WPP – position closed with a +19% relative gain (>+330% annualised ;-)

Add a bit of mean reversion to GrowthRatings, with a healthy pinch of recency bias and you can have a wild ride in these menopausal markets. For example, three weeks ago on this blog I highlighted the unloved Agency sector and in particular WPP.  Those listening to what some key marketeers were saying about their marketing budgets for 2018, or what the helpful Maurice Levy was suggesting about Publicis’ performance at Davos, might have anticipated an opportunity, as stabilising organic revenue expectations exposed a discounted GrowthRating.

As it transpired, it didn’t require too much to start the stampede; a +2.2% rise in Q4 organic sales for Publicis and +3.3% for IPG, along with its guidance for more of the same for FY18.  The nuances of Publicis’ performance coming off a -2.5% prior year comparative, or IPG’s growth being nearer +2.5% without pass-thru revenues or indeed any full year forecast by an agency at this point of the year is broadly worthless, was suitably ignored.  Similarly, the normally dependable Omnicom disappointed with a Q4 organic sales growth of only +1.6%, while Havas’s -1.2% Q4 slide and full year margin collapse of over 3ppts was thankfully buried within the voluminous results from its new owner, Vivendi.

Having added WPP to the GrowthRater portfolio on the 26th Jan, I have now closed the position, to lock in the +19% relative gain over the period and will revisit the situation following its forthcoming Q4 & FY17 results on the 1st March.


Action              Date                     WPP share price                     FT All Share index

Opened              26 Jan                      1,295p                                             4,209

Closed                16 Feb                       1,471p                                              4,012

Gain/loss                                            +13.6%                                            -4.7%

Relative                                         +19.2%


A +19% relative gain in 3 weeks is enough!