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Woodford: Crisis?, what crisis?

By Nigel Somerville, the Deputy Sheriff of AIM | Wednesday 7 February 2018

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.

One wonders what Neil Woodford has been doing in the face of Cynical Bear’s onslaught against his funds. Reading Cynical’s pieces, it is clear that the Woodford house was edging ever closer to disaster. Now it seems that the effluent is indeed in collision with the air conditioning: we’ve had disasters at Purplebricks (PURP) and Capita  (CPI), and there’s a stockmarket correction (at least we hope that’s all it is) underway. Oh, and we have numbers from the AA on Thursday – hardly the ideal time to take a hatchet to its dividend! So what has Mr Woodford been up to? Well, why change a winning formula!

I have tracked down the following TR-1s issued by Woodford this year. Now you may think that with the funds facing potential problems he would trim back a few holdings: cash is king if things get sticky. And indeed he has. He sold:

Countryside Properties (CSP), down by 0.55% to drop his holding to 12.46% on 22 January. This only listed in 2016, at 225p, and has put on about 75p since then. Unfortunately for Mr Woodford, he seems to have been a bit of a latecomer to the party, for the day he started buying the shares went from 300p to 336p. Oddly, Mr Woodford was still buying the stock on 18 December (shares around 340p). Whatever changed his mind between then and 22 January this year when he was a seller (and the shares closed at 335p)?

Err….that’s it. And unfortunately, Mr Woodford has been unable to help himself in the face of walls of cheap shares the market doesn’t want. There is no crisis, keep calm, carry on…. He topped up:

Eddie Stobart (ESL) – added just over 1.1% to bring his holding up to 20.4% on 1st February. Dividends so far: (almost) bugger all, but it only listed in April last year (on AIM).

Benchmark Holdings (BMK) – added 0.12% to bring his holding to 22% on 23 January. Dividends: none (according to ADVFN).

Honeycomb Investment Trust (HONY) – added 1.15% to bring his holding to 19.23% on 19 January. There is a dividend here.

Provident Financial (PFG), which has already bitten him on the bum twice, is an obvious choice (for him) and he raised his holding by 0.94% to 23.03% of the company on 19 January. That’s….er….brave. Or just plain stupid. Dividend…er….

Watkins Jones (WJG) – added 1.19% to bring his holding up to 13.33% on 15 January. Dividend yield: around 3%

Most worryingly, Allied Minds (ALM) announced on 11 January that Woodford had signed up for a syndicate (alongside Invesco Asset Management Services) which is taking $10.28 million of convertibles in STT, in an arrangement with Allied Minds (ALM). This is supposed to bridge the completion of a planned Series B funding round at STT, not that the market has suddenly fallen out of bed or anything. Incidentally, Mr Woodford, have you actually got the cash to do this any longer? Dividends: ho ho ho…

IP Group (IPO) – raised his holding by 0.29% to 19% on 5th January. No dividends (according to ADVFN).

So it is onwards and, er, downwards then. What a pleasure it must be to get to play with Other People’s Money (OPM) and get paid for it win, lose or draw.

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