Purplebricks could be the next investment to go sour for embattled fund manager Neil Woodford.
The forecast has come from analyst Lucian Miers.
Writing on the shareprophets website, he declares a “short position” in one of the shares mentioned in his article.
Miers says that Woodford’s judgement “seems to have deserted him”.
Due diligence is, says Miers, “likely to be far more thorough when investing in quoted companies than in unquoted ones”.
He goes on: “Purplebricks, where Woodford invested pre-flotation, springs to mind where clearly any due diligence has been rudimentary to put it mildly.”
Miers concludes: “Returning to Purplebricks, human nature is such that as a self-employed agent who is paid a fee the day after you have agreed to try and sell someone’s house, your incentive to do anything other than slap it on Rightmove has clearly got to be a great deal less than that of a rival estate agent who doesn’t get a dime until they have flogged the property.
“This is the principal reason that the business model is never going to stack up, and why I believe Purplebricks is the next shoe [sic] to drop in the crumbling Woodford empire.”
How marvellous to see the investment world waking up to this undeniable fact.
The real disruption has been to the fairest and most transparent customer offering ever.
No Sale, No Fee
Cue Cyberduck
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No ducky today I guess – this’ll be keeping him busy as a busy thing on Busy Day.
I thought I would find him revisiting his post on the Shares Forum asking if anyone knew a good UK-based company to short his shares through – but instead I spotted that as recently as Thursday he was stating
“And, no, I don’t hold PB shares.”
Not the first time I’ve read that, mind – he flits in and out so often he should be called ‘Butterfly46‘…
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Maybe that’s the case and I am no fan of Bricks . However slightly unfair criticism of Woodford .He was right there investing at the start of Bricks pre-flotation and seen his initial investment explode with a successful placing too way in excess of the flotation price despite bricks not turning a penny profit .
He had the foresight to see that Bricks would disrupt the market and find traction with investors .He did his job Trees dont grow to heaven
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If Woodward had the nouse to invest in PB pre-floatation, then he’s done his job frankly! However, if he’s going to continue his good work, he’d be advising his clients to sell. The cracks are starting to show and all sectors are starting to see it’s a flawed business and customer model? This has ‘Dot Com’ written all it……..
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I agree he has done his job The fact that they raised a big chunk of money at a price well above flotation is testament to that Posters here can slag off bricks to their heart’s content and I will probably be singing with them but Woodford I think is being criticised unfairly
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his role explained http://elitebusinessmagazine.co.uk/finance/item/friends-in-high-places-with-a-high-profile-investor
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Thank you Robert – excellent link and a clear explanation of how these things work!
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Sheep and ducks are both predated upon by wolves.
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Woodford would only need to sell a handful of Bricks shares to get his initial investment back. He could announce this with a triple lock on the remainder for 3 years and this might only cause a medium sized drop in the share price but doubtful it would plummet to below the flotation price of 100p
Whether Bricks profits will ever justify anywhere near the current SP is another matter
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An interesting comment was posted on yesterday’s article that PLC companies could be misleading the city and new customers by using Trustpilot to silence their p**sed off customers. Despite all the stats on its performance, purple bricks has failed to confirm how many properties it has sold. It’s accounts only show a profit of £200,000. In my opinion, a close eye has to be kept on who is selling off shares in the firm
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And indeed where any trading profits might end up. I don’t like the idea that those who have profited from their role in industry fee erosion might have large wads of cash to invest in a marketing platform to traditional agency that might be IPOing anytime soon.
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Purplebricks share price will remain high whilst the ‘potential’ of the American operation exists. Their success or failure there will determine the future. They have done well in the U.K., but with more and more High Street agents giving customers an online alternative, the USP has been diluted and the disruptors may well be disrupted by the so called dinosaurs. It’s worth noting that not all dinosaurs became extinct, many evolved.
The established High Street can offer a choice of service levels and fully inform a customer of the implications of these different services. Online agents don’t have that luxury and if they try to match it, they undermine their entire ethos.
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BINGO! A game where the numbers have to match up in order to win a prize. No prizes for 2nd place.
EBITDA – or more commonly referred to as Bull$hit earnings. A game where you adjust figures to suit your needs better.
Anyone using EBITDA is either trying to con you or conning themselves. Cyber duck & Woodford have a vested interest as shareholders / investors; so you do the maths.
