Woodford, which owns an 11 per cent stake in Capita, took a big hit after shares crumbled almost 50 per cent last week.
Woodford's landmark equity income fund has lost over £400m in performance and outflows since the start of the year.
He wrote in his blog at the end of last week Capita's fall had "clearly been unhelpful to recent performance".
I am not trying to make a silk purse out of a sow’s ear – this has been a poor investment. But it is one that has the capacity to become a significantly better one from here.
Woodford admitted it was a "mistake" to own Capita in 2016 when the firm's shares were worth more than £11 each; they are currently trading at just over 170p.
But, he added: "It is not a mistake to own it now. And so, I will not be compounding the previous error by behaving in an irrational and valuation insensitive way now."
Capita shares plummeted last Wednesday after the firm revealed plans for an operational restructuring, warned on profits, cancelled its dividend and said a £700m rights issue was on standby.
The announcement was one of the first by Capita boss Jonathan Lewis, who joined the firm in December.
He wrote: "I am pleased that we have seen from the company what we thought would be coming. This is a complete reset for Capita. The new chief executive, Jonathan Lewis, has mapped out a clear new direction of travel for the business and it is one with which I completely agree.
More focus, better leadership, better cost control, a stronger balance sheet (through a combination of disposals, dividend cut and a future capital raise) which will, in turn, lead to more investment in the business, an enhanced competitive position and a brighter future for its shareholders and customers.