From estate agency website:

What an opening half to the year for Countrywide!
Profits down 90%, staff cut by 9%, transactions down 30% and 33 branches closed — but share price holding up
Transactions down 30 per cent, profits crash 90 per cent, staff cut by nine per cent, 33 branches closed and a dispute with an IT supplier.

It has been quite a year so far for Countrywide — yet their share price remains above 300p.

At the time of writing, the share price was 350p, valuing Countrywide at £630 million. Mind you, the stock market as a whole has advanced.

The obvious reason is that once Rightmove floats in November, Countrywide’s one third stake in the property website could be worth between £65 million and £100 million, or 35p to 60p per share and that this ‘value’ will be unlocked for shareholders.

In our July issue, I quoted a City analyst as estimating Rightmove would fetch £150 million to £160 million or 20p a share for Countrywide.

But the stock market has moved on since then, and investor appetite is being whetted at the prospect of an up-and-running tech firm being floated.

Just before Countrywide announced its results, Rightmove announced it had appointed investment bank UBS to advise on the share issue.

Rightmove contributed only £900,000 to Countrywide profits during the first half of this year, against only £228,000 a year earlier.

But as a thriving ‘dotcom’ business on a high price earnings ratio it will clearly be more valuable to Countrywide on flotation than as an income-producing investment.

Even Harry Hill, managing director of Countrywide, admits much of the Rightmove expectation is already priced into the shares, an opinion shared by analysts.

But Mr Hill also believes profits at Countrywide Surveyors will grow in anticipation of the introduction of Home Information Packs.

He told me: “Rightmove and prospects for Countrywide Surveyors are two reasons why our share price is holding up.”

In the meantime, Countrywide’s half-year results made predictably gruesome reading when they were announced on August 11.

Pre-tax profits crashed to £3.5 million against £30.7 million a year earlier; earnings per share plunged from 12.2p to 1.82p, while the dividend is a token 1p, against 4.2p.

But a key reason for this cut is a key reason why the shares are bearing up. About 70 percent of Countrywide shares are now in the hands of US financial institutions.

Because of withholding tax deductions, traditional dividends from the UK are less attractive. Instead of paying out a bigger dividend, Countrywide is committing £6.3 million, equivalent to a 3.5p dividend, to buying back shares for cancellation before the end of 2005.

I wonder if this will make Countrywide shares less attractive to UK investors seeking income? And will the proceeds from the Rightmove flotation be used to buy back shares or reduce borrowings rather than be paid out as dividends? No doubt this is one of the issues the experts at UBS will be addressing.

The estate agency business suffered its first loss for 10 years during the first half — £6.4 million against a £22.3 million profit a year earlier.

For the first time, the results included the former Bradford & Bingley agencies, acquired almost a year ago.They returned an “estimated £2.7 million negative contribution”. In other words, they increased the loss by that figure.

As the market was poor in any case, this suggests Countrywide has got to grips with its acquisition. Incidentally, letting agency profits actually rose from £2.7 million to £2.1 million.
The total number of branches was 1,072, up from 804 as the former Bradford & Bingley network was added in. Add to that 109 franchises, up by 20 on a year earlier.

Exchanges for the wholly-owned branches were 38,965, against 40,643, a four per cent drop despite the additional branches. But the franchises showed a 27 per cent drop to 1,676.

By my reckoning, the number of exchanges per wholly-owned branch dropped to 36.3, against 50.5 a year earlier, while the number of exchanges per franchised branch dropped from 25.8 to only 15.3. I wonder how that performance can be explained?

The staff shedding meant average employee per wholly-owned branch dropped from 5.46 to 5.02.

Average commission dropped from 1.74 per cent to 1.63 per cent, but turnover for the division dropped only six per cent to £118m.

Surprisingly, Harry Hill told me the “downsizing” has been reversed as business picked up in July.

