Friday 23 August 2019 3:03 pm

Fresh blow for Woodford as suspended fund's holdings take hit

Neil Woodford has suffered his third setback of the day after it was announced that his suspended Equity Income Fund (EIF) significantly underperformed its industry benchmark.

Link Fund Solutions, which is managing EIF’s suspension, said the fund had declined 11.15 per cent between 3 June and 21 August. By contrast, the fund’s industry benchmark – the FTSE All Share Total Return Index – rose 1.52 per cent during the same period. 

Link also confirmed that EIF would remain suspended for another 28 days, and said its aim to lift the suspension in December “remains achievable”. 

Read more: Woodford share price tumbles as it devalues holding in cold fusion company

In a statement posted online following Link’s announcement, Woodford said EIF’s underperformance “can be primarily attributed to the share price decline of two of the fund’s larger holdings, Burford Capital and Industrial Heat.”

Litigation funding firm Burford Capital was hit by a short attack earlier this month by US firm Muddy Waters. In a scathing report, the shortseller criticised some of Burford’s accounting and management practises. 

The attack wiped almost £1.8bn off the value of the company, although some of this has since been regained. Woodford’s funds collectively own just under seven per cent of Burford. 

It was announced that controversial energy firm Industrial Heat, which both EIF and Woodford’s Patient Capital Trust (WPCT) hold stakes in, had been devalued by Link earlier today.

Shares in WPCT fell following the devaluation, which represented one of the fund’s biggest holdings. Industrial Heat is trying to harness the power of cold fusion, but has been the subject of skepticism from the scientific community.

Read more: Eddie Stobart fires boss and suspends shares after accounting scandal

WPCT said it expects the devaluation to cut its asset value by approximately 3.4p per share, which would represent around a four per cent drop in its net asset value. 

It was also announced this morning that Eddie Stobart had fired its chief executive and suspended trading in its shares following an accounting scandal. Woodford is the biggest stakeholder in Eddie Stobart.