Purplebricks Share Discussion Threads

[clocktower] 02/2/2018 12:14

PURP may have a fight on its hands with Jefferies but the more it fights the more it might expose itself and leave questions unanswered that can be exploited by one and all whom see the risk/reward falling favourably on the short side. Target the bottom of the dart board.

[thirty fifty twenty] 02/2/2018 12:11

Andy

i agree with you re the trend in some share IG don't let you short bet on...
i was thinking of creating a wee spreadsheet of the companies it applies to
what do you think?

PURP would certainly be the biggest!!!

[thirty fifty twenty] 02/2/2018 12:10

some good posts above - many thanks.

i agree that the issue is the contradiction between
their revenue recognition,
and their 'people's champion' advertising and corporate mantra.

if they work for you until your house is sold,
i don't see how they can book the revenue all up front.
i presume they paid the local agent, RMV, head office costs + marketing cost up front

i have tried to read the revenue recognition policy
but it seems there is no annual report on their website????
maybe i'm being stupid but all links go to a PDF of the RNS
any else been able to find their annual report?

poor form if the website is that opague
and hestitant to call it deliberate????

All IMHO, DYOR + BoL
PURP is in my top5 (short)

[edmondj] 02/2/2018 11:59

The most pertinent aspect of the Jeffries note is tucked away in small print within one of various dense paragraphs at the very end:

"Jefferies, its associates or affiliates, and its respective officers, directors,
and employees may have long or short positions in, or may buy or sell any of the securities, derivative instruments or other investments mentioned or
described herein, either as agent or as principal for their own account."

No position either way myself, though I'm surprised that while modern compliance insists e.g. all media writers disclose any such, brokers get away with this vague disclaimer.

The point is that properly, research should strive for balance and objectivity, but when it comes from a trading firm with such a disclaimer, you wonder.

[ltcm1] 02/2/2018 11:49

I agree bob, if you contract for a 10 month listing then the terms appear clear. Even traditional estate agents don't offer an open ended service.

What I can't get my head around is the customer contracts with Purplebricks but the valuation is done by a third party (agent does not work for Purp). If the agent is at fault, does the customer take action against Purp or the agent? An agent who may have moved on and liquidated his company!

[minerve] 02/2/2018 11:46

Well the issue is timing of revenue recognition vs inappropriate mis-representation of your business IMO. The first is important because it is this very issue that is bringing down outsourcing at present and the latter will be of interest to advertising regulators, Companies House and competitors etc.. I think there is good reason for concern and at the very least these issues need to be addressed fully. I don't think a simple RNS is going to put the issue to bed.

[clocktower] 02/2/2018 11:46

Fighting talk it maybe but on what basis can they justify the current share price going forward, with the UK housing market looking as though it may slow considerably, with a possible fall in prices as we head towards Brexit.

Side on the side of the Bears imo. Reasonable risk being short I think.

[bobmonkeyhouse] 02/2/2018 11:35

How do you define a "proper estate agency " though? If their contracts state they charge a fee which is received either up front or via loan after 10 months, then as long as they account that appropriately , then the accounts are correct whatever extra services should be offered as a "proper estate agency"

I'm a bear, but I think that is weak

[bobmonkeyhouse] 02/2/2018 11:35

How do you define a "proper estate agency " though? If their contracts state they charge a fee which is received either up front or via loan after 10 months, then as long as they account that appropriately , then the accounts are correct whatever extra services should be offered as a "proper estate agency"

I'm a bear, but I think that is weak

[minerve] 02/2/2018 11:33

bobmonkeyhouse

You maybe on the good money with that short! Good luck!

Shorting is not for me.

[minerve] 02/2/2018 11:31

Some good stuff on FT Market's Live folks with respect to PURP and the Jefferies note.

"If our interpretation of the accounting policy is correct, it might be inappropriate for Purplebricks to lead in the UK with a marketing message that they are ‘Proper Estate Agents’ rather than just offering a service to list properties on the property portals.If our interpretation is incorrect and Purplebricks does indeed have an ongoing and openended ‘Proper Estate Agent’ obligation to its customers, it may have overstated revenue in its audited accounts and understated its deferred income liabilities. Revenue may have been recognised too early and potentially insufficient allowance made for the future costs relating to providing estate agency services to customers who have withdrawn properties and for those currently taking a marketing break."

