Woodford faces mid-cap relegation while the AA makes a speedy return

 
Oliver Gill
Follow Oliver
Edmund King Talks To the Press As AA Workers Vote For Strike Action
The AA has seen its market value almost double over the last few weeks (Source: Getty)

Neil Woodford's investment trust is set for relegation from Britain's mid-cap index, while the AA – which counts Woodford among its largest shareholders – is poised for a speedy return to the FTSE 250.

Sitting in 325th place yesterday evening, AA's stock market valuation has almost doubled to over £820m since hitting all-time lows in March.

Meanwhile, Woodford Patient Capital Trust's market value of £683m places it in 383rd position.

London Stock Exchange officials will reshuffle indices next week with close of business market values on 29 May leading to a 30 May announcement. Any firms ranked in the top 325 which are not already in the FTSE 250 are automatically promoted. Those ranked 376 or below are automatically demoted.

Woodford, which also runs larger unlisted unit trusts – such as the flagship Equity Income fund – is the AA's third-largest shareholder, according to the AA's recently filed accounts. His funds hold a 14.32 per cent stake worth over £110m.

"Anything can happen"

The AA – which once billed itself as Britain's "fourth emergency service" – has recently rolled out an advertising campaign with the strapline of "anything can happen". Its change in fortunes follows a big sell-off earlier this year in response to strategic turnaround plans. The firm remains weighed down by a multi-billion pound debt pile; but one which has does not require immediate refinancing.

Woodford has been on the receiving end of some bad stock picks, prompting questions over his position as one of Britain's most revered fund managers. The value of his listed investment trust does not precisely mirror that of the underlying investments as, similar to other investment trusts, shares can trade at a premium or discount to the underlying value of the assets.

Large stocks held in the Woodford Patient Capital include online estate agent Purplebricks and Oxford Sciences.

Read more: Royal Mail set for red letter day as £2bn surge prompts blue chip return

Ocado

Last week online retailer Ocado added billions to its market capitalisation, overtaking British stalwart Marks & Spencer. Ocado was widely expected to secure a promotion to the blue-chip FTSE 100 with M&S facing a demotion for the first time in more than 30 years.

Ocado is not a slam dunk to be promoted, sitting in 89th place. Neither is M&S demotion assured as it is in 101st position. Similar to the mid-cap reshuffle there are automatic promotions and demotions with a spread in between. The spread is narrower for the FTSE 100 with firms in the top 90 promoted and those outside the top 110 relegated.

The most precariously placed of the FTSE 100 is the world's largest security firm G4S, which is sitting in 110th place.

Read more: Woodford throws his weight behind Provident... and he had to

Related articles