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AA delivers boost to Woodford as shares soar

Shares surge on bullish comments from boss, boosting fund manager Neil Woodford, the roadside recovery group's largest single shareholder.

 
AA delivers boost to Woodford as shares soar
 

Neil Woodford has received a boost from a surge in the shares of AA (AAAA) as the roadside recovery group reported a positive start to the year.

The shares jumped 16.5% to 132.5p, having initially fallen to 110.9p at the open, after reporting £391 million of profits for the 12 months to the end of January, 3% down on the previous year but in line with expectations.

Bullish comments from chief executive Simon Breakwell helped spark a rally in the shares, which have been languishing over the last year after the shock departure of its chairman and a string of profit warnings.

The rally will be welcomed by Woodford, the largest single shareholder in the company, with 15% of the shares, and holdings in both his Woodford Equity Income and Woodford Income Focus funds.

'In February we outlined our strategy - we are if anything more confident we can meet our growth ambitions,' said Breakwell in a mdeia call, according to Reuters.

Breakwell earlier this year overhauled the roadside recovery group and insurer's approach, cutting dividend payments and announcing higher investment levels to fuel growth.

Even with today's jump, the shares have lost half their value over the last year, after the company fired executive chairman Bob Mackenzie for gross misconduct and delivered a string of profit warnings.

But they are up from a low of 71p hit in the aftermath of the latest profit warning in February. 

Woodford had been buying more of the shares as they languished at lows, topping up his stake in February.

His fund group has backed Breakwell's turnaround plan, with analyst Alex Correia saying in February the dividend cut 'should be viewed as a short-term sacrifice which is insubstantial in the context of the long-term value that can be delivered from here'.

Retailers rally

The FTSE 100 meanwhile rose 30 points, or 0.4% to 7,227, with retailers leading the way after Associated British Foods (ABF), up 3.6% at £26.76, reported a resilient performance from its Primark clothing stores chain. That helped Next (NXT) rise 2.4% to £51.86.

On the FTSE 250, JD Sports (JD) added to the bullish sentiment for retailers, as the sportswear chain posted a 25.5% jump in annual profits. Among 'small-cap' stocks, Debenhams (DEB) rose 7.3% to 22.9p.

15 comments so far. Why not have your say?

Michael Whitehouse

Apr 17, 2018 at 16:35

Too late Mr Woodford - all my funds in your languishing fund withdrawn. Ran out of patience with your optimism and Hargreaves Lansdown optimism and promotion.

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Penelpe Gardner

Apr 17, 2018 at 17:12

yeah well, I still holding . Plough on Neil.

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JDee

Apr 17, 2018 at 17:14

I've just re-invested in Woodford Equity Income @ £1.20 after selling out six months or so ago at £1.30. Luck me! I have a feeling this fund is coming good again after a run of really bad luck.

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Ian Gregory

Apr 17, 2018 at 17:15

Just sold half of my Woodford on the grounds he has been my worst performer .

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Penelpe Gardner

Apr 17, 2018 at 17:25

Long term, long term, you millennials....

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Ian Gregory

Apr 17, 2018 at 17:28

Unfortunately my pension time is not as long term as I would like.non millennial

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Tyrion Lannister

Apr 17, 2018 at 18:52

I still hold Woodford but switched from the UK Equity income fund to the income focus fund.

My initial purchase was intended as a core holding, it’s now my contrarian bet!

How things change!

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William Wilkinson

Apr 17, 2018 at 20:37

Held on to Woodford, with gritted teeth. It's been disastrous, but there is plenty of upside potential from here. Prothena could be key, reporting soon.

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Franco

Apr 17, 2018 at 22:36

I have sold out of all my Woodford holdings. His funds may recover one day, but how long will his investors have to wait and who will give them back the years they will have waisted? And what if they do not recover?

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William Wilkinson

Apr 17, 2018 at 22:59

I don't disagree with you. You will probably beat him with a tracker fund. However, I do admire the way he tries to support early stage UK businesses, I think he genuinely cares about the UK economy. I also respect him for his fund updates, especially publishing all his holdings. It would be nice if he actually made some money though.

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Tyrion Lannister

Apr 18, 2018 at 00:54

WW - my thoughts too. If I could afford to, I’d invest in WPCT just for that reason.

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Gordon Russell

Apr 18, 2018 at 05:25

I held the Equity Income Fund since inception as a big Core Holding . Then about a year ago when it’s dividend yield had fallen below 4% , I bought the Income Focus fund for its higher yield . By Xmas 2017 I had sold all my Equity Income fund because of all Woodies stuff ups , and the income Focus Fund is under review . I am prepared to hold it for the high yield and give him time to get his house in order , subject to there being no more stuff ups .

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Mr J

Apr 18, 2018 at 21:31

As Warren has said...The stock market is a device for transferring money from the impatient to the patient.

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jab1tt

Apr 22, 2018 at 08:17

I d'ont get it. Why be patient and hang on when you can switch to more reliable performers like Fundsmith and Lindsell Train? Us investors are not a charitable institution, hanging on because that is what Hargreaves Lansdown would have us do.

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Michael Whitehouse

Apr 22, 2018 at 08:28

Too little and too late, Mr Woodford. I should have dumped the fund earlier, or not listened to the HL hype to buy it.

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