Companies in the news ... and how they were assessed
Countrywide: roof falls in?
Shares in Britain’s biggest estate agency group tanked by 30% this week after it issued a fresh profit warning and put out the begging bowl to investors, said Ben Woods in The Daily Telegraph. Countrywide, whose agency brands include Hamptons, John D. Wood and Mann, lost £212m last year and is asking for about £100m to tackle its “huge debt pile”. The company has lost “substantial market share” in both sales and lettings thanks to “competition from cut-price online rivals and a cooling housing market”. Shares have crashed some 84% since a group of private equity owners took it public in 2013. “In a contrast of fortunes”, shares in Purplebricks – the online estate agency now led by former Countrywide manager Lee Wainwright – have more than trebled since its 2015 flotation to a market value of £1bn. Countrywide’s new boss, Peter Long, reckons going “back to basics” is the right response to both the “disrupters” and Britain’s “battered” property market, said Lex in the FT. He may have a point. Purplebricks “has made big waves in UK property listings”, but has yet to translate the momentum to high sales volumes. “Countrywide is down, not out for the count.” But its “shrunken valuation” will confirm a good many doubts about the value of private equity-backed IPOS.
Hedge funds/pollsters: Brexit manoeuvres
An “explosive” Bloomberg report has claimed that several UK hedge funds “made billions betting on Brexit” two years ago “after buying secret exit polls” that pointed to a surprise Leave win, said Kate Ferguson in the Daily Mail. Funds including Odey Asset Management, Arrowgrass and Pointstate used private polls to make huge bets against sterling and other assets before the result was announced, according to the report, which also “raises questions” about what Nigel Farage, then UKIP leader, knew. When Farage initially conceded defeat as voting closed, the news pushed sterling up to a six-month high of $1.50, said Bloomberg – “herding investors toward a cliff hours ahead of one of the largest crashes for any major currency since the birth of the modern global financial system”. Farage himself “had information suggesting his side had actually won”. Farage, a former commodities trader, strongly denied trying to sway markets or placing currency bets. But the matter is unlikely to rest there, said The Times. Pollsters including Yougov, Survation, ICM and Comres “made some of the biggest profits” in the industry’s history selling data to hedge funds in the week of the referendum. The chairwoman of the parliamentary Treasury Select Committee, Nicky Morgan, has called for financiers to be prevented from profiting “from prior knowledge of public information”.
General Electric: Ozymandias
After more than a century, General Electric’s run on the Dow Jones Industrial Average has come to an end, said The Economist. The company – one of the “original components” of the 30-strong share index when it was formed in 1896 – has been a continuous presence there since 1907. It is being replaced by the pharmacy chain Walgreens Boots. GE was “the most valuable American company” of all in 2000, but its share price has halved over the past year due to “a difficult restructuring process”. Losing its Dow status will have “little practical impact” on GE, but it is “symbolic of the group’s decline”, said the Financial Times. This week’s decision to spin off the healthcare division, and a multibillion-dollar stake in the oil services company Baker Hughes, “marks a further shift away from GE’S broad conglomerate structure, which, under chief executive Jack Welch in the 1980s and 1990s, included businesses as diverse as insurance, entertainment and plastics”. GE will now confine its business to three divisions: equipment for the electricity industry, renewable energy, and aero engines and parts.
Chanel: discreet, moi?
The French fashion house Chanel has “broken a near century-long silence in releasing its financial results” by reporting its first ever set of figures, said Jo Ellison in the FT. They look sufficiently elegant. The privately owned group, currently in the hands of the billionaire brothers Alain and Gérard Wertheimer, increased revenues by 11% last year to $9.6bn, to produce an operating profit of $2.7bn. One executive said that releasing the figures “was the subject of a long internal debate”, but, ultimately, the luxury group concluded that “the culture of discretion was no longer serving us” and that transparency was preferable. Some traders discerned an ulterior motive. But Chanel is insistent that the move is “absolutely not” a sign that it is readying itself for sale.