Few UK fund managers can claim to have name recognition, but in financial circles, Neil Woodford is practically a household name.
The former Invesco Perpetual executive has been a star stock-picker for the past three decades, and he has made millions of pounds in interest for investors in his Woodford Investment Management (WIM) firm, since it was founded in 2014.
But recently his star has started to wane. WIM’s flagship Equity Income Fund was listed in the bottom two per cent of all funds in the Investment Association’s ‘UK Equities’ classification for 2018, having made a 12 per cent loss over the course of last year.
At its peak, the Woodford Equity Income Fund was worth £10.2bn, but in the 18 months between May 2017 and October 2018, it halved in value to £5.1bn. By May 2019, the fund size had fallen to just £4.4bn.
It is unsurprising then that many investors are choosing to withdraw their money from WIM, but in order to meet this rash of redemptions, Woodford has had to sell off much of his liquid portfolio. In early May, he sold his stake in peer-to-peer investment trusts VPC Specialty Lending and P2P Global Investments, raising £126m. He raised a further £42m by selling his share of NewRiver Reit to a former Invesco colleague.
Given that £300m was withdrawn from the fund between February and April 2019, it seems likely that Woodford will move to sell off more of his stocks and shares investments within the coming weeks and months.
Once the go-to guy for fixed-asset investments, Woodford’s brand has now been tarnished by years of bad luck and bad decision making. However, it is important to remember that what happens next will be an exercise in damage control, not a reflection of Woodford’s real-world finance views.
Many day traders have made a lot of money by mirroring the stock portfolios of the great and good of the UK equities scene. While Neil Woodford’s reign as the king of stock-picking may be coming to an end, his damage-control actions should not be mistaken for market advice. In fact, for savvy investors, there may even be an opportunity to pick up some cheap stocks which have been dragged down by the Woodford association. As ever, use your own judgment, but don’t let bad press blind you to potential opportunities.