Standard: Thousands Of Unwanted New Builds To Be Dumped On Market

[The Knimbies who say No]

BKG had a good day today, an all time high close.

http://www.google.com/finance?q=lon%3Abkg&ei=8JBwVvG5JsO8U7rErsgI

[Patient London FTB]

BKG had a good day today, an all time high close.

http://www.google.com/finance?q=lon%3Abkg&ei=8JBwVvG5JsO8U7rErsgI

I think it's ripe to be shorted in a bit by someone with a bigger appetite for risk than me. It's obvious it's set up to survive a crash, but that doesn't mean someone couldn't make some money off share price falls in the short-term. Just wait for a few more buyers to pile in first.

[The Knimbies who say No]

I think it's ripe to be shorted in a bit by someone with a bigger appetite for risk than me. It's obvious it's set up to survive a crash, but that doesn't mean someone couldn't make some money off share price falls in the short-term. Just wait for a few more buyers to pile in first.

Exactly my thoughts. Wouldn't dare try to short it at present.

[eric pebble]

Spot on a backdoor bailout attempt ,will it be enough to keep the forever HPI centerment going ? as once that centerment is gone demand will go of the cliff edge (if it has not already)

"centerment"

[Patient London FTB]

Cannier players than me might want to look at my nine reasons why shorting Berkeley in a bit might not be complete madness (I've never shorted a stock so I'm not rushing to do this!)

Financial

• today’s share price of £37.10 is now 92 per cent above 2007 peak (£19.35) and 485 per cent above 2009 trough (£6.34)

Sales:

• weakening forward sales growth despite higher value flats being on sale this year. Forward sales Apr 2014 £2.27bn > Oct 2014 £2.69bn > Apr 2015 £3.0bn > Oct 2015 £3.1bn
• Berkeley itself says that it has been making 50% of sales to investors and 40% to overseas buyers (cf. Berkeley’s own 31 Oct 2015 interim results presentation and its 30 Apr 2015 preliminary results presentation). NB it is not clear whether those groups are separate or intermixed. Nevertheless they’re the most vulnerable to taxes.
• it is still in the construction and sales phase of type of flats observers have started to say are vulnerable to falls in value. For example, it put a big bet on London SE1 (though to be fair to it, having bought land cheaply at 2007 to 2009 values) and has at least four-five developments in progress for completion in 2016 and 2017: One Tower Bridge, One Blackfriars, and three on the Albert Embankment (The Corniche and Merano Residences plus due to come on sale next year, The Dumont). 64 of the 100 most expensive SE1 properties listed on Rightmove as for sale or sold subject to contract come from those four developments and are all worth £3m+ (not HTB territory)

Insiders:

• chairman Tony Pidgely sold 750,000 shares at £25 per share in April 2015 for £18.8m leaving him with 6.3 million shares; MD Rob Perrins sold 250,000 shares at £25 per share for £6.3m leaving him with 1.5 million shares in April 2015; Pidgley’s wife sold 337,029 shares at £34.10 per share for £1.1m in September
• the changes to dividends proposed in October have the effect of bringing forward jam to the next three years. a cynic might say this gives shareholders the chance to get money out of the company more quickly. however to be fair to them, the overall effect is to produce higher dividends over the next six years
• sudden departure of finance director last year - it turns out he is now suing them over something (undisclosed what)

If there is a crash:

• Berkeley faces potential difficulty in collecting cash from overseas buyers (h/t The Knimbies Who Say No) who now have to stump up more due to stronger pound
• it faces potential difficulty in collecting cash from BTL buyers who now have more difficulty getting mortgages

However:

• no-one bets against Tony Pidgeley
• I believe if someone shorted the stock today they would have to pay the 100p dividend in January?
• Berkeley is ungeared and has access to £575m of banking facilities which mature in March 2020
• it has lot of lower selling price developments in the South East presumably less likely to suffer in a crash

Berkeley share price down 5% today ...

[long time lurking]

"centerment"

It`s like sentiment but sticks a bit better