He added: “July was the first month this year where we beat the total for the corresponding month of 2004. Indeed pipeline business at the end of June was £76.1 million, up £5 million on June 2004.”

The surveying division showed profits halved to £8 million, as it was hit by a double whammy:fewer transactions and fewer re-mortgages.

The recent cut in interest rates will not only help transactions but should mean more re-mortgage work.

Further niggling problems for Countrywide are a dispute with a software supplier for its conveyancing business, which added £2.1 million to losses in that division, and a £3.4 million dispute with the owners of Mandrake, an independent financial advice firm it sold to a management buyout in 1996.

The issue is who is responsible for any pension mis-selling claims? Judgement is expected this autumn.

The big question for Countrywide shareholders is whether the housing market is going to sustain its recovery to a degree that will allow the estate agency business to move back into the black.

The group’s borrowings were £75 million at the end of last year but had reduced by 20 per cent to £60 million as at the end of June.

Clearly, if trading profit is recovering, these borrowings will reduce further. If they are not, then it will be very tempting, and prudent, to use proceeds from the Rightmove float to reduce borrowings.

Analysts believe that Countrywide will return to decent profits if the market revives. Current forecasts are full year profits of £30 million to £40 million.

Stuart Duncan, an analyst at Numist said: “ We expect about £35 million profit for the full year. Hopefully, the number of housing transactions will increase from the level witnessed early this year.”


CWD are down 20 points since their recent closeness to their all time high.
It has to fall eventually. I have taken a long term 9-12 month short position.
Expect to see shareprice fall to 200p
Currently 345p = £625 million value approx

DB

Agreed DB. V sensible to take a 12 month ish view on this one.
Those attracted to doing same who are not experienced at shorting, don't go overboard. Keep amounts to manageable level.

400p.. anyone still short?

Contender for "most overvalued stock in the FTSE 350".

CWD = designed to take money from fools that listen to bulletin boards.

Price should be 100-200p but it's being manipulated like crazy.
All the big players can just buy 5 million worth push up the price and squeeze out the shorters.
It should drop (common sense tells me this) but i'd advise avoiding it trying to time the eventual drop is gonna be crazy it could be tomorrow or in a year.

Every time the price dips a bit, one of their directors buy a few more .

Possibly November as that's when Rightmove should be sold and the only asset CWD owns brings in a whole load of cash.

How many times must I repeat myself?

Here is the tip in big red letters:
Buy Secrets for Profiting in Bull and Bear Markets by Stan Weinstein and stop listening to other people.

------------
http://www.housepricecrash.co.uk/forum/ind...ndpost&p=156175

I highly recommend Secrets for Profiting in Bull and Bear Markets by Stan Weinstein.

The basic problem with shorting in a rising market or near the top is there is a lot of new profits looking for a home. And it seems to bargain hunt in irrational places. Also the rational but early short sellers all try the same thing at the same time with high leverage. You get short covering blow ups until everyone gives up short selling. Of course a profit downgrade could come any time and the stock plummets but until that announcement the position is likely to get blown up. So yes it is quite tricky. Historically its better to ignore the clever short and wait for the entire market to show weakness.

From Stan Weinstein's book:

Don't ever short a stock that is above its rising 30-week MA.
Don't sell short a stock because its PE is too high.
Don't sell short because the stock has run up too much.
Don't sell short a sucker stock that everyone else agrees must crash.
Don't sell short a stock that trades thinly.
Don't sell short a stock in a strong group.
Don't sell short without protecting yourself with a buy-stop order.

I think CWD is showing too much strength at the moment. Logically it should fall and it's really hard to figure out why it's nearly 400p. If you look at the Bolinger Bands they seem to be trending, I personally would wait until it breaks the centre line and see what happens.

CWD is one of those basket-cases that will make money in a desperate market too!!!

....they are estate agents primarily,so as long as sales don't fall off a cliff and prices rise(careful here because the figures get skewed by region)....they will do OK.

what they won't like is lower sales coupled with lower prices nationally.......or in other words,about where we are now!!!

if profits fall,the first response is to reduce commissions to gain market share....after that it will be reduce headcount.

