Neil Woodford’s new venture will invest in a portfolio of eight biotech stocks, detailed in a document sent to prospective investors that lists an address in the Cayman Islands.
It comes weeks after the regulator in Jersey said it would not be used as a “back door” for the fallen manager to revive his career.
Portfolio Adviser has seen a document sent by a representative of WCM Partners to prospective investors that promotes the WCM Partners Healthcare Portfolio and reveals its eight stocks and their weightings in the portfolio.
“The purpose of this document is to discern investor interest in the strategy used by WCM with a view to determining whether or not to bring such a fund to market,” the document said.
WCM Partners is incorporated in England and Wales and listed on Companies House, but the document lists a WCM Partners Healthcare (GP) Ltd at an address in the Cayman Islands.
Woodford previously unveiled a plan to use Jersey as a base in a Sunday Telegraph interview announcing his planned comeback in February. However, the Jersey regulator swiftly hit back, saying it was not a “soft touch” and the island would not be used as a “back door” for Woodford to revive his career.
AJ Bell head of active portfolios Ryan Hughes said the Cayman Islands could be a route WCM Partners is taking to obtain regulatory approval under a different jurisdiction.
“Obviously, [WCM Partners] got short shrift from Jersey and from the UK as we understand it, so they may well be exploring other options,” he said.
Projected rates of return ‘galling’ for investors trapped in Equity Income
The document names the investment team as Woodford and Gavin Petken who was previously head of investments at the Business Growth fund. It said both are “actively supported” by Acacia Research Corporation.
In June last year, Link Fund Solutions offloaded a portfolio of biotech stocks from Woodford’s former Equity Income to Acacia in a cut-price deal. The original press release announcing Woodford’s comeback, dated 14 February, said WCM Partners would be working with Acacia Research “to advise on Acacia’s portfolio of life sciences companies”.
The eight stocks listed in the document are Oxford Nanopore Technologies, Viamet, Immunocore, Adaptix, ‘Target Company A’, AMO Pharma, Induction Healthcare, and Novabiotics. Oxford Nanopore, Viamet, AMO Pharma and Immunocore are all stocks Woodford used to own in his old funds.
Hughes said what could be “galling” for investors trapped in Woodford’s former Equity Income fund is the triple-digit projected three-year returns on some of the stocks in the portfolio.
The document lists Viamet, for example, as having a projected one-year IRR as 153.8%, while AMO Pharma and Novabiotics have a projected three-year IRRs of 124% and 149.1% respectively.
Hughes said: “You are looking at 100%-plus on a couple of these per annum, so clearly they [WCM Partners and Acacia] are seeing significant upside in a portfolio of stocks that was unfortunately sold from the Equity Income fund at much lower valuations.”
But Seven Investment Management senior portfolio manager Peter Sleep said the attractiveness of any of these firms depends upon on how they are being valued.
“Valuing unlisted stocks can be very fraught and difficult as investors in the Woodford Equity Income fund and the old Woodford Patient Capital fund have found,” he said.
WCM Partners declined to comment.
The eight stocks and target weightings
Oxford Nanopore (43%) – specialises in unique sequencing technology
Viamet (18%) – focused on the development of a novel anti-fungal agent for the treatment of recurrent vulvovaginal candidiasis and nail fungus
Immunocore (12%) – built on a unique and powerful technology platform developing novel TCR-bispecific T-cell engager molecules. The technology has broad applications in cancer, infectious diseases and immunology.
Adaptix (8%) – designing and developing low-dose, low-cost and portable 3D X-ray imaging devices
Target Company A (7%) – UK biotechnology company deploying microscale measurement technologies in a novel way to analyse protein interactions.
AMO Pharma (6%) – focused on clinical-stage assets that treat rare CNS diseases with significant unmet need
Induction Healthcare (1.5%) – Aim-listed digital healthcare platform
Novabiotics (0.2%) – focused on the design and development of anti-infectives for difficult-to-treat, medically unmet diseases
