Woodford offloads £86m P2P stake onto Quilter

Star manager cuts deal on another investment trust

Woodford

Neil Woodford (pictured) has gifted his entire stake in peer-to-peer lender P2P Global worth £86m to Quilter Investors as he looks to rejig the portfolio to counter continued outflows.

Quilter absorbed the entirety of the star manager’s 13.56% stake in the £636m investment trust, stock exchange announcements from Monday show.

The move comes weeks after Woodford sold off a £40m stake in real estate investment trust NewRiver to his former colleague and successor at Invesco Mark Barnett. This took Woodford Investment Management’s holding down from 29.06% to 23.35% making Invesco the new largest shareholder with its 25.07% stake.

He also cut his stake in Mereo BioPharma by 26% from 41.97% to 31.07% last week.

But he bought more of FTSE 250 lender Amigo Holdings and troubled contractor Kier Group in April, doubling his stake in the former and lifting the other to 18.14%.

A spokesperson for Woodford Investment Management declined to comment on the recent transactions stating that Woodford never comments on any stocks bought or sold intra-month. They added the sale would be referenced in the star manager’s next portfolio roundup.

P2P stake absorbed by Cirilium

Portfolio Adviser understands the P2P holding is through the firm’s Cirilium portfolios which has exposure to similar investment trusts.

In early April Quilter abandoned Woodford as manager on one of its UK equities segregated mandates. Quilter Investors UK Equity Income II, the mandate managed by Woodford, held assets totalling £91.8m. It was merged into another segregated mandate run by Adrian Frost with £236.6m.

At the time Woodford Investment Management made it clear that Quilter would retain 90% of the assets as the £8.3bn Cirilium active range, managed by Paul Craig, switched its holdings into the LF Woodford Equity Income fund.

A spokesperson for Quilter told Portfolio Adviser that the investment in P2P by the Cirilium portfolios is unconnected to replacing Neil Woodford as the manager of one of its mandates.

Outflows and performance woes

Woodford has come under pressure to rejig his portfolios as his funds have continued to be stung by outflows.

Morningstar data puts net flows for the Woodford Equity Income fund at -£2.38bn for 2018. In January 2019 the research group said clients pulled a further £67.12m from the £4.33bn flagship fund.

The star manager’s younger Income Focus fund, which had a 1.64% stake in P2P at the end of March, also ended last year with net negative flows, losing £62.61m.

FundHolding in P2P Global (%)
Woodford Equity Income1.61
Woodford Income Focus1.64
Source: Woodford Investment Management as at 31 March 2019

Woodford’s flagship equity income fund has continued to languish near the bottom of the IA UK All Companies sector though performance in 2019 has improved marginally.

Over three months the fund has nearly crept into positive territory with returns of -0.6% versus the sector’s 8.5%. But investors who have stuck around for three years are down considerably against IA UK All Companies rivals, who have returned  29% on average versus Woodford’s -6.9%.

Woodford Income Focus is also stuck in the fourth quartile over three months, six months and one year.

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