Monday 30 September 2019 10:28 am

Neil Woodford's role at risk as listed fund suffers £232m loss

Woodford Patient Capital Trust (WPCT) is considering the position of beleaguered fund manager Neil Woodford after the fund reported a £232m loss and a significant writedown in the value of its portfolio.

WPCT said its assets dropped a further 21 per cent in value during the past three months, with chairman Susan Searle describing the first half of the year as “the most challenging period for the company since it floated in 2015”.

Read more: Woodford Patient Capital shares slide following fresh writedown

The valuation of the fund’s assets fell from £748m to £591m during the three months to 26 September.

The fund’s board “continues to evaluate” Woodford’s position as portfolio manager, and “remains in dialogue” with rival portfolio managers about taking over, it said.

Neil Woodford said he was “very sorry” for the “extremely disappointing six-month period” shareholders in WPCT had experienced.

“While shareholders can be forgiven for thinking there are no positives, I continue to believe that the majority of the businesses we have invested in are making good progress,” Woodford said.

WPCT’s interim results showed the fund is close to breaching its 80 per cent limit on unquoted holdings. On 31 August, WPCT’s portfolio was 79.77 per cent unquoted holdings. WPCT said it is planning to seek shareholders’ permission to raise the limit.

WPCT may also stop reporting its net asset value (NAV) daily due to its high proportion of unquoted holdings, which it said “will become increasingly unsuited” to daily publication. Instead, NAV could be published monthly or quarterly.

“Essentially [WPCT] is becoming a private equity trust”, AJ Bell’s Ryan Hughes told City A.M..

Hughes also said replacing Woodford as the fund’s manager would be a challenge because of how “personalised” the portfolio is, which would make it difficult for another manager to take on “and adjust it into the shape they wanted”.

Shares in WPCT have halved in value this year, and relations between the board and Woodford have come under significant strain since the fund manager’s Equity Income Fund (WEIF) was suspended in June following a run of redemptions.

The fund said in July that it was considering dropping Woodford as its portfolio manager and had been approached by a number of other fund managers pitching to take over from the stockpicker.

WPCT has suffered a series of embarrassing writedowns in the value of its holdings since the gating of WEIF, and dropped off the FTSE 250 index earlier this month.

Read more: Hargreaves Lansdown founder slams Neil Woodford for not being ‘truthful’ about frozen fund

“We are focused on maximising value and restoring confidence in WPCT and its portfolio,” Searle said.

Shares in WPCT were down just over two per cent in early trading to 43.10p.