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The Neil Woodford pain continues as NAV slips and stampede of redemptions continues at Income Focus. Tick-tock, how long to suspension o’clock?

By Nigel Somerville | Friday 7 June 2019


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Yesterday I showed that redemptions at Woodford Income Focus Fund (IFF) had been 6% the previous day. This morning it is down again sharply – and so is Woodford Equity Income Fund (EIF) despite the gates being firmly shut.

As at midday yesterday, Income Focus Fund had dropped from £451.79 million to £423.70 million. The accumulation shares had dropped 1.63%, so £7.4 million of that drop is explained by Neil’s investments being poor. But that leaves £20.7 million of redemptions to explain the rest of the drop – which is 4.6%. Put another way, 10% of IFF has been redeemed in just two days which is clearly not sustainable. I continue to expect the fund to be suspended by the end of next week.

Of course, Woodford shares have been tumbling because the market can see him coming: he has to sell. And that means that IFF might not get the value it should from disposals, which raises the possibility that it might be gated sooner than the end of next week, in order to protect investors.

Either way, at this rate there won’t be anything left by the end of the month if it is not gated.

As for EIF, it is gated and thus yesterday’s fall of 2.06% (when the market was up!) tells you all you need to know. The fund has now fallen to just £3.54 billion.

With Woodford having been sacked by Omins and St James’ Place, and WPCT generating no fee income, this all has a nasty implication for Woodford Investment Management. Having started the week with around £10 billion under management, it is now less than £4 billion  ( and less than £3 billion on which WIM earns fees) and that means thoe fees won’t be coming in at anything like the rate they had been. Indeed, WIM must surely be running at a loss.

And Woodford is coming under increasing pressure to drop its management fee for EIF. Whilst he has waved two fingers at that so far, I wonder if an invitation to visit the Treasury Select Committee might change that.

With a £25 million bill just having dropped in the door from Proton Partners, we know that Neil has promised to dump unlisted stocks and go for the FTSE350 in EIF – so it might be a little tricky to justify paying the £25 million from there. But then WPCT hasn’t any money and Income Focus is straining under a stampede of redemptions, and in any case there’s no income from Proton Partners.

This raises the possibility that WIM might itself have to foot the bill……but I bet it can’t pay up either. Problems, problems…who WILL pay, if anyone?

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