The board of the Woodford Patient Capital Trust has abstained from buying up stakes in the heavily discounted closed-ended fund even as bargain hunters pile in.
Interactive Investor revealed on Wednesday that it was the most purchased investment trust in June knocking Scottish Mortgage from an almost a five-year uninterrupted reign as the most popular. The only other time James Anderson’s £8.6bn fund has been knocked off the top spot since February 2014 was in April 2015 when Woodford Patient Capital Trust launched.
“While there remain lots of questions about Woodford’s stock selection and valuation, some of our investors are clearly taking the view that some of the companies held in this trust may be big winners in the future, and that the current huge discount is therefore potentially attractive,” said Moira O’Neill, head of personal finance at II.
The £885.8m Woodford Patient Capital trades at a 31.9% discount, according to the Association of Investment Companies. In contrast, Scottish Mortgage trades at a 2.9% premium.
Darius McDermott, managing director at Chelsea Financial Services, said: “This is a clear bit of evidence of good old human behaviour in chasing a bargain.
“Clearly it has been making the news every day so will be in front of investors, coupled with the fact that it has gone to a big discount and still has the UK’s most known fund manager has been an alluring combination, so that’s why it’s been number 1 selling trust in the last month.”
Board must be careful about messages it sends
However, the board of the Woodford Patient Capital Trust have been notably absent among the bargain hunters.
There have been no director dealings since Woodford Equity Income suspended on 3 June triggering the widening discount on the investment trust. The last director dealing was in May 2017, when chair Susan Searle bought 15,000 at 92.2p, Alan Hodson bought 100,000 at 92.8p and Pamela Makin bought 12,000 at 92.1p. Hodson departed the board two weeks before Woodford Equity Income suspended.
Director shareholdings reassure investors but are ultimately a “personal matter”, said O’Neill.
She said: “It’s fair to say the board have a huge number of issues to contend with right now, and director dealing is unlikely to be high on their list of priorities. Moreover, they also need to be extremely careful about the messages they send to the market. The trust has a lot of general housekeeping to do right now – having just got a new director, one has just left and they are looking to recruit another. There is a lot of work to do.”
