Is Woodford now embracing momentum?
The recent equity raise from Purplebricks (AIM:PURP) highlighted the inflated nature of some parts of the equity market, where momentum has been a key driver. It therefore comes as a surprise that one of the leading investors in PURP, Woodford Investment Management, would have been supportive of the fund raise at such a high valuation. Having previously steered clear of the momentum crowd, could Woodford now be a momentum follower? Our Blog considers further
Neil Woodford has always prided himself on going against the crowd, yet his firm’s ‘apparent’ support of Purplebricks’ recent fund raise at a super-inflated valuation suggests his approach may now be changing, with PURP a momentum play that has little regard for fundamentals at the current stratospheric valuation. The fund raise, if undertaken at a suitable discount, could have represented an ideal opportunity to offer the PURP share price a reality check. Small shareholders could also have been encouraged to participate via an Open Offer arrangement. Unfortunately PURP raised £50m at a modest 0.6% discount to the share price before,…