PB could reframe EBITDA – “Earnings before I try do anything”. It suits.
http://www.propertyindustryeye.com/shares-in-purplebricks-storm-up-after-online-firm-reports-its-first-profit/
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So could it be possible for Woodford and Purplebricks to use creative accountancy to show what should be a loss into a small profit, knowing that this would increase share value and their investment? It would be interesting to know who sold shares around or after these results got released.
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Just a reminder to my previous definition of this wondrous acronym for what some may label creative book-keeping:
‘EBITDA accountancy? You know – gross income less the cost of the stamp needed to post the accounts to Companies House…’
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Anyone know where Cyberduck is hiding? Its most unusual for him not to have chipped in with the usual purplepropaganda by now….. cracks appearing…..
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Maybe he’s being a LPE about 300 miles from where he lives and can’t get to a computer right now…
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Such a volatile stock that those shorting or going long can make money if they get their timing right more often than not.
People should take no notice of PeeBee. He accused me of lying when I said I didn’t own the shares so I sent him a copy of my trading statement. Since then I’ve bought once and sold once, the last time being in May. He doesn’t have a clue but likes to speculate.
I will keep monitoring the data though and wish the company all the best because I think they will save the public a lot of money. I don’t buy into the idea that you will get better service with a traditional Agent and think the whole process of choosing an Agent is pot luck with a high probability that the traditional Agent you choose will be useless.
I’m not sure this Miers guy knows very much about PurpleBricks. What most of these shorters do is start trying to get investors nervous so they start selling and the share price drops.
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“People should take no notice of PeeBee”
People can make their own minds up on that point, I am sure.
“He accused me of lying when I said I didn’t own the shares so I sent him a copy of my trading statement.”
Actually that is fundamentally incorrect. For a start it was the other way round.
On 10 March you stated to me that you had sold your shares in the company. Later in that month – here on EYE – you stated that you were a shareholder in the company, to which I posted
“Thought you sold your shares – bought them back on the cheap on Monday?”
A week later you brought it up again My words to you were that someone giving such conflicting information would not comprehend the meaning of the word ‘misleading’.
You did, in fact, send a heavily censored screenshot of one page of a trading statement. It showed a number of transactions – both ‘sell’ and buy’ – but the ‘Current Holdings” section was blacked out, and the date range did not include the original date of 10/3 when you stated you owned none.
In essence – what you sent added zero weight to your argument – but then I had not asked for ‘proof’ of anything.
“Since then I’ve bought once and sold once, the last time being in May.”
Quote from the lse.co.uk ‘Share Chat’ forum, 26 July:
“Are there any other companies who you can sell PB short with? UK based ones preferably.”
Just sayin’, Ducky – not calling you a fibber or anything – but you’re asking for pointers to something you’ve stated above you wouldn’t have needed since May…
…and I REALLY DON’T want to see your latest statement!
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‘Because I think they will save the public a lot of money’ Boom! And in that one sentence it shows your ignorance. I am an E/A and i have lost two sales (chains) in the last 3 months because of P/B’s useless sales chasing, both times my vendors have placed their properties back on the market because we could not get the sales progression required. (in both cases the buyers were so p**sed off they disinstructed P/B (i got one of the instructions)) In this market, the easy part is selling, the hard part is getting the sale to exchange. This is why
PB won’t inform us of their sales to completion ratio.
My opinion, every time an Agent opens, they have a honeymoon period, down my way PB name is already turning bad, more and more I’m having the public come into my office moaning about them… I’m not worried about them at all, word of mouth is my friend.
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>PB won’t inform us of their sales to completion ratio.
StanLaurel35,
And you won’t inform us either 🙂
Or will you? What’s your Agency name and what’s your completion ratio?
I have a pretty good idea what PB’s ratio is because I’ve looked at a sample of listings. So it is you that speaks out of ignorance. My opinion, based on my research, is that they save a lot of money for homeowners.
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To be fair cyberduck, they only save money for those homeowners whose properties they actually sell and get through to completion, otherwise they cost them a lot of money against the traditional no sale no fee model. And even then they are only actually saving them money if they get the maximum possible sale price for those homeowners otherwise again they are potentially costing them a lot more than they are saving them.
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Cyberduck.
For the month of August – 32 New instructions – 20 Sales = 62.5%
Purplebricks – 5 new instructions – 1 sale = 20%
If you give me your e-mail address I will send you the Rightmove data.
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