Hedge funds have field day front-running the liquidation. 300,000 investors left twisting in the wind
Neil Woodford, the manager of shuttered asset management fund, Woodford Equity Income fund, just had one heck of a black Friday. First came news that Link Fund Solutions, which manages the corporate governance of Mr Woodford’s investment vehicles, had slashed the valuation of cold fusion developer Industrial Heat, one of Woodford’s largest unquoted holdings, by around 40%, from £91.3 million to £55 million.
The move will shave 4.3% off the net asset value of the Woodford Patient Capital (WPCT) investment trust. Having plunged since the suspension of Woodford’s flagship Woodford Equity Income fund (WEI), shares in the trust dropped a further 5.5% on Friday to 41.5p and are now down 46% year to date. Industrial Heat is also held by WEI. Valued at £115 million at the end of December, that stake is now likely to be worth around £70 million, knocking around 1.4% off the fund’s value.
Then came the second blow: another big Woodford holding, British haulage company Eddie Stobart, announced that it was suspending trading in its shares and had fired its CEO after an accounting investigation had found the group’s profits had been overstated. Twenty-three percent of the company’s shares, already down 47% in the last year, belong to Woodford. As long as the shares remain suspended, there’s no way he’ll be able to sell them.
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