Fund manager Woodford’s faith in Purplebricks as it trades at 22 times forecast profit for 2017

Financial website The Motley Fool has looked at “ace fund manager” Neil Woodford’s recent investments, including in online agent Purplebricks.

The piece starts: “Should you sell everything and run for the hills when markets are in turmoil? Of course not!

“Some of your best long-term returns will come from buying when bearish sentiment pervades.

“Still, selectivity may be wise when global economic growth is being downgraded.

“With this in mind, I’ve been looking at the latest buys reported by ace fund manager Neil Woodford’s equity income fund.”

The article continues: “Woodford had been a major backer of Purplebricks when it was a private company, and upped his stake when it joined the stock market in December.

“His buying just before Christmas gave him ownership of 29.1% of the company’s shares.

“The attraction of the company to Woodford? ‘Purplebricks already sells more properties than all the main online agents combined and its IPO is the latest step as it seeks to cement its leading position in the UK’.

“The placing price of the shares was 100p, but the January market turmoil has seen a fall to 73p, so you can buy today at a good discount to the price Woodford was willing to pay.

“This fast-growing company is expected to turn a profit for the first time in 2017, and currently trades on 22 times that year’s forecast earnings.”

Trading at 16 times forecast earnings is GlaxoSmithKline, another Woodford pick.

The third company The Motley Fool looks at is CityFibre, also favoured by Woodford.

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10 Comments

  1. Robert May

    The King is in the all together, the all together, investing in the greatest scheme the world has ever seen!

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  2. GlennAckroyd

    Having made losses of £13m up to September 2015, making a profit seems very unlikely.

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  3. is it just me

    What happens when all the  money raised and spent on TV adverting has gone?

    Will the model stand up? Can you really sell houses for circa £700, do a professional job and still make  a profit?

    Will Mr Woodford’s investment go the same way as all the banks and insurance companies who also thought that any fool can be an estate agent?

    Only time will tell!

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  4. Client1st

    So he brought nearly 30% of the business and his investment has dropped by 30% and he is an ace fund manager? No wonder my endowment policies lost so much money…

    When in a hole stop digging

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    1. Online Estate Agency Sceptic

      It’s nowhere near as clear cut as that Client1st. Think you’ll find Woodford purchased a big % of his fund’s shares before the flotation. On paper he’s probably already massively up on the deal, given he bought at a MUCH lower valuation that PB floated at. But that’s just a paper issue and I agree with most commentator’s on here that the PB valuation is still ludicrous!

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    2. PeeBee

      Hole digging?  Or frantically baling out?

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  5. Property Paddy

    Yep. PB still heading south !

    I have predicted time and again 36p is where it will end up. At this rate by Easter and to be fair to PB I always thought they might last the summer.

     

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    1. Online Estate Agency Sceptic

      Even at 36p, the market cap is not far short of £100m – still ludicrous at this stage!

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      1. Property Paddy

        True this (36p)should have been their opening offer, but then only complete morons buy penny shares !!!!!!!!!!!!!!!!!

        However it seems not the brightest bought them at £1 each lol

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  6. Beano

    Worth opening an IG account and spread trading the shares to go down….

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