Woodford sells multi-million pound stake in the AA

Oliver Gill
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Woodford's flagship Equity Income fund has returned almost five per cent in the last three months

One of the AA's largest shareholders has flogged a multi-million pound stake after the breakdown firm's shares almost doubled in a matter of weeks.

Neil Woodford trimmed his position in the AA, selling a one per cent slice worth around £9m, according to a regulatory announcement today. The star fund manager remains one of the AA's biggest backers, owning 13.88 per cent of the firm.

The AA is targeting a speedy return to London's mid-cap index next week after being relegated earlier in the year.

The motoring organisation has had a disastrous 12 months, starting with ex-boss Bob Mackenzie's sacking last summer following an altercation with a fellow exec. This prompted a hefty sell-off last August, which was followed by a second sharp fall in mid-March as investors reacted negatively to the AA's turnaround plans.

Rising from a nadir of 74p 10 weeks ago, shares leapt to 146p in mid-April.

Woodford, meanwhile, has seen his flagship Equity Income fund dramatically shrink in size. Having peaked at £10.2bn this time last year, the fund has fallen to £6.6bn in size. However, in recent weeks it has staged a comeback.

Provident Financial, one of Woodford's top four holdings, has mounted a comeback in recent weeks while litigation funder Burford Capital has near-doubled in size itself since the start of 2018. The equity income fund is up almost five per cent over the last three months, though this compares with an eight per cent return from the corresponding index.

The fund manager also runs a listed investment trust, Woodford Patient Capital. Tuesday evening's reshuffle could well see the fund trade places with the AA, falling out of the FTSE 250.

Architas’ investment director Adrian Lowcock said: “Ultimately investors shouldn’t read too much into this as the trust focuses on long-term investments which are higher risk and in doing so it was always likely that the bad news would come ahead of any good news and therefore the trust would lag the performance of the wider market especially in a bull market.”