Reducing the fund's exposure to unquoted and illiquid holdings

As we announced in March, and clarified in May, Neil is repositioning the Woodford Equity Income Fund portfolio to reduce the fund’s exposure to illiquid and unquoted investments, down to zero. That process is already underway, but he is not a forced seller in the market.

The suspension gives Neil time to execute this strategy in the best interests of investors. The capital will be redeployed into more liquid stocks in the FTSE 100 and 350, that fit in with his core investment strategy. Neil and the team remain as passionate about, and committed to, the patient capital asset class as ever. Woodford Patient Capital Trust’s strategy is unaffected and it remains a long-term investor in the companies in its portfolio.

 


In an extract from Neil’s blog in May 2019, talking about the fund's exposure to unquoted stocks, Neil clarifies:

“As we said on 1 March, our long-term intention is not to have any exposure to unquoted holdings in WEIF. Instead, the fund’s exposure to the unquoted asset class will come through closed-ended investment vehicles we run at Woodford, such as Woodford Patient Capital Trust (WPCT). This process is already underway and the fund’s exposure to unquoted securities (including those listed on less well-known exchanges where there is little or no trading activity) will decline over the remainder of the year to below 10%.

“In some respects, this will naturally decline because many of the largest, less liquid holdings in WEIF are in businesses that we have been nurturing for many years (for example, I first invested in Oxford Nanopore almost a decade ago), and some of these businesses are maturing into companies that are ready for a full stock market listing.

“Some others are approaching inflection points where new investors are coming onto the register and these afford liquidity opportunities that we will be able to take advantage of, where appropriate. It is also the case that some of the smaller early-stage companies in the fund have developed so quickly that they will, over the next few months, be launching full IPO processes (typically on Nasdaq).

“The combination of all these carefully managed processes will mean that beyond this immediate period, WEIF’s exposure to these less liquid holdings will reduce further to significantly below 10% and, over time, to zero. Of course, my interest in these businesses will continue for as long as they remain undervalued, and WEIF investors will be able to benefit from the continued growth in many of them via their full market listings and through WEIF’s direct holding in WPCT.”

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