Gloom for investors as Countrywide and Foxtons shares hit new lows

Countrywide investors endured another uncomfortable day yesterday as shares sunk to a new low.

However, it was by no means the only housing stock to have a bad share day – housebuilders’ shares also tumbled after Redrow founder Steve Morgan sold a £152.8m stake in the company.

Redrow shares sank 7.8%, while rival housebuilders were also hit.

Morgan’s sale follows Berkeley founder Tony Pidgley’s offloading of a £26.8m stake last week.

Foxtons shares also yesterday hit a new low at 80p.

Countrywide shares yesterday fell by 4p to 129p, giving a market capitalisation of £317m.

The shares were priced at 350p when the company returned to the stock market in 2013.

By contrast, Purplebricks – whose shares fluctuated between 418p and 377p, ending at around 395p – yesterday had a market capitalisation well over three times that of Countrywide at around £1.1bn. But it was the first time for some three months that the shares had ended the day below 400p.

Tom Winnifrith, of ShareProphets, forecast that Purplebricks “is No mates Woodford’s next disaster in waiting” – a reference to fund manager Neil Woodford’s recent poor performance.

Winnifrith said analysts are steadily reducing their expectations of Purplebricks: “There is a very clear trend and I expect it to accelerate. That is partly because the housing market is slowing and that will hit this company harder than traditional estate agents.”

Winnifrith also said that there is “no barrier to entry other than capital and I see a new, even lower cost, player, part of the ‘easy’ stable, is now advertising on the telly”.

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16 Comments

  1. smile please

    I hunk 80p for a foxton share is fantastic value.

    As for CW all the agents thinking hybrid is the way CW have put all their eggs in a basket on this one and looks like it’s not paid off.

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    1. Hillofwad71

      Foxtons-maybe good “value” on the basis the shares are yielding  6.28% on current dividends and they aren’t carrying any debt.

      However the market still values Foxtons at £218m which breaks back to over £3m per leased office Thats quite a bit of goodwill. The other problem is that the senior guys who are  running the show  hold  little equity.How do you reward them Share options?The star players budding Jon Hunts won’t  be content with higher commisson and  a better car when they can  nip next door and join Gazump & Gazunder taking  half the instructions and cherry picked  staff .Given  a big slice of the action

       

      I can  see this slowly drifting down to below 50p when  a MBO  is on the cards backed up by some venture capitalists and the  whole merry dance starts  again .The way of all flesh

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  2. ArthurHouse02

    Pretty sure i am not the only one who has a little chuckle seeing the PB price price fall away. 25% of their value lost in a month….blooming shame that

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  3. hill70

    Sooner or later one of the City’s respected analysts will do a piece of work to carefully calculate the draconian effect that a complete ban on all tenant fees (currently in draft legislative form) will have on these two businesses, and the answer will be super ugly. Add to that the miserable state of the London sales market and the near astonishing revolving management door at Countrywide and one is perhaps left with the overwhelming view that the shareholder pain (unless one is wisely shorting both stocks) is set to continue.

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    1. Philosopher2467

      Well it won’t be Antony Codlin of Jeffries that’s for certain!! He has steadfastly maintained an optimistic (deluded) view of CWD’s woes throughout its demise. I’m minded of ‘Comical Ali’ during the desert storm campaign. He, Codlin and Platt all truly hilarious in their assessments of impending and unequivocal disaster!!!

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    2. WGC

      Hill70 – if you think they havent already done that you are deluded – and if you think that TF’s cant and wont be mitigated for by any smart independent operator and even more so the larger ones then you are way behind the times.

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    3. WGC

      Hill70 – if you think that most havent already done that you are deluded – and if you think that TF’s cant and wont be mitigated for by any smart independent operator and even more so the larger ones then you are way behind the times.

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    4. P-Daddy

      Be aware, don’t focus on the Countrywide part of this story…Pidgley’s Berkeley Homes sale is much BIGGER news and hence why Redrow sank so much. He has called the market wisely in the past and that won’t be missed by the city…for once!

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  4. Philosopher2467

    The PB share price is predicated upon an expectation of performance/market share, that is wholly unachievable. When; and it is when, investors get to know the number of properties that are actually sold utilising the platform, the reality and mathematics will create an appropriate share price relative to the yield. Where that will be is as yet unknown but it will be nowhere near current levels.

