Dampier (pictured), head of research at HL, said the firm is sticking with the star manager despite his recent poor run of form following a number of stock-specific setbacks from some of his biggest listed holdings this year, including Provident Financial and Capita.
Dampier said: “With Neil Woodford we’re taking a lot of flak and I say, ‘We have been here before’. We know he is having a particularly bad time at the moment, but I am prepared to give him a bit more time.
“It could be that he has lost the plot completely, it does happen, and I’m not so silly that I don’t realise that, but on the balance of probabilities over the years I’ve known him, I’m going to give him a bit more time.”
When pushed on how long he would give Woodford, he said: “I’d say at least three years plus.”
He added: “If you are not going to play that game then buy passive, it is a dead easy choice because all active managers are going to have bad times which can last three months, a year or easily three or four years. The market just moves away from what you’re doing.”
Fourth quartile
The Woodford Equity Income fund has returned -9.31% and 3.58% over one and three years respectively, versus the IA UK All Companies sector’s 7.6% and 22.8% – placing it in the fourth quartile for both periods, according to FE data.
FE figures also show the newer Equity Income Focus fund, launched in March last year, has returned 7.9%, 0.2% and -1% over three months, six months and one year versus the IA Specialist sector’s 4.2%, 0.1% and 2.9%.
Whitechurch Securities started to sell out of the Woodford Equity Income fund across the board in Q3 and Q4 last year and has moved into the Woodford Income Focus fund more recently.
Gavin Haynes, managing director at Whitechurch Securities, said: “For balanced investors, our view was the headwinds of the money coming out of the Equity Income fund on the unquoted part of the portfolio meant for clients who wanted a straightforward equity income fund, the Income Focus fund was more appropriate.”
Haynes said Woodford’s top-down view of the UK is aligned to Whitechurch’s perspective that a very gloomy scenario is priced into UK shares and that the Income Focus’s 5% yield target makes the fund not a bad place to be at the moment.
Whitechurch also recently bought some of the Woodford Patient Capital trust when the price was “bombed out” with a wide discount.
Haynes added: “He seems to provide a contrarian opportunity and there has been a lot of negative press comments that have weighed on him. We went to see him recently and his conviction hasn’t changed, and that’s what we want to see.”
