Attempting to explain the recent less-than-stellar performance of Neil Woodford’s flagship, Woodford Equity Income, the note said there was “a fundamental disappointment” from Capita during December, in the form of another profit warning.
WIM conceded that “with the benefit of hindsight” it has been a mistake to own Capita shares over the last twelve months. The company’s share price fell from over £11 per share at the start of 2016 to below £5 per share during December.
Despite this, WIM did offer some words of optimism, saying it believes “the market has over-reacted” to the negative trading updates, and Capita’s share price is now “way below the intrinsic value of the business.”
Industrial services company G4S and sub-prime lending specialist Provident Financial were also in the line of fire as WIM named other culprits that had detracted from performance in 2016.
On a positive note, WIM picked out energy company Drax and tech business Allied Minds as examples of the fund’s stronger performers last year.
The £9.5bn fund has returned 8.96% over the past 12 months versus 17.16% for the IA Equity Income sector as a whole, according to FE Analytics.
