Is Woodford Patient Capital revamp enough to lure back buyers?
…The board of WPCT moved to address the concerns of key shareholders on Friday (28 June) by announcing a raft of measures in response to the ongoing crisis at Woodford Investment Management.
…Most welcomed these changes, but some believe a complete revamp is required. Ben Yearsley, director at Shore Financial Planning, told Investment Week “it’s good news the board is changing [but] in my view it should be a total change”..
James Carthew, founder and head of investment company research at Quoted Data, agreed, saying it’s now down to shareholders to decide whether they have confidence in the board. “We would not be surprised to see more directorship changes in due time,” he added.
The board made sweeping changes elsewhere, too.
…But there’s mixed views on the minutiae. Scouller and Stern said they were pleased leverage is being reduced, while Lovett-Turner also says it makes sense, but the Stifel pair noted it will be some time before share buybacks are implemented.
Meanwhile, Carthew’s concern is that it could be too little, too late should the NAV fall over the coming months, which could mean gearing will quickly breach the 20% limit. “The board needs to tell investors at what point lenders start to demand their money back.”
Indeed, he thinks one of the main problems WPCT has is its gearing, “which in extreme circumstances could threaten the survival of the trust and prevents it, for now, from providing capital to support its existing investments“.
Both Carthew and Lovett-Turner note the latter point means there is a risk of some of the portfolio’s holdings having insufficient funding to execute their plans, which could put valuations under pressure.
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