Leading U.K. stock picker stung by a share price crash at the estate agency
One of the U.K.’s best-known stock pickers has been left red-faced by a share price crash at the estate agency Purplebricks.
Neil Woodford, sometimes referred to as the Britain’s answer to Warren Buffett, is Purplebricks’ largest shareholder with a stake of just under 30%.
The online real-estate company on Thursday fell around 25% after warning that its full-year revenues would be lower than expected and that some of its top executives are leaving.
Purplebricks PURP, -0.85% which charges homeowners an upfront fee to market their property online, said its international businesses in Australia and the U.S. are performing below expectations and that Lee Wainwright, UK chief executive, and Eric Eckardt, its U.S. boss, will depart.
Analysts at JPMorgan described Purplebricks’ trading update as disappointing, adding that it “underlines that visibility remains low and trading is volatile”. They also said the loss of Eckardt, who was well received among investors from their point of view, will be taken negatively.
The warning hit the company’s shares, and Woodford’s holding, hard.
At the close of the market on February 20, Woodford Investment Management’s 89 million or so shares in Purplebricks were worth about £147m. At around 15:20 GMT on February 21, that figure had dropped to £109m.
Woodford spent 25 years at the investment manager Invesco Perpetual before setting up his own business in 2014. But Woodford Investment Management has been hurt by several of its investments, including its decision to invest in lender Provident Financial, pharmaceutical giant AstraZeneca and outsourcing company Capita.
Woodford’s £4.9bn Equity Income fund has underperformed the market by 28% over a three-year period, according to Bestinvest, which said in its report: “Woodford took a contrarian, more optimistic view of the UK economy after the Brexit referendum, increasing his exposure to domestically focused companies.”
A spokesperson for Woodford said at the time that as a value-orientated investor there are tough times, no more so than when markets are momentum-driven, as they have been for some time now. But valuation is the only catalyst for investment returns that Neil has ever trusted.
Woodford Investment Management declined to comment on the fall in Purplebricks’ stock.