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Woodford - the Redemptions begin in earnest, Jupiter Pulls

By Tom Winnifrith | Wednesday 11 October 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I flagged up at the weekend why Neil "nomates" Woodford might be just a couple mmore high profile disasters away from disaster in terms of a flood of redemptions. Well it appears that some are not waiting for the implosion of Purplebricks and another Woodford car crash.

According to Investment Week:

"Jupiter's multi-manager Merlin team has significantly reduced its exposure to the Woodford Equity Income fund, dealing another blow to Neil Woodford in a year when he has already suffered significant losses from some of his key holdings.

According to sources, John Chatfeild-Roberts, head of Jupiter Asset Management's Merlin fund range, has reduced exposure to the Woodford Equity Income fund by £300m, which makes up two thirds of the holding.
A Woodford IM spokesperson said: "The transaction was concluded in September and the current AUM of £8.9bn reflects this."

The fund has significantly underperformed the IA UK Equity Income sector, returning -0.3% over the year to 9 October versus a sector average of 10.5%, making it the worst performer in the sector, according to FE."

The problem for Woodford is that with so much cash tied up either in relatively illiquid second liners where his positions are too large to sell down without crashing the price ( think Purplebricks (PURP:) or Provident Financial (PFG)) or in utterly illiquid private companies, if redemptions flood in nomates has to sell his relatively few FTSE 100 stocks which have been his best performers. If redemptions become a torrent he will at some stage have to start selling the illiquid second liners and that will crash his NAV so compounding his woes.

It could not happen to a more modest, humble and all round nice guy.


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