Shares in the trust have fallen this morning by -2.28% following the news to 96.3p. The £800m trust is current trading at around a 7% premium to its net asset value.
Woodford said the trust has “successfully deployed the proceeds of its initial public offering and has a substantial ongoing pipeline of investment opportunities.”
This being so Woodford said he is looking at ways to raise additional capital this year and will consult with investors to gauge interest.
Head of investment research, Hargreaves Lansdown Mark Dampier cautioned that there could be a fall in the price if Woodford issues new shares, but the trust is a long term investment and he believes Woodford will ultimately reward those who back him.
“It must be said, that if and when there is a capital raise, a new large tranche might cause the trust’s share price to fall to a discount to its net asset value in the short term,” he said. “However, the fact Woodford believes the investment case remains so strong is good for the long-term investor, although there are no guarantees of future performance. In my view, any new money raised should not fundamentally change the reasons for holding the trust for the long term – Woodford’s only reason to consider this would be the opportunities he believes are out there. Long-term investors, who take the trust’s name literally and are patient, should be rewarded.”
Dampier said the plan indicates Woodford believes there are plenty of “untapped opportunities” still out there despite having deployed all the trust’s initial money. These will “not be around forever” Dampier noted.
The trust currently has 60 holdings and Dampier said he expects Woodford to add 20 to 30 if he goes ahead with the plan to raise new money.
