Shares in Woodford Patient Capital Trust (WPCT) are down 2.6% to 51.9p after it said it could replace Neil Woodford as its portfolio manager.
In an update the FTSE 250 listed trust, which has large holdings in early-stage pharmaceutical businesses, said it has held ‘preliminary discussions’ with rival fund managers about taking over management of the trust.
The trust’s board of directors said they are ‘monitoring and assessing all options’ as they try to slash its £117m debt and calculate the trust's funding requirements to its investee companies.
WOODFORD SELLS £1M OF SHARES
The announcement comes after Neil Woodford sold a majority of his stake in the trust, which said he was a ‘reluctant seller’ as he disposed of 1.75m shares or around 60% of his holding.
READ MORE ABOUT WOODFORD PATIENT CAPITAL HERE
Woodford sold the shares between 3-8 July, when they were trading around 56-58p, generating a total of around £1m.
It added that the only reason Woodford sold the shares was to meet ‘personal financial obligations, including a tax liability.’
SALE NOT VIEWED POSITIVELY BY SHAREHOLDERS
Broker Numis said it was ‘surprised’ Woodford needed to sell the shares in order to generate £1m in liquidity. It added, ‘Despite the explanation provided, his sale of WPCT is not something that is likely to be viewed positively by shareholders, in our view.
‘The shares are down 35% year-to-date and are trading at a 34% discount to NAV. We remain wary of buying WPCT due to uncertainty over the valuation of its illiquid/unquoted investments.’
PATIENT CAPITAL WOES SINCE WEIF SUSPENSION
The trust has struggled since the Woodford Equity Income Fund (WEIF) was suspended, given the 75% overlap in holdings, with the fall in share price reducing its market value to £484m.
Numis said steps taken by the trust’s board of directors to reduce its gearing and look at alternative managers is ‘sensible’, adding that remedial action could help improve the share price from its current level.
But the broker said ‘we still believe that greater clarity over the future management and strategy is required before having any conviction over a recovery in the fund’s fortunes.’