CWD seem to be doing a lot of trading in their own shares. Does anyone understand what the reason is?

Do we know if these are buys or sells?

I think they are buys. Could they be buying shares from those who want out at a higher price than they would otherwise get, to hold the price high?

I'm a firm believer that CWD is a heavily manipulated share. The fact it's bought back shares rather than pay a dividend shows it has allegence only to the major investors. Also the fact they had to ask the market for more money (by a share issue) yet also continued to buy back is unusual.
I also know that in a recession in estate agency they will tend to survive as others go bankrupt allowing them to gain cheap and easy market share.

But this thread is about shorting them. I still expect them to fall a some point and think it might be worth a short early next year maybe a month or two before final results. As I feel that buying up the B&B estate agency business made poor sense as they could've kept the money and just grown organically. This will eventuly feed into the bottom line/shrea price. Also the buzz about shorting them has died down which is a very good sign.

On a different note I think that 5 years from I'll probably be buying CWD shares.

Just my opinion DYOR.

PS This goes against my previous post to avoid shorting at all costs but then the market is changing.

All the mainstream chatter on housing market related short selling would have been a waste of time and money so far. Just look at the major housebuilders. The share prices of most of them are at all time highs.

Crazy though it would seem, you'd stiill be better off placing upbets on CWD, PAG, WLB etc. at the moment.

I've blown quite a bit of money vainly shorting housebuilders since August this year. With hindsight, I was a moron. There is nothing about the charts to indicate good shorting potential (I have been educating myself a little). Watch and wait - the time will come.

Thank heavens for the Nikkei - It's been good to me!

I wouldn't be shorting any stock with great conviction at the moment. I'm not convinced CWD is even a good short with the CPI data yesterday.

I know many on HPC are contrary thinkers but is this profitable? I often find it's better to go with the flow and keep your safety checks in place. Remember, "the trend is your friend", and the trend is most likely to be going up.

Edit: Also take heed of the Feds statement last night, could this be a catalyst for stocks to surge?

Closed at 415 today .

Interesting to see it has bounced so well after their results. Could be a very bullish signal, maybe the market knows something we don't? Could it be the prospect of IR cuts driving it up? The view maybe that business conditions may start improving for CWD.

Looking at the chart I think the next move may be up.

425 at the moment. Still doing very well, above 50 and 200 day moving averages. Not going down based on its own anytime soon. If anything I'd be tempted to go long

451! Up 9% over the last week.

Anyone still short? 470p, +4.3% today!

LOL... property bulls would have just been better off dumping thir BTLs and buying CWD instead. If you're gonna be bullish, might as well be hopelessly bullish!

You need staying power to go short like this. And keep topping up the margin account.
Try turning the chart upside down.

I haven't yet gone short on CWD. But the time to do so is coming closer.
I think that once it falls it'll be very very quick e.g. 10-20% in a week.
I know that trying to guess the top is hard so I'll either go small value and wide stop or wait till sentiment has turned and it's dropped at least 5% before I go in.

We're getting share price inflation as inflation is much more rampant than 2% and it's moved from house to commodities to shares. I'm just surprised that housing stock have gone up so much compared to the wider market. I'm not yet sure where all the money is coming from which is why I keep out.

The price is set by money. e.g. money is going in so the price rises but until I can get an idea of where this money is coming from I'm keeping out.

The only good thing is that nobody is currently shorting CWD so the old rules of not being a sheep will be true. It's just I know that trying to guess the top is the most expensive thing to do in shares.

I'll post when I go short but it's not quite yet (through nearly went in yesterday...).

The problem is that EVERYONE is shorting this stock.I shorted at 348! I'm out now,but licking wounds.Good luck!

Is there anywhere you can get short interest data for LSE listed stocks? I suspect there isn't but would love to be proved wrong.

