Short sellers – who sell when share prices are high and buy back when they drop – look to be targeting Purplebricks.
Two short sellers, named on the link below, have recently increased their stakes in Purplebricks, whose share price has dropped to around £1.96 – below the £2 mark for the first time in almost two years.
https://shorttracker.co.uk/company/GB00BYV2MV74/
The new share price also represents a 45% drop in value for Axel Springer on its £125m investment at £3.60 per share in March.
That works out to a loss of around £56m in some seven months.
It is also reported that Foxtons – whose shares are today bumping along the bottom at around 47p – has also had an increase in short sellers.
FOXTONS GROUP PLC ORDINARY SHARES (OTCMKTS:FTXGF) Sellers Rose Their Shorts By 104.82%
I wonder what the Tall sellers done 😉
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I am surprised in the PC world in which we now live you can still refer to them as short sellers!
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What are we being told and by who?
The trading performance of Purplebrick and it’s failure to achieve any of its aims, promises or predictions means that in my opinion dust has more tangible value as an investment.
Is this story one designed to reassure other investors that if the shorters are buying, the stock must have reached a great, not to be missed price? If that’s the case I’m not buying it.
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>Is this story one designed to reassure other investors that if the shorters are buying, the stock must have reached a great, not to be missed price?
No,
If somebody is selling short then they expect the price to drop.
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So how have they “recently increased their stakes in Purplebricks” by selling short? how is it possible to inrease a stake by getting rid of it?
I deal in physical tangible things, things I can touch and influence so the whole gambling on stocks and shares is a nonsense to me and I am happy to admit my ignorance.
Income investmests I understand but these ponzi bubbles are a mystery to me.
If I tried to sell investment that offered all vendors a £2500 refund whenever an Agent sold their home I would get massive take up from vendors and agents, so much so I wouldn’t need an advert on the telly. I cannot conceive anyone being so thick as to invest in that as an investment opportunity, but that is what is happening. Investment funded discounts for selling your home.
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The article is indeed unclear but if you know how shorting works you can work out the message it’s trying to portray.
>I deal in physical tangible things, things I can touch and influence so the whole gambling on stocks and shares is a nonsense to me and I am happy to admit my ignorance.
As for not understanding the stock market try thinking of it as just supply and demand for a share of a company. In the old days a share was tangible because you had a share certificate.
For every buyer there is a seller.
Shorts are a bit more complicated. Just think of it as selling something you don’t own but can buy later to satisfy the deal.
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Shorts is a gamble on the whole thing imploding?
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In a word, yes.
—
Taking a long position is spending your money investing in something, expecting it go up in value. Invest in Apple in the 80s, sell in the 2000s. Make mega bucks.
Taking a short position is the opposite. Buying a stake you expect to decrease in value.
You buy 10% of the stock in Purplebricks for $100. Once Purplebricks’ value increases beyond $1000, you have made money on your investment, and can sell at any point with the company worth $1000+ for a profit.
That’s playing the long game. Easy.
—
The short game is tougher to describe.
You sell the shares before buying them. And you must buy back the same shares in the future.
So…
You sell 10% of Purplebricks’s stock to your broker.
But you have no shares…
So… The broker finds some shares and sells them at market value, as you instructed.
Their market price is $100.
The $100 goes into your account.
You now owe your broker those shares – you must buy them back.
Time passes…
A few weeks later, the stock falls! Turns out, Purplebricks has never sold a property and the stock value has plummeted to just $50, at half the value you sold it.
Turns out, you were right to short the stock.
You call your broker.
“I want to close my short position on Purplebricks.”
The broker goes into your account, sees the $100, and buys back Purplebricks shares at $50 each.
He takes the shares he was owed (which were worth $100, but are now worth $50).
And the rest of the cash goes to you.
So you sold the shares for $100, but bought them back at $50.
Congratulations. You shorted Purplebricks and made $50 on the back of their failures.
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Hi Cyberduck
A few weeks ago i asked a question which you misunderstood, you invited me back to clarify another day. I have done so a number of times but i assume you keep missing them. You say you run a proxy to measure the number of new instructions for PB do you also measure how many sell, how many complete, how many reduce, how many withdraw without selling etc ?
Thanks
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>You say you run a proxy to measure the number of new instructions for PB do you also measure how many sell, how many complete, how many reduce, how many withdraw without selling etc ?
AgentQ73,
I have used a proxy to see how many sell but this was a while back and a ‘one off’ approximation using a very small sample (about 400 properties from memory). I was mainly interested in the percentage that sold by PurpleBricks but I’m pretty sure if I went back and checked that data I would also be able to have an estimate for those no longer on the market and how many sold with another agent. Reductions is another matter because my data was a snapshot of time, so properties may already have been reduced prior to that point in time.
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Thanks for the response, do you still monitor new instructions ?
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Yes.
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Yet you dont monitor how many they sell ? Why is that ?
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Around £1.50 for the whole firm is nearer the price surely
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Remind me never to give Axel Springer any money to invest, one born every minute!
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Well Axel who are serious players have probably got something in mind for Bricks.Should imagine that they are not overly impressed with the current mangement and Sports mad Bruce seems to have his eyes on other balls.
General feeling management filled with “Mates of the Bruces”more interested in cashing in options than supervising their LPE’s. Schoolboy errors in Listings,hazy photos daily complaints on social media and poor communication.failed appointments ,massive staff churn etc
Yawning gap between selling a semi off Startford Road to playing Alexander the Great
Can’t imagine that sits very well with their German friends who have a seat on the Board
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Axel are probably quite happy for the short sellers to starve the Bruce brothers into submission.
It isn’t in their interest to do anything with the current management until the wheels start to come off, then they can ride to the rescue and dictate terms.
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I told you lot nearly a year ago… sell Purple bricks and buy OTM shares
I wont repeat the comments, but I was right.
PB is not a business worth tens of millions, it simply doesn’t have the earning potential.
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Given OTM share price is dropping not sure that is the best advice.
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Robert ,
The post has been misinterpreted. The 2 funds have increased their short position not closed it . Upwards direction of green arrow.
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It is all so confusing, is it against the law for the investment industry to use normal language?
Upwards dirction of green arrow? Yes! My dog walks around the bay tree! Yours?
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More woes to follow from down under for #PURP in the next few weeks.
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Just in time for another Christmas party 😉
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You’re 100% right Chris, but what makes you so sure?
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JV
“Great Southern Land, burned you black”
Weren’t you saying on LSE that the LPE’s in OZ are hightailing out and due to lack of interest Bricks are shoehornig the viewing assistants into the vacant territories in for cover?
All starting to sound very much like the global roll out is a step too far and beyond their skillsets, Maybe Kenny would be better served playing “keepy-up “at Larne
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The share price has fallen and continues to fall because the inflated valuation of the company cannot be justified. They are still losing money ( The investors not their own!) , they are expanding into areas that they know nothing about and the market is turning. It looks like the perfect storm to me , with no easy way out for the brothers once it starts to properly unwind!! The patience of investors waiting for any form of dividend is likely to be not rewarded…… Never mind you have the capital growth of the stock to fall back on………………oh wait!!!!!!!
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“Faguzzi, fugazzi, it’s a whazzie, it’s a whoozie.. it’s a.. fairy dust. It doesn’t exist. It’s never landed. It’s no matter, it’s not on the elemental chart.”
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