Woodford Patient Capital – rating removed

The investment trust was put under review in June following the suspension of the Woodford Equity Income fund. Andrew Pitts explains why we have now removed the trusts Money Observer Rated Fund status.

We placed Woodford Patient Capital (WPCT) under review in early June, immediately after the gating of its sister fund Woodford Equity Income.

At the time, we expressed concern about the high level of cross-holdings between the two funds; the potential for the discount to net asset value to widen further; and the prospect of the open-ended fund needing to sell its substantial holding in the investment trust, potentially creating a share overhang.

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Since then, further concerns have arisen, not least the stability and commitment of the management group, the huge funding requirements of holdings in WPCT such as Proton Partners and the listing status of its two largest holdings – Industrial Heat and BenevolentAI – which were delisted from the International Stock Exchange in Guernsey.

On Monday 31 July, the trust’s board took the unusual decision to announce that Neil Woodford had belatedly informed it, on Saturday 27 July, that he had sold 60% of his own shares in the trust in the first week of July. Woodford said he sold the shares for personal financial obligations, including the need to pay a tax bill.

While not obligated to inform the board of the share sale, we find it surprising that Woodford failed to inform the board in a timely fashion of the sale of 1.75 million shares, effected at prices of between 56.6p and 58p, for a consideration of around £1 million. Unsurprisingly, Woodford’s share sale further dented confidence in prospects for the crisis-hit trust and the shares dropped to a new low of 45.4p on Friday 2 August, which represents a discount to estimated net asset value of 45%.

Given these recent worrying developments, the Rated Funds investment committee has decided not to continue keeping WPCT’s rating under review and has now removed its Rated Fund status.

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Comments

Woodford

I’d say your well behind the curve in your decision making, hope that doesn’t stretch to all the other advice you give.

Patient Capotal

Well done, although taking credit for doing something you should have seen 18 months ago and long after it was any use to anyone is a bit of a stretch even for the most daft of investors.

Woodford

A sad day when one of the best known fund managers acts like a spiv. I am so glad that I got out when I did. I realised that I just could not trust Woodford any more and sold my entire isa with Hargreaves Lansdown who also caused me to have doubts about their integrity.

wpct

All a bit disappointing & need never have ended up likethis.
Still baffled as to the rationale ?

What exactly was going through his mind - if anything?

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