In his first update of 2018, a year which has already brought fresh pain for several of his investments, the heavyweight manager doubled down on his contrarian positions on valuations and the broader macroeconomic picture.
“Many of you will be aware that my views on market valuations and the broader macroeconomic conditions have gone against the consensus for a while now – and they remain so,” he wrote.
“As we move into 2018, I expect global liquidity to tighten and China’s economy to slow, with both acting as a brake on economic growth and financial asset prices.”
One area in which he has notably gone against the grain is his bullish outlook on UK domestic stocks at a time when investor confidence in the economy has waned. Last year, he beefed up his exposure to the housebuilders and Britain’s biggest retail banks on the basis that people have been “too downbeat” on the UK’s future post-Brexit.
The star manager once again reiterated this position on Monday, singling out the domestic market as an area currently containing “the best opportunities”.
“I expect the UK to defy expectations of a slowdown and for the valuation stretch between the popular and unpopular stocks will begin to reverse,” he said.
“While there are risks, there are equally opportunities – that is always the case when markets get carried away. I believe the best opportunities lie in UK domestically-focused stocks, a healthcare sector that has endured a prolonged bear market and companies (of all sizes) that have disruptive technologies at their core.”
He also promised to provide investors with “a more detailed and regular insight” into his thinking over the coming weeks and months.
Though Woodford has made a point to be painstakingly transparent, publishing fact sheets listing every single holding in his portfolios, he has still been skewered by critics and commentators on his own site for failing to justify his positions in floundering firms like Provident Financial.
“It may be a chart, some data, a view from an economist, a press article or simply a view based on conversations with my close contacts,” he added.
“It will likely challenge the consensus and some of you will disagree with me – however, it should give you a greater understanding of why my portfolios look as they do.
“As a value-orientated investor there are tough times, no more so than when markets are momentum driven as they have been for some time now – but valuation is the only catalyst for investment returns that I have ever trusted.”
