The move was seen as a major departure for the fund manager who has shunned many of the prevailing domestic cyclicals since setting up his eponymous firm.
As a result of people being “too downbeat about the UK economy,” Woodford said he seized on an opportunity to take advantage of depressed valuations among the housebuilders, banks, construction stocks, adding Lloyds, Taylor Wimpey and Barratt Developments to the top 10 holdings of his Income Focus Fund.
Cullen finds the timing of Woodford’s newfound appreciation for housebuilders to be an odd choice, as shares across the board are looking expensive.
“It’s interesting that he’s picking his moment now because, to us, housebuilders were at their most interesting a couple of years ago when there was a high degree of scepticism about the sector,” he said.
That being said, he doesn’t think that this is necessarily an error on Woodford’s part either.
“From his perspective, taking a really long-term view of the market, I think the housebuilders still look strong.”
Compared to where they were years ago, the UK builders are “very cash generative” and are “pretty strongly positioned companies.”
Like Woodford, Cullen does not consider himself bearish on the UK economy, but at this time, he thinks it is more important to be opportunistic than fully invested.
“We are pretty long-term investors,” he said, “at the same time, if something doubles and gets to our idea of fair value, we are more than happy to sell it. We are prepared to be patient, if need be.”
