Britain’s most famous fund manager is bullish on Brexit and thinks ‘investors have become far too pessimistic about the UK economy’

Woodford Investment Management

Neil Woodford

LONDON — Prominent fund manager Neil Woodford is buying up UK stocks which he believes have become undervalued due to misplaced bearishness on Brexit.

The latest update from the Woodford Equity Income fund, the stock-picker’s £10 billion flagship fund, shows that he has sold out of “frustrating” GlaxoSmithKline and added to his portfolio of UK stocks including Lloyds Bank, building firms Barratt Developments and Taylor Wimpey, and property developer British Land.

Woodford said that a bearish market consensus around Brexit and its potential impact on the UK economy has created “really interesting opportunities” for investors.

“Since the Brexit vote last June the market consensus has become increasingly cautious about the outlook for the UK economy and I think investors have become far too pessimistic about the UK economy,” he said in a blog post.

He said that investors were overly pessimistic about rising inflation and about broad economic activity in the UK.

“I’m more bullish about the domestic economy than consensus and at the same time that bearish consensus on the UK has resulted in very big share price falls in some domestic cyclical sectors and that’s offered up some really interesting opportunities,” he said.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said that Woodford’s acquisition of Lloyds stock is particularly significant.

He said in a note: “The investment in Lloyds bank is a bit of a milestone seeing as Neil Woodford hasn’t held banks in his portfolio since 2003, aside from a very brief flirtation with HSBC in 2014.

“Selling out of banks was one of the big calls Neil Woodford made which protected investors from the worst ravages of the financial crisis, and reaffirmed his reputation as an outstanding fund manager.

“Ten years after the onset of the credit crunch, Neil Woodford is now back in Lloyds, which reflects the fact that banks are finally returning to business as usual. The bank is heavily plugged into the UK economy though, so any domestic shocks will take their toll,” he said.

Khalaf added: “As well as Lloyds bank, Woodford has bought into housebuilding, property and construction stocks, which is a vote of confidence in the UK economy, despite the ongoing Brexit process. Neil Woodford is a contrarian investor, which means not only being wary when others are complacent, but being bullish when others are bearish.”

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