6th Jul 2026 13:36
(Alliance News) - Barratt Redrow PLC on Monday said it continues to keep its capital allocation policy under review after analysis by shareholder Phoenix Asset Management Partners painted a scenario under which the firm could be worth five times as much as its current share price.
In a brief statement, a spokesperson for Leicestershire, England-based housebuilder Barratt Redrow told Alliance News that the board is committed to acting in the best interests of the company and its stakeholders, including delivering long-term value for shareholders.
"As the board has demonstrated in recent years, it frequently evolves its capital allocation policy where appropriate to reflect changing market conditions. It continues to keep the policy under review in light of the current environment and welcomes ongoing dialogue with all shareholders," the statement continued.
In a 430-page report building on a recent presentation, Phoenix claimed Barratt Redrow was "fundamentally misunderstood and misvalued," and reiterated the case for the company to adopt an "aggressive" share buyback programme.
A buyback would not just "take advantage" of the "current undervaluation" but utilise the sector's "perennial" undervaluation to create long-term value for shareholders, Phoenix said.
Capital available for buybacks should not be constrained by reference to accounting earnings, Phoenix, which first invested in the firm back in 1998, said.
Gary Channon, chief investment officer of Phoenix, had previously made the case for Barratt Redrow to ramp up its buyback programme at the London Value Investor Conference.
Phoenix said an undersupplied market means developers can always sell their property meaning UK housebuilding businesses can be modelled with the knowledge that "cash will keep coming in", especially in a downturn.
Phoenix said housebuilding financial statements are "confusing, often misleading and at a minimum opaque", with returns "hard to see", giving the impression of a "much lower quality business."
Phoenix said Barratt Redrow is "absurdly cheap", trading at a 40% discount to tangible net assets, a 67% discount to liquidation value and a 80% discount to estimated intrinsic value per share.
The shareholder thinks Barratt can have a "material" and "value-creating" buyback programme.
At "just" GBP500 million a year, Phoenix says Barratt Redrow "never even gets geared".
If shares trade at book value, then over five years shares rise to 782 pence, 3.0 time the current price, Phoenix calculates. Continue over 10 years and the price ends up at 1,609p, it adds.
On Monday, Barratt Redrow traded up 0.8% at 283.60p in London.
Even at a "modest level of gearing" that does not "imperil the business" Phoenix sees a scenario where the share price reaches 1,021p over the next five years.
By Jeremy Cutler, Alliance News reporter
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