Neil Woodford sells more than half his shares in listed fund

Neil Woodford has sold more than half his shares in his listed investment fund – whose board is considering sacking him and bringing in another asset manager.

The stock picker sold 1.75m shares in Woodford Patient Capital Trust between 3 July and 8 July. At the average share price between those dates, the sale would have made Woodford just less than £1m, Reuters calculated.

Woodford, who told the fund’s board about the share sale on 27 July, said he needed the money for a tax bill and other commitments. The Patient Capital Trust is one of several managed by his company Woodford Investment Management.

He said he was forced to sell the shares after taking no income or dividends from Woodford Investment Management, after blocking customers from another fund, the Woodford Equity Income Fund, two months ago.

Investors are due to hear on Monday whether the suspension of the Equity Income Fund will be extended by another month. Investor fury at Woodford for continuing to take millions of pounds in fees while their money is locked up has added to the controversy surrounding the former star fund manager.

The explanation from Woodford’s company to the board for selling his Patient Capital Trust shares said: “Whilst a reluctant seller, between 3 and 8 July Mr Woodford sold 1.75m of his WPCT shares (around 60% of his holding). The sole reason that he did so was in order to meet personal financial obligations, including a tax liability.”

The board said that although it was not strictly required to disclose Woodford’s share sale, it had decided to release the information to the public. Woodford is left with 1.25m shares representing 0.14% of the Patient Capital Trust.

Neil Woodford was once the UK’s biggest star fund manager, personally managing a £25bn mountain of money on behalf of pension funds and other investors at Invesco Perpetual. When he decided to quit Invesco and go it alone in 2013 it was a huge shock for the fund management industry. Invesco shares slumped by 7% on the day he announced his departure.

At Invesco Woodford held control of huge stakes in some of the UK’s biggest firms, and his opinions mattered. His criticism of AstraZeneca chief executive David Brennan in the 2012 shareholder spring was widely regarded to have cost him his job, and his critique of BAE’s attempted £28bn merger with Airbus is acknowledged as one of the reasons the deal collapsed.

Woodford, who was widely referred to in the media as an investment “hero” and fund management “star”, had done exceedingly well over his quarter century there. A £1,000 investment placed when he started at the firm in 1988 would have risen to £23,000 by the time he left.

Woodford accidentally fell into fund management and hadn’t heard of the term until he rocked up in the City in the 1980s sleeping on his brother’s floor while looking for a job. He got his first break in insurance, before drifting into fund management. He had left school wanting to fly fighter jets but couldn’t pass the RAF’s aptitude test, and instead read economics and agricultural economics at the University of Exeter.

Feeling he had outgrown Invesco Perpetual, he set up his own firm Woodford Investment Management in 2014, on an industrial estate near Oxford. Within two weeks of launching, he had raised £1.6bn, a UK record, and it quickly grew to £16bn. In its first full year his flagship fund returned 16% and Woodford, a devotee of veteran US investor Warren Buffett, was dubbed the “Oracle of Oxford”.

Asked if he ever doubted his judgment, Woodford once said: “Daily. You must never, as a fund manager, stick your head in the sand saying ‘everybody go away, I’m right, I’m right, I’m right’. You’ve always got to expose yourself to criticism and the analysis that you may be wrong.”

Woodford went on to say that the secret of successful fund management was a balance of arrogance and humility. “You have to have a sufficiently strong arrogant gene to back your judgment, back your conviction. If you didn’t, you would end up with a portfolio that looks very much like the index. But, equally, you must have the humility to accept that you will get things wrong.”

Rupert Neate

Photograph: Jenny Goodall/Rex Features

A spokesperson for Woodford said: “Neil remains invested in WPCT and completely committed to the early-stage asset class and its long-term investment potential.”

Woodford Patient Capital Trust has an independent board whose job is to act in the interests of shareholders. The board also revealed it was considering replacing Woodford as the fund’s portfolio manager after receiving approaches from other potential candidates.

The board said: “Whilst the board remains confident in the portfolio manager’s commitment to WPCT and the current day-to-day management of the portfolio, the board intends to engage with a broader range of third-party managers in order to undertake a full assessment of all potential management options, which may or may not lead to a change in the company’s management arrangements.”

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If the board replaces Woodford it will be a further blow to the reputation of the UK’s most famous fund manager and a former favourite with retail investors. After building his reputation at Invesco, Woodford launched his own business in 2013 but he made bets on troubled companies such as Kier and Purplebricks that led to disastrous performance.

Woodford’s spokesperson said: “Neil is proud of the portfolio created and the considerable potential some of these companies have to achieve commercial success.”

Shares in Woodford Patient Capital Trust, down 38% this year, fell just over 3% to 51.6p.


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