HouseValues took another hard hit on Wall Street last month. Shares of the online real estate leads company lost $1.95 apiece, or 22 percent of their market value. The company responded with announcements of new features and functions for its products and an alliance with Dave Hershman, a former sales manager turned author and spokesperson within the mortgage sector. Yet investors seem unimpressed with the company’s financial outlook at this time. Shares opened June 1 at $8.88 and closed June 30 at $6.93.
Two other online real estate stocks, Move Inc. and ZipRealty, also were losers on Wall Street in June, albeit to a lesser degree than beleaguered HouseValues. Move’s shares dropped 48 cents, or 8.1 percent, from $5.96 to $5.48. ZipRealty’s shares declined 42 cents, or 4.7 percent, per share from $8.90 to $8.48 during the period.
Homestore’s shareholders officially renamed the company Move Inc., and analysts at Caris & Co. initiated coverage of the company with an “average” rating, according to NewRatings.com.
The company formerly known as Homestore may have suffered some fallout from the conviction of former CEO Stuart Wolff, though the company itself settled its own involvement in the massive accounting and stock fraud case some time ago. In an ironic twist, Wolff is to be sentenced Sept. 11, five years to the date after the terrorist attacks that company executives blamed for Homestore’s failure to meet Wall Street analysts’ revenue expectations for the second quarter of 2001.
After-market mortgage giants Fannie Mae and Freddie Mac also suffered further reversals on Wall Street in June, when their share prices declined $1.93, or 3.9 percent, and $3.22, or 5.4 percent, respectively.
The Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, known as OFHEO, ordered Fannie Mae to pay more than $400 million in fines to settle alleged violations of accounting principles. The company announced the resignation of a second corporate director within two months, and analysts at Merrill Lynch cut their rating on Fannie Mae from “buy” to “neutral.”
“It would be hard to blame Fannie Mae if she threw herself a pity party,” wrote a Mortgage News Daily reporter.
The Merrill Lynch crew downgraded Freddie Mac as well, though other analysts have a more positive outlook on the company. UBS analysts reiterated a “buy” rating, but cut their target price from $89 to $86. A Prudential Financial analyst maintained an “overweight” rating with a target price of $84.
Fannie Mae and Freddie Mac also faced criticism from James B. Lockhart, acting director of OFHEO, who told Congress that both corporations were “so poorly run” that it will take “many years” to fix all of their problems, according to news reports.
Cendant Corp., Countrywide Financial and Interactive Corp. were the only positive contributors to the hypothetical Inman Index of 10 publicly traded brokerage, mortgage and online real estate corporations in June. Those three corporations eked out gains of .4 percent, .3 percent and .8 percent, respectively, while IndyMac posted a near-breakeven month with a loss of five cents, or .1 percent, per share.
Cendant, which is engaged in a complex break-up-and-spin-off of its operations into four separate companies, received an “overweight” rating from a Morgan Stanley analyst, who said the company’s shares were undervalued and could be a “very attractive” play for investors, according to a Forbes report.
Countrywide may have perked up after the Federal Reserve hinted it may hit the pause button on its campaign to increase bank interest rates. Investors’ concerns about higher interest rates have had an adverse effect on mortgage and banking stocks overall in recent months.
The Inman Index lost 2.6 percent of its total value in the June period, again a poorer performance than that of the broader market indices. The Dow Jones Industrials lost .2 percent; the Standard & Poor’s 500 was unchanged, and the Nasdaq Composite lost .3 percent in June.
Marcie Geffner is a real estate reporter in Los Angeles.