Key Takeaways
- • Bristlemoon Capital, an Australian hedge fund led by George Hadjia, has taken a short position in REA Group, according to a report by the AFR.
- • Bristlemoon sees scope for REA shares to fall towards A$98, implying downside of almost 40%.
- • The fund expects new listings to decline 5% to 10% in FY27, against REA's guidance for flat to slightly lower volumes.
- • The bear case rests on weaker housing activity triggering a reassessment of REA's valuation; bulls argue market dominance, pricing power and product innovation can offset a listings slowdown.
Summary
Australian hedge fund Bristlemoon Capital has taken a short position in REA Group, the operator of the property listings platform, betting that a deeper downturn in the country's housing market will weigh on the company's earnings, according to a report by the Australian Financial Review (AFR). The fund is led by George Hadjia.
Bristlemoon sees scope for REA shares to fall towards A$98, implying downside of almost 40% from current levels as reported. The fund expects new listings to fall by 5% to 10% in FY27. This compares with REA's own guidance of flat to slightly lower listing volumes, marking a meaningful gap between the fund's view and management's outlook.
The bearish thesis centres on the risk that weaker housing activity and lower earnings expectations could prompt a reassessment of REA's valuation. Because listing volumes drive a significant portion of the company's revenue, a sustained slowdown in property transactions would feed directly into forecasts.
Bullish investors counter that REA's market dominance, pricing power and product innovation could help offset a slowdown in listing volumes. Hedgeweek carried the same story under a matching headline, reporting the short position without adding further figures.
Bristlemoon sees scope for REA shares to fall towards A$98, implying downside of almost 40% from current levels as reported. The fund expects new listings to fall by 5% to 10% in FY27. This compares with REA's own guidance of flat to slightly lower listing volumes, marking a meaningful gap between the fund's view and management's outlook.
The bearish thesis centres on the risk that weaker housing activity and lower earnings expectations could prompt a reassessment of REA's valuation. Because listing volumes drive a significant portion of the company's revenue, a sustained slowdown in property transactions would feed directly into forecasts.
Bullish investors counter that REA's market dominance, pricing power and product innovation could help offset a slowdown in listing volumes. Hedgeweek carried the same story under a matching headline, reporting the short position without adding further figures.
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