Shares in Neil Woodford’s investment trust fell more than six per cent this morning after it was revealed that it sacked its advisor in a row over risky investment valuations.
Woodford Patient Capital’s stock dropped this morning following reports that the listed trust sacked Duff & Phelps last year.
The advisor, which was appointed when the trust was launched in 2015, was fired following a row over fees and valuations.
The Sunday Times reported that the trust had demanded lower fees and seemed to be “cutting corners”.
“There is a significant overlap in the holdings in the Woodford Patient Capital trust and the suspended Woodford Equity Income fund and it looks like investors in Patient Capital want to exit the trust before the selling pressure from Equity Income drives down the prices of these common stocks too much,” Ryan Hughes, head of active portfolios at AJ Bell, said.
“As a result, the share price of Patient Capital has fallen sharply although interestingly there is now a big disconnect between the share price and the value of the underlying assets with the trust trading on a significant discount. Investors clearly expect the value of the stocks to fall and are voting with their feet in large numbers.”
It was also revealed over the weekend that fund supermarket Hargreaves Lansdown had raised concerns over the performance of the now-suspended Woodford Equity Income fund more than two years ago.
However, the investment advisor continued to recommend the fund to its customers.
Hargreaves Lansdown sold 12.4m units of Woodford stock in four of its multi-manager funds between March 2017 and March 2019, while its total holdings across two other funds grew 2.7m.
In total, the value of its holdings in the equity income fund fell by £189m over the period. It still has about £610m in the fund.