Source at firm says short-sellers are ’contributing nothing’ to the UK’s housing needs by betting against company following last week’s profit warning
Vistry’s share price has tumbled in the past few days following a profit warning and a spike in short-selling of its stock.
The housebuilding giant last Wednesday said its first half profit for the six months to June 30 will be “significantly lower” than for the same period last year due to the impact of discounting market homes to drive sales.
The discounts are part of strategy to boost cash generation, along with other measures including delaying or slowing the building of some sites to ensure alignment between build and sales rates.
The housebuilder, which turned over £4.3bn last year, has since seen its share price fall from 331.2p on Tuesday before the trading update to 264p this morning. Its share price has dropped by nearly two thirds in two months since the 730p reported on 12 February.
The proportion of Vistry’s shares out on loan to short-sellers has risen sharply over the past few weeks, spiking at 12.5 per cent, a high for the firm.
A source close to Vistry told Housing Today: “The short-sellers are looking to make a quick profit and are contributing nothing to the long-term needs of the UK in requiring more homes.
“We are focussed on the right thing – managing our cash and delivering homes with partners.”
Short sellers make money by borrowing shares, selling them, waiting for them to fall in value and buying them back at a lower price - meaning they effectively bet against a company doing well. Short-selliing is controversial because it is seen as eroding confidence in a company to push down its share price.
In The Sunday Times yesterday, sources reported Vistry “falling victim to a concerted attack by short-sellers who are looking to make money at the expense of other shareholders by pushing their negative agenda.”
A source close to Vistry told Housing Today: “We are focused on cash and our balance sheet during difficult and uncertain market conditions which is the same thing that every other house builder is doing and it is entirely rational. It will enable us to do more for and with our partners as we focus on delivering their homes and preparing for the SAHP.“
Vistry last week said it expects the impact of discounting on profit to reduce in the second half of the year, and this, coupled with an expected pick up in affordable housing demand, will mean its full-year profit will be in line with last year’s.
It has given a guidance for adjusted pre-tax profit of between £168m and £283m.
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