Purplebricks chairman Paul Pindar’s strategy of buying blocks of company shares is a bold attempt to boost investor confidence, according to a City analyst.

Pindar (main image) has purchased five million shares since the struggling agency revealed its slumping profits last month, and now owns more than 5% of the company.

“He [Pindar] is putting his money where his mouth is, and hoping the market will take a more positive view,” David Reynolds, an equity analyst at Davy Research believes.

The move is also designed to give the Purplebricks management team a vote of confidence, he says.

The senior managers at Purplebricks, including chief executive Helena Marston, are inexperienced, and “I’m not convinced they can turn it around,” Reynolds says.

‘Corporate failure’

At the same time Purplebricks announced a fall of a quarter in revenues and profits a month ago, Pindar and his wife Sharon bought 2.5 million shares. The share price then was 14.79p, and is now around 17p.

Pindar has invested in a further 3.5 million shares in two subsequent tranches in the last few weeks.

“Buying up equity is laudable,” says Reynolds, “but would him resigning have a more positive effect? It would be better being led by someone else.

“He has overseen five years of corporate failure, and frankly it would enhance the credibility of that story if someone else was leading the board.”

Reynolds says Pindar must believe the shares are undervalued, and will, of course be hoping to make a profit in the long term.

“He may not have expected an instant response [in the share price].”

Purplebricks is due to hold its AGM on 14 September, when Pindar is expected to face more calls to resign.