Vistry Group: UK Homebuilder With Attractive Partnerships Model

Mike Kruger of MPK Partners presented his in-depth investment thesis on Vistry Group (UK: VTY) at Best Ideas 2025.

Thesis summary:

According to Mike, it easy to understand why Vistry Group is cheap: UK homebuilders are in a bear market, the partnerships business model not well understood, and the company has had three profit warnings in the last three months. Yet, despite recent cost overruns on the legacy homebuilding operations that are in runoff, management’s track record is otherwise great.

Vistry is a high-quality business — much less cyclical than a traditional homebuilder, much better returns on capital (ROIC should >= 28% in the next couple of years). Government policy remains very supportive.

Vistry shares are cheap: 2.7x EV to management’s target of GBP 800 million EBIT (2028E?); 84% price to tangible book value, even though lower-quality traditional homebuilders trade between 1-2x tangible book. For the recent price to make sense, one would have to believe that not only has the CEO suddenly lost his touch (at age 60), but that the mixed-tenure partnerships model is fundamentally broken. Neither is likely to be true.

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About the instructor:

Mike Kruger’s first investment experience was watching his shares of Berkshire Hathaway get cut in half during the tech-mania of the late 1990’s. But he didn’t panic, and today manages a global focused value portfolio of equities and distressed debt in New York City. He previously worked as a former equity and credit analyst at Promethean Asset Management LLC in NYC, and prior to that as a high-yield credit analyst at Liberty Mutual in Boston. He holds a Bachelor’s degree from the College of Arts and Sciences at Cornell University.