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  5. Philosopher2467

    Countrywide remains in complete disarray and it’s getting worse. Nothing, since the arrival of Mrs Platt, has been beneficial to the group and yet she remains??? Go figure! The ousting of Sam Tyrant has been a huge relief to many no doubt although her sycophants remain and continue blindly on perpetuating her legacy. The legacy of failure, incompetence and sheer inability. The share price sinks and as many know, so does the organisation as a whole. Tragic circumstances for the staff reliant on the company for their livelihoods: truly tragic!!

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  6. MartinCo40

    hill70 hits the nail on the head. Its brutally clear that the Government is pressing ahead regardless and the industry’s lobbying and special pleading has fallen on deaf ears. The thing about tenant fees is that the margins are so good, and so the loss of revenue can’t be easily offset with a reduction in costs. The revenue loss will feed straight through to profit reductions, and none of the “silver bullets” – flogging rent protection insurance, deposit replacement insurance, utility switching back-handers come close to compensating.

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  7. AgentV

    Said it before……Countrywide needs some experienced modern thinking ‘coalface’ independent agents at its helm to turn it around.

    It is constantly behind the curve with what it is doing, yet with the resources it can draw upon, it should be able to be one of the leaders of the game!

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    1. smile please

      Not sure about that V,

       

      CW is a beast of an animal, it cannot do what independents do, they are believe it or not trying to replicate it at this very moment.

      The issue is targets and rollout.

      You cannot have service at the heart of your organisation when in truth its all about targets, they need the targets and procedures in place because the model works on taking the worse neg with the right attitude and if they follow the procedure to the letter of the law they will hit their targets. This however comes at the expense of service and also stifles any entrepreneurial flair or the ability to ‘see a deal’

      CW have always had some really good ideas but rolling it out to circa 1,200 branches has always been the issue as yet again targets get in the way of the roll out going as planned.

      Give you a prime example, At the moment CW are gearing up for their annual ‘Big Sale’ idea is over a weekend they reduce stock through price guides, they open a sunday and have focused call out to gain new instructions, reductions and fill up the two days with back to back viewings.

      In theory is a good idea, but i bet at least 75% do not display the material until a day or 2 before as it never arrives when it should, no real effort is made to make it a success as they still have to hit their daily targets, The negs resent working on a Sunday.

       

      The board and upper management are focused on service and a retail option of streamlining everything. But they have not got a clue that agency is about true sales – Its not about giving the public an option its about making them do something they do not want to do.

      For example, They have three agents out, 1 is favoured and its not CW – The CW employee needs to convince the seller to go with them. Sadly a hand delivered letter and a naff ipad presentation does not cut it, they need to really sell – They do not have the time or experiance needed.

      They have zero admin support, they are on almost daily conference calls reporting figures, Its all about getting the figures in which leaves no real time for service OR sales.

      I am wittering on now but another example of how independents work to CW – Yesterday a branch manager in one of my offices spent 2 hours with an 85 year old widow, she was crying as she did not want to leave the house after 20 years. My chap did not even try to get her to sign the agreement. Instead told her to make sure its the right choice and will keep in contact when she is ready.

      Brilliant service from him and i am so proud, If the manager had relayed that story in a morning meeting at CW he would have been strung up. That is why Corporates cannot (and should not) be run as independents.

      They need to go back to their roots.

       

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      1. AgentV

        Ok Smile please……it’s even worse than I thought if service, rather than targets, is not at the heart of their operation!

        Whilst targets might have worked in the past, I truly believe above all else that service is what will win the modern day battles.

        They are clearly in a very, very bad place.

         

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  8. GeoW10

    Agent V,

    I could not agree more. I have it on good authority they were given the opportunity to buy a”USP game changer operation” which would not just hugely and positively impact on them, but potentially across the property sales sector.

    Apparently they said they were too busy restructuring to even look at it.

    I suppose it depends on their definition of “restructuring” !!! 

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  9. Philosopher2467

    Is that ‘restructure’ or ‘destructure’? Either way; it’s disaster.

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