[bobmonkeyhouse] 02/2/2018 11:29

There are ways to short a stock without using a spreadetting company, but we will leave it at that

I never use stop losses with spread betters, don't give them a chance to stop you out. If I'm short, I'm short, it may go underwater but If I believe I am right, I am prepared to run the time that the market goes against me

[ltcm1] 02/2/2018 11:13

Wow that is most interesting hpcg. So just to get this totally straight, to short Purp at 500 say you would load the account to cover a possible rise to 1000 - 2000 then???

It makes sense to me because the combination of margin, incorrect bet sizing and intraday fakery just kills accounts.

[hpcg] 02/2/2018 10:57

ltcm1 - people who run without a spread bet account without ample margin (more than 100% move against in a single stock for me, currently at about 300%), those who use stops and especially tight stops, and those who cannot cut losers are bound to fail. For people who know what they are doing it offers fantastic opportunities to go short which would otherwise not be available.

Andy - City Index will allow short PURP. If they offer a share at all then it is usually shortable. They have also paid out on Carillion already unlike IG. I haven't checked Spreadex but I imagine they also would - they too tend to allow shorts when IG won't. I think IG get the corporate short money so their book balances quickly, and long or short they never allow a position in the market to become notifiable from what I have seen.

[ltcm1] 02/2/2018 10:53

1. Bob the trouble is the general public are a lot less smarter than you.

2. Don't underestimate the brain washing powers of TV ads.

[bbmsionlypostafter] 02/2/2018 10:53

Jefferies

COMPANY NOTE
Estimate Change
UK | Property & Real Estate | UK Property
1 February 2018

Purplebricks
(PURP LN)
Buyer Beware

UNDERPERFORM
Price target 94.00p
Price 489.80p^

[bobmonkeyhouse] 02/2/2018 10:45

So, put yourself in the postion of a seller

DO you

Pay 1150 pounds or commit to, with a one in two chance of getting what you have paid for in 10 months

or

Pay on delivery of a sale a higher price, for someone that is incentivised to sell your property, and now has to offer a much better rate

[bbmsionlypostafter] 02/2/2018 10:40

You're wasted on here Melody, you should have been a detective!

With that level of highly skilled forensic research I can see you are going to be a very successful investor.

[ntv] 02/2/2018 10:31

so with purple bricks you £1150 even if they don't sell your house
now that is funny
my partners house sold stc in less than 6 weeks at the end of last summer
those selling seem to be tied into a contract that appears to opened ended or you lose your cash
bigger mugs the mug punters
don't tink i have seen any recent sales in their houses around colchester recdently
still income of £5m justifies a £1.2bn mkt cap does it?

[ltcm1] 02/2/2018 10:17

Andy the point you make goes a long way to explaining the 90/90/90 rule - 90% of spreadbetting clients lose 90% of their account in 90 days.

The other issue is they regularly fiddle it so your stop or margin out call gets hit intraday, so many winning trades get taken out by this scam is what I've read. I guess you are only safe if you don't trade on margin and have a wide stop.

Just remember they are in the business of making money from you and be very careful how you deal with them.

[melody9999] 02/2/2018 10:10

Interesting. The person doing the research is a Robert May, and the only link I can find to a Robert May connected with UK property is here hxxp://www.naea.co.uk/estate-agent-directory/braunton/mr-robert-may-m0027926.aspx

And from there is a link to Robert May's business. hxxps://www.chequershomes.co.uk/
Which just happens to be an independent estate agent.

Now if this is the Robert May, he is unlikely to be independent as far as researching Purplebricks is concerned....which would cast considerable doubt on his findings and whether Jefferies should use such a person.

[bbmsionlypostafter] 02/2/2018 10:09

He raises a couple of v. good points.



Chris Wood
February 2, 2018 at 07:57

PB issues a statement that avoids the obvious and easy solution; release the evidence to substantiate the claims they made (both brothers, Kenny on LinkedIn and Michael in the BBC). Meanwhile, two independent sources* have now shown that these claims to be potentially false. Odd, then, that the usually highly litigious Purplebricks hasn’t threatened legal action on either occasion?

[bbmsionlypostafter] 02/2/2018 09:54

Wheels falling off this now, more revelations to come.

Massive re-rate downwards due imo.

[phowdo] 02/2/2018 09:51

JakNife, link to Jefferies note in this article.

[bulltradept] 02/2/2018 09:30

Hi Andy,

"The last few times I have tried to open positions in various stocks they wouldn't allow it, and all fell subsequently!"

Yes I'd love to be able to short stocks but I get the feeling (as you point out), they aren't into letting retail traders trade on the day so to speak.

I don't spread bet at all and only buy real shares so don't have that issue, although of course I come up against algos regularly, but that's the nature of it the market, I am afraid.

Made a few pennies today on PURP going long, which was OK.