offering an attractive risk-reward.
Disclaimer
European Investing Summit 2025 was held from October 28 to November 3, 2025. 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.
Slides
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