Woodford may gauge how many investors want to sell out
Investors with money stuck in Woodford Equity Income Fund (BLRZQ73) may be able to place an order to sell up to two weeks before the official reopening date earmarked for December.
Shares understands that Link Fund Solutions, the fund’s administrator, is considering a 14 day period in which investors can say how much they want to transact in the fund. These instructions would only be enacted once the fund’s suspension is lifted.
This would give Woodford Investment Management up to a fortnight to gauge demand from investors looking to cash out of the fund.
Theoretically it would provide a short period of time to sell enough stock to meet redemptions as soon as trading recommences rather than the fund reopening and the manager having to rush to sell holdings to immediately raise cash.
WHAT’S HAPPENED SINCE THE SUSPENSION?
Trading in the fund has been suspended since 3 June while fund manager Neil Woodford restructures the portfolio, sells smaller holdings and uses the proceeds to invest in larger stocks. The value of the fund has fallen by 15% since the dealing suspension began.
Woodford Investment Management last month reduced its stake in one of the income fund’s holdings, Non-Standard Finance (NSF) from 23.9% to below 5%. Private equity group Alchemy bought a 19.25% stake from Woodford and may be interested in owning the whole company according to analysts.
Another holding in the income fund has also been reduced, a 13.17% stake in Russian warehouse investor Raven Property (RAV) where Woodford Investment Management recently went below 5%.
This ongoing portfolio restructuring is a key reason why the asset manager has refused to waive the fees charged to investors locked in the income fund. It means that investors have incurred fees for more than 100 days with no way of withdrawing their money.
Eddie Stobart Logistics (ESL:AIM), another holding in the fund, last month saw its own shares suspended following various accounting issues. On 9 September it revealed that investment group DBAY had expressed interest in buying the company.
LATEST NEWS ON THE FUND SUSPENSION
‘Link previously indicated that it was anticipated that the suspension of dealing is likely to last until early December 2019 while the portfolio of assets held by the fund is re-positioned,’ said Woodford Investment Management on 23 August.
‘Based on the progress made to date, they remain of the view that this is a realistic timeframe and therefore have decided that it remains in the interests of all investors for the suspension of dealings to continue.’
Investors are expected to get at least four weeks’ notice of the date when the suspension will be lifted.