Traditional agents who are unhappy about the rise of the UK’s largest hybrid agency Purplebricks may find succour in the declining fortunes of its biggest backer, investment fund manager Neil Woodford (pictured, right).
His company Woodford Investment Management has been investing millions of pounds into Purplebricks from 2014 onwards and publicly backed the agent’s ‘innovative approach’. Many of his firm’s key funds now include exposure to its stock, in one case of up to 7%.
But the highly-successful City figure, whose own website describes him as one of the most influential UK investment managers of his generation, has been facing a stickier wicket than normal in recent months.
Woodford specialises in property and has invested heavily in many leading UK property firms including, as well as Purplebricks, Taylor Wimpey, Barratt, Countryside, Crest Nicholson and several commercial property REITS.
Only two months ago one of Woodford’s most successful funds, the LF Woodford Equity Income Fund, reported that its “strongest performance came from hybrid estate agent Purplebricks, which reported interim results that showcased the very positive progress it is making across the board”.
But, as commentators at both The Times and The Financial Times have noted recently, the City thinks otherwise and share prices have been dropping.
Share price drops
This includes shares in almost all Woodford’s featured property PLCs including Purplebricks (-19%), Taylor Wimpey (-14%), Barratt (-15%), Countryside (-12%) and Crest Nicholson (-13%), which Woodford recently increased his stake in.
As Woodford has himself pointed out, the share price drops can be in part blamed on the general downturn in share prices following the recent global stock market wobble, but it’s also about investors losing faith in UK property – for the time being, at least.
Continuing reductions in the number of homes sold each year, a government hell bent on stripping fees out of the lettings market, stagnating house prices, lower mortgage fee income and higher property taxes are all taking their toll on investor sentiment.