Neil Woodford is sitting out on a fundraising for troubled smart pallet firm RM2 International and has cut his stake in another laggard as he loads up on some of his former FTSE 100 favourites.
RM2 revealed via an RNS update that Woodford would not be participating in an upcoming placing, with shareholder Richard Cashin and hedge fund Polygon Global Partners agreeing to front the cash instead.
Prior to the fundraising Woodford’s investment boutique held 12.5% of the firm’s issued share capital but if the second tranche placing goes ahead, he will only own 7.0%. Portfolio Adviser understands RM2 makes up 0.01% of Woodford Equity Income.
The smart pallet maker has been struggling to make ends meet and admitted to burning through $2.3m each month and having just $3.3m on its balance sheet. The firm suspended trading in early July after it failed to produce its interim results on time.
A regulatory filing from Tuesday also shows that Woodford reduced his stake in troubled online estate agent Purplebricks from 17.6% to 15.5% on 27 September.
The company has been one of Woodford’s biggest laggards in terms of performance and has seen its share price halve over the last year from 222p to 113p.
Woodford buys BT and British banks
The updates from the beleaguered UK equity manager’s stragglers comes as he has added a quartet of FTSE 100 names to his second open-ended fund, Woodford Income Focus.
Woodford loaded up on £22.7m shares in BT and Legal & General, as well as high street banks Lloyds and RBS, an interim report posted by authorised corporate director Link revealed.
The bulk of that money (£13m) went to telecom giant BT, which now makes up 3.59% of the fund. A further £7.3m was poured into RBS, bumping it up to 2.44% of the portfolio, while Legal & General and Lloyds became 1% and 0.97% respectively.
BT was also added to the frozen Woodford Equity Income fund along with British American Tobacco, both of which featured among the fund’s largest holdings when it debuted in June 2014. Over the period he also added British Airways parent company International Airlines Group.
Woodford Income Focus top 10 holdings (as at 31 July 2019)
| Barratt Developments | 7.15% |
| Provident Financial | 6.73% |
| Honeycomb Investment Trust | 6.23% |
| Theravance Biopharma | 5.93% |
| Bovis Homes | 4.90% |
| Regional Reit | 4.82% |
| PayPoint | 4.78% |
| Crest Nicholson | 4.63% |
| Redrow | 4.41% |
| Card Factory | 4.14% |
Source: Link Asset Services
As he was loading up on blue chip companies Woodford exited five of his small-cap names. He offloaded his entire stakes in doorstep lender Morses Club and Newriver Reit, both of which he lost money on. BCA Marketplace was also dropped from the portfolio and was one of the few sales Woodford has taken a profit on.
Woodford’s sister fund has suffered from severe outflows in light of the Woodford Equity Income suspension.
That month alone it haemorrhaged £150m of client money, putting it on par with redemptions suffered by much bigger funds like Standard Life Investments Global Absolute Return Strategies. Since the suspension Woodford Income Focus has seen assets nearly halve to its current £256m.
