The board of Woodford Patient Capital Trust is remaining tight-lipped on how significant losses projected for the Woodford Equity Income portfolio could impact the portfolio.
Investors trapped in Woodford Equity Income are set to lose 32.5% from their investment during the wind-down in a base case scenario, according to a Link-commissioned report. Losses could hit 42.6% under the worst-case scenario.
The heaviest discounts are forecast to come from companies also held in WPCT – the fund’s unquoted holdings and difficult-to-trade listed tech stocks.
WPCT declined to comment on how it might be impacted by the higher projected losses.
Stifel analyst Iain Scouller said the fact Woodford Equity Income is now in wind-down mode makes it difficult to assess the overlap with WPCT. Link has tasked PJT Partners with selling off the unquoted holdings in the fund, while Blackrock is responsible for selling the quoted part of the portfolio.
He said it would be helpful if the WPCT board provided month-end updates for investors given the amount of news flow surrounding the Woodford Equity Income fund and the investment trust.
The Link review does not reflect the most recent adjustments made to WPCT’s unquoted valuations over the last two to three weeks, he said. “So, they could be using a different basis of assumption.”
Investec director of investment company research Alan Brierley said he expects to see more of the trust’s assets written down in the coming weeks.
In an analyst note dated 5 November, Investec applied a “more conservative” discount of 50% implying a NAV of 29p on the basis that certain valuations, like cold fusion company Industrial Heat, could not be written down much further.
“However, it is not beyond the realms of possibility for the discount to crash out to 70% which is where the Listed Private Equity sector traded at during the financial crisis,” Brierley said.
WPCT provides daily updates on NAV and has updated the market where there are significant changes to valuations in the portfolio.
WPCT is currently trading at a 47% discount at 30p a share.
