30.07.2019 kl 11:08 2227

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29.07.2019:   https://www.ft.com/content/2ee91896-b1f1-11e9-8cb2-799a3a8cf37b

Patient buyers see difference between Woodford funds

«It may be called the Woodford Patient Capital Trust, but its board members’ patience seems to have run out. With manager Neil Woodford still unable to let investors withdraw cash from the supposedly “open-ended” Woodford Equity Income fund — its suspension is now likely to last until December — the listed WPCT has announced it is considering “a change in the company’s management arrangements” and that Mr Woodford only just told them he has “sold 1.75m of his shares”. Timings would suggest the two cannot be connected, and circumstances would suggest a sale of still-traded WPCT shares was the only way Mr Woodford could raise money to pay his bills. Still, it is possible to see why WPCT’s board could be patient no more.

In the 56 days WEIF has been frozen, WPCT has lost 33 per cent of its value. Hence the board had to act on three very real shareholder concerns.

First, WPCT portfolio valuations cannot be relied upon as so many holdings are common with those of WEIF, which has become a forced seller to meet withdrawal requests. If WEIF is forced to take a lower price for holdings — especially the unlisted ones — WPCT by definition also takes a hit.

However, the WCPT board already seems to have addressed two of these problems. Debt is now down to £117m, or 16 per cent of NAV, and new non-executive directors are being hired. It would appear, then, that the board’s only worry is a reputational link to WEIF. But to see one is arguably wrong, given the funds’ differences.

WPCT, as a listed closed-ended fund that can always be traded, is exactly the right structure to hold Mr Woodford’s small illiquid investments — unlike WEIF. He himself has just proved it, cashing in on the liquidity it offers despite its illiquid stocks.»

Redigert 30.07.2019 kl 17:30

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