Cover of MoneyWeek issue no 496

The best energy plays

23 July 2010 / Issue 496

Our experts give their eight top tips

PLUS:

  • Profit from the shake-up in the NHS
  • Warren Buffett’s billion-dollar giveaway
  • How I made a fortune as a debt collector

Excerpt

Ocado: Even the experts got it right

I’m finding it hard to drag up much sympathy for the founders of Ocado.

They may not have got the price they at first said they wanted for their online grocery delivery service (up to 275p) when it listed this week. But they must surely be dancing with joy to have got the thing away at all.

We’ve long thought that buying shares in Ocado would turn out to be a rubbish investment. But the interesting thing about this particular IPO is not that we think Ocado is likely to disappoint those who have bought shares at the float (that’s the case with all too many IPOs), but that so many other people agreed with us.

Almost every analyst who looked at the Ocado prospectus had something bad to say about both the business and the price expected for it. And absolutely no one – including, I should imagine, the founders and Goldman Sachs, which was managing the float – could have claimed to be surprised when, having listed at 180p, the shares promptly fell to 155p, 40% below the top price the team had once hoped for.

This is odd simply because it is – so far – a rare example of the investment community reaching a consensus opinion and it being correct. Normally analysts as a group are completely wrong.

• Read the full editor’s letter here:
Ocado: Even the experts got it right