Monday, June 26, 2006
Rightmove: happy on the short-side
I've got only one short position, a spread-bet that shares in Rightmove, the property website, will fall.
Currently I've got my nose slightly in front but I'm expecting a big move to come any day soon. That's because the market's expectations of the future profitability of the business are based on the viability and success of Home Information Packs, new government legislation that will force people selling their homes to provide more information when marketing to potential buyers.
Rightmove is planning to earn a considerable amount of future revenue by doing the work necessary to put the Home Information Pack (HIP) together and flogging the products to home sellers. The HIP will contain legal information about the property and a report on its condition. The government is hoping that by forcing the seller to provide this information once, it will save anyone that is seriously considering buying the property from the aggravation of seeking out this information for themselves. The current system can result in a lot of duplication, as each successive buyer has to pay (and wait) for the vital information to be supplied by solicitors/surveyors etc. Most of the motivations for HIPs are honourable enough but it becoming increasingly doubtful whether they will work in practice.
Most industry groups are opposed to HIPs, from surveyors to the building societies to house builders. However, more powerful information emerged at the weekend to suggest HIPs won't work. A study by the Observer on a statistically meaningless sample of sales saw HIP provider Mysalepack give away the packs to nine house vendors (it is not known if they would have been able to sell them).
the government and industry - pack providers, estate agents, lenders and lawyers - have yet to conduct a full trial of the scheme to establish whether it works. A trial that had been planned for this month, potentially in Cambridge, has been postponed until the autumn...
it gets worse..
Jenny Short of Taunton decided to apply for a free Hip and is about to exchange contracts on her home, but the buyer's solicitor refused to accept the information included in her Hip, thus incurring costs for his clients and delaying the sale by six weeks while the conveyancing was carried out.
if this is typical it will break the HIP industry before it can get into it's stride. If buyers solicitors will not accept conveyancing information supplied by the seller, costs will not be saved and HIPs will fail in meeting their aims. Of course, the government could go ahead with it's plans but with the opposition gaining ground it's unlikely Labour would want a high-publicity fiasco less than two years from a general election.
Rightmove's share price is implying a value for the company close to £400m and the prospects for profitably HIPs looking weaker by the week, I'm (literally) betting the scheme will be watered down substantially or even better, scrapped entirely. If that news were announced shares in Rightmove would bleed from every orifice.
The Artful Dodger
(0) comments
Currently I've got my nose slightly in front but I'm expecting a big move to come any day soon. That's because the market's expectations of the future profitability of the business are based on the viability and success of Home Information Packs, new government legislation that will force people selling their homes to provide more information when marketing to potential buyers.
Rightmove is planning to earn a considerable amount of future revenue by doing the work necessary to put the Home Information Pack (HIP) together and flogging the products to home sellers. The HIP will contain legal information about the property and a report on its condition. The government is hoping that by forcing the seller to provide this information once, it will save anyone that is seriously considering buying the property from the aggravation of seeking out this information for themselves. The current system can result in a lot of duplication, as each successive buyer has to pay (and wait) for the vital information to be supplied by solicitors/surveyors etc. Most of the motivations for HIPs are honourable enough but it becoming increasingly doubtful whether they will work in practice.
Most industry groups are opposed to HIPs, from surveyors to the building societies to house builders. However, more powerful information emerged at the weekend to suggest HIPs won't work. A study by the Observer on a statistically meaningless sample of sales saw HIP provider Mysalepack give away the packs to nine house vendors (it is not known if they would have been able to sell them).
the government and industry - pack providers, estate agents, lenders and lawyers - have yet to conduct a full trial of the scheme to establish whether it works. A trial that had been planned for this month, potentially in Cambridge, has been postponed until the autumn...
it gets worse..
Jenny Short of Taunton decided to apply for a free Hip and is about to exchange contracts on her home, but the buyer's solicitor refused to accept the information included in her Hip, thus incurring costs for his clients and delaying the sale by six weeks while the conveyancing was carried out.
if this is typical it will break the HIP industry before it can get into it's stride. If buyers solicitors will not accept conveyancing information supplied by the seller, costs will not be saved and HIPs will fail in meeting their aims. Of course, the government could go ahead with it's plans but with the opposition gaining ground it's unlikely Labour would want a high-publicity fiasco less than two years from a general election.
Rightmove's share price is implying a value for the company close to £400m and the prospects for profitably HIPs looking weaker by the week, I'm (literally) betting the scheme will be watered down substantially or even better, scrapped entirely. If that news were announced shares in Rightmove would bleed from every orifice.
The Artful Dodger
Thursday, June 15, 2006
Dodger is back
Right, I'm at home this morning waiting for a delivery.
Did I say? I bought more SOCO at 1070p just after their most recent drilling disappointment. The market has been complete carnage for the last month! Investors in the US and UK have pretty much seen all their gains of the year so far wiped out in the space of a month.
Markets typically fall much faster than they rise.
I've suffered from seeing declines at Fayrewood, Chaucer and SOCO. Miraculously, Invox has not fallen further, probably signifying that all the weak holders have since exited. It's on a knife edge that company and really could go either way.
Today's news will come from SOCO, who are holding their AGM. Market is expecting something positive from SOCO, the shares have advanced this morning to 1240p.
Finally, their is my Rightmove short. The property website business is doing really well but is close to reaching saturation in the UK. The plan for further growth comes from Home Information Packs (HIPs), which government legislation is going to make compulsory in June 2007. I think there are several risks to this proposition, not least that this is an unpopular piece of legislation from a weakening government who might simply decide the scheme is a vote loser and bin it? There are numerous other risks to the plans, not least huge industry opposition from mortgage brokers, lenders and estate agents. Almost every day new stories appear with organistions labelling the plans 'chaos' or some such.
My Rightmove short is currently making me money, but not a lot. That could change overnight, should the government yield and decide to make HIPs voluntary, delay the scheme or bin them altogether. Google News is a good place to search for tidbits and tittle-tattle on HIPs.
Market movements have been harsh. I'm at least 10% down so far this year. 2006 will be difficult to save.
The Artful Dodger
(0) comments
Did I say? I bought more SOCO at 1070p just after their most recent drilling disappointment. The market has been complete carnage for the last month! Investors in the US and UK have pretty much seen all their gains of the year so far wiped out in the space of a month.
Markets typically fall much faster than they rise.
I've suffered from seeing declines at Fayrewood, Chaucer and SOCO. Miraculously, Invox has not fallen further, probably signifying that all the weak holders have since exited. It's on a knife edge that company and really could go either way.
Today's news will come from SOCO, who are holding their AGM. Market is expecting something positive from SOCO, the shares have advanced this morning to 1240p.
Finally, their is my Rightmove short. The property website business is doing really well but is close to reaching saturation in the UK. The plan for further growth comes from Home Information Packs (HIPs), which government legislation is going to make compulsory in June 2007. I think there are several risks to this proposition, not least that this is an unpopular piece of legislation from a weakening government who might simply decide the scheme is a vote loser and bin it? There are numerous other risks to the plans, not least huge industry opposition from mortgage brokers, lenders and estate agents. Almost every day new stories appear with organistions labelling the plans 'chaos' or some such.
My Rightmove short is currently making me money, but not a lot. That could change overnight, should the government yield and decide to make HIPs voluntary, delay the scheme or bin them altogether. Google News is a good place to search for tidbits and tittle-tattle on HIPs.
Market movements have been harsh. I'm at least 10% down so far this year. 2006 will be difficult to save.
The Artful Dodger
