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Analysts criticise Woodford secret sale

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Neil Woodford has been criticised by investment trust analysts for the late disclosure of the sale of a majority of his stake in Woodford Patient Capital Trust (WPCT), with a trio of brokers speculating the portfolio could be wound up.

Charles Cade, analyst at Numis Securities, said he was “surprised that Neil Woodford needed to sell WPCT shares to generate liquidity of £1m”

“Despite the explanation provided, his sale of WPCT is not something that is likely to be viewed positively by shareholders,” said Cade.

James Carthew, head of investment company research at Marten & Co, agreed, claiming it looked as though Woodford was “already severing his ties with the fund”.

Wind-up

All three brokers said any new manager would have to give due consideration to a wind up of WPCT, taking into account the views of the board and appetite from investors. Any capital raised from the sale would then be returned to shareholders.

Carthew has been calling for a change for some time. One reason is it may get WPCT off the hook for some of its forthcoming commitments, like the reported £10m it recently parted with as part of a fundraising from Atom Bank.

…according to Carthew, should WPCT sack Woodford before the cash it requested, the trust will not have to pay as Woodford IM is liable.

Alternative options

Carthew said it would be likely any new manager would “have a hard look at the valuation of some of the [unquoted] investments, while Scouller suggested they may want to “kitchen sink the valuation of the unquoted portfolio”, which makes up 75% of net asset value (NAV), and make a precautionary writedown.

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