CWD appears to be nowhere near being technically ready to short yet. Big resistance on heavy historical volume at 380 and again aroun 365-370 mark. Still well above 100 and 50 day MA with good volume. I'd still be long but would be looking to reduce position on any strength...Would take big ball's to short this based on the chart. You'd need to be Mystic Meg I think.

Most of the shorters are private investors, to be more accurate a lot of private investors (PI) lost a lot trying to short this stock (scary amount to be honest). The money the PI's lost went to the industrials holding ths stock. Ignoring the share price movement (which is just assets) they probably made 5-10% on loaning out there stock to PI's + dividend as well so a winner all around. I just think they the industrials have made a lot and whilst they will work together to screw PI's once it's time to be the last fool to pull out they turn into sharks against each other.

I am still convinced this is a stock to short but the timing will be very very difficult. I still think the fall will be quick and there might be a false fall first (down 10% on the week and then up 8%) but at some point the drop will come. Try to find any other share with a similar share graph over the last years. It's almost vertical up.

So when I decide to short it'll be a wide stop, big money and a big slap in the face if it fails.

I just hope I've got the guts to post after I've shorted if I end up losing.

Andrew

£4.93 and rising.....

Hang in there. Im short from 2.75. Been shorting all the way up.
Some of you just dont have what it takes.

Blimey. Half no actually a thirds respects the size of your kahunas and conviction but the other two thirds is wondering if your mad!

Good luck!

LOL

CWD well down today (-3.8% a few minutes ago), I wonder what's causing that?

http://www.londonstockexchange.com/en-gb/p...XSTMMB00FQ06CWD

Below 500 for the first time in weeks.

Maybe because the chance of an IR cut is fading. Also, looking at many stocks at the moment, I think we are entering some sort of consolidation phase.

Pause before the next rally...go long signals still there remember EA's will still make money at the early stages of any crash as people sell to STR or liquidate thei BTL portfolio's.

Bit of a fall today but only to 552p

WMPY Wimpey Homes just experienced a 5% spike down to 500 before recovering - could be big news in the pipeline I am going to try a short on Finespreads

I think about two things when it comes to share prices.

1) If people are buying it goes up, if they sell it goes down.

2) The stock price reflect the next few years not the next few weeks.

1 has the strongest effect by a considerable margin. But 2 means the smart money slowly evaporates causing 1. someone can easilly argue that 1 is the only true factor to consider and that 2 just effects the share price and it's true.

My thoughts are between two opposing views:

People are still in the 'property is the only investment to be in' boom, whatever us bears might say (until the Sun has a headline that property is crashing it's true).

Number 2 is starting to hit the radar. The seller packs might not be the cash cow for CWD that some people think. it'll make selling easier so other market entrants might jump in effectively squeezing out CWD.


I heard something a few days ago which has altered my opinion. So I expect to open a wide short within the next few weeks/months. By wide I mean 20% of current share price. I'll probably wait for the upward trend to reverse first of course. The 20% will see me through the short squeeze/recovery. Remember the companies that bought in at 322~ (share issue) they can afford to seriously manipulate the markets so expect a bumpy ride.

Am shorting countrywide, and thinking about shorting Barratt. This make sense if you have Gold - the only way this is going down is if Banks raise interest rates sharply - and this would stuff the Builders and Estate agents

I got lucky. I did open my short in May but only speculatively e.g. only 5% stop loss.

The information I had heard has not come true. It still might and made sense to me. This is from a R&D techie not some high up business type so judge it on it's own merits. Basically it was about one of the supermarket chains moving into selling houses.

I'm now going to leave the short running and have not moved my stop loss so it'd have to explode back up above 550 before I get closed out.

I hope others who got burnt shorting CWD on the way up have managed to make some money on the way down.

Oh I do think that it's going to rise for a couple of weeks and then will start dropping again no clever technical analysis it's just the graph has that sort of a look to it.