One of Britain’s biggest fund managers Neil Woodford (pictured) has denied being involved in a “conspiracy … to injure” infrastructure firm Stobart Group, which he owns a significant stake in.
Speaking before the High Court on Monday, Woodford said he was “shocked” by claims made by Stobart bosses that he and the company’s former chief executive Andrew Tinkler formed a plot to buy a majority stake in Stobart’s aviation business and then sell it for double what they paid a short time later.
The alleged deal has been linked to Stobart’s planned takeover of air carrier Flybe, which was later ditched.
Stobart success in investors’ best interest
Woodford called the claims “untrue” in a written witness statement and said there was no motivation for him to injure Stobart because it would be detrimental to investors in his funds.
Woodford owns a 19.63% stake in Stobart. The stock is the 10th largest holding in his flagship Equity Income fund, making up 2.61% of the portfolio, and also appears in his Income Focus fund (1.11%).
“Why I would want to ‘injure’ Stobart, in which I have chosen to invest my investors’ funds, is never explained, as is the allegation that I conspired with Andrew Tinkler to pursue his interests over those of Stobart,” he said.
“I owe duties to the funds I manage, and it is in the best interests of these funds for Stobart to be as successful as possible.”
A ‘very complex transaction’
The heavyweight manager added that he would not have been able to invest in the alleged Stobart Air deal in the first place because of its private structure.
Contrary to claims made by Stobart bosses, Woodford has stated it was the group’s current chief executive Warwick Brady and Tinkler who approached him in mid-2017 to “invest in a separate company, alongside Stobart Capital, to facilitate the investment acquisition of Flybe for all parties, including Stobart”.
During cross-examination on Monday, Woodford said the deal presented by Brady was “a very complex transaction” but “looked like a deal that would benefit Stobart Group shareholders”.
Woodford holds a number of private companies in his open-ended funds as well as his £820m Patient Capital Trust.
Earlier this year his £5bn Equity Income fund was close to breaching the 10% hard limit on unlisted securities for retail Ucits funds imposed by the Financial Conduct Authority.
Portfolio Adviser reached out to Woodford Investment Management for clarity on his comments on the structure of the deal but did not hear back.
Boardroom brawl
Woodford’s support for ousted Stobart boss Tinkler put him on the opposing side of former employer Invesco in an embittered boardroom battle ahead of the firm’s AGM.
Tinkler was shown the door in June after he told shareholders and employees that he would be using his shares to vote against the re-election of Iain Ferguson as chairman and instead install billionaire Peter Day. He has also been accused of inappropriate behaviour.
In an uncharacteristically public show of support Woodford sided with Tinkler, describing him as “an unconventional, straight talking, honourable man”, while Invesco sided with the board’s recommendation to shoot down Tinkler’s proposal. Invesco owns 24.82% of Stobart.
The scuffle spilled out to the High Court earlier this month. Tinkler has also rejected Stobart’s allegations and has countersued the firm on unfair dismissal grounds.
The case is still ongoing.
