Neil Woodford invests in Royal Mail

[TrueBlueTerrier]

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Neil Woodford, one of Britain's best-known fund managers, has bought shares in Royal Mail for his new fund, Woodford Equity Income.
The fund manager said recent falls in the share price had made the company "attractive". Royal Mail shares peaked at 615p on January 15 but have since fallen significantly, trading at about 412p this morning. They floated at 330p last autumn.

Royal Mail shares now account for about 1.5pc of Mr Woodford's fund.

In a fund update for July, Woodford Investment Management said: "We added several new holdings to the fund, the largest of which was Royal Mail.

"Since its IPO [flotation] last year, the shares initially performed very strongly but have since come back to more attractive territory. This is fundamentally a very attractive, cash-generative business. It has its challenges, not least the competitive threat in profitable, densely populated areas. But it has its opportunities too, such as slowly working to bring its cost base into line with its competitors."

The fund manager pointed out that there was scope for Royal Mail to improve its profit margins, which stand at 4.6pc, compared with 8pc-10pc for most of its peers.

"We have been impressed by the management team and believe it is well-placed to capitalise on the long-term opportunity to deliver a better service to its customers and generate sustainable shareholder value," Woodford Investment Management said.

In a trading update last month, Royal Mail warned that parcels revenue for year was likely to be lower than previously expected.

Other fund managers have sold their shares in the company recently. George Godber and Georgina Hamilton, who manage the successful Miton UK Value Opportunities fund, bought the shares on the first day of trading at 425p but sold, at prices of 560p and 525p, when the company issued the significant profit downgrade in late May. Threadneedle said it remained a supporter of the company, however.

[RobertT]

I've actually invested in this fund via my stocks and shares ISA. So I now have a stake in Royal Mail in three separate ways: free shares, shares I bought myself and now the Woodford Equity Income fund.
It's actually down about 1.5% since it's launch in June, maybe the RM shares will put it in profit.......... or maybe not.

[Viewfindergeneral]

http://www.telegraph.co.uk/finance/pers ... -Mail.html


"We have been impressed by the management team"

I wouldn't be listening to any of his "advice". He must be pretty easy to impress

[fly-catchers]

I've actually invested in this fund via my stocks and shares ISA. So I now have a stake in Royal Mail in three separate ways: free shares, shares I bought myself and now the Woodford Equity Income fund.
It's actually down about 1.5% since it's launch in June, maybe the RM shares will put it in profit.......... or maybe not.

Were you not tempted to sell off the shares you had brought when they were reaching their high of £6 +?

[fishtank]

But it has its opportunities too, such as slowly working to bring its cost base into line with its competitors."

That should send a shiver down the spine of every Royal Mail employee.
We are 60% of Royal Mail's "cost base" and the majority of the other 40% is either fixed or has already been pared back significantly so you join the dots....

[RobertT]

I've actually invested in this fund via my stocks and shares ISA. So I now have a stake in Royal Mail in three separate ways: free shares, shares I bought myself and now the Woodford Equity Income fund.
It's actually down about 1.5% since it's launch in June, maybe the RM shares will put it in profit.......... or maybe not.

Were you not tempted to sell off the shares you had brought when they were reaching their high of £6 +?

I thought about it at the time but decided to hang on to them. Nobody knew they would fall as much as they have and as I only bought £500 worth at the time, I'm not too worried about it anyway.