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Woodford Patient faces relegation in FTSE reshuffle

Woodford Patient Capital set for relegation to 'small cap' status with shares having lost a quarter of their value since launch.

 
Woodford Patient faces relegation in FTSE reshuffle
 

Woodford Patient Capital (WPCT ) is facing relegation to 'small cap' status as the quarterly FTSE reshuffle looms.

Neil Woodford's early-stage company focused investment trust is set to lose its spot in the FTSE 250 next week, with its market capitalisation having dwindled to £611 million.

The trust had flown into the 'mid cap' index in 2015 after raising £800 million at launch, the most ever for a UK investment trust.

But with the shares having lost more than a quarter of their value since then, the trust now stands as the third smallest stock on the FTSE 250, behind sweetener maker PureCircle (PURE) and travel group On The Beach (OTB).

Heavy share price falls for some of the trust's major holdings, like Northwest Biotherapeutics (NWBO.PK), Allied Minds (ALML) and Prothena (PRTA.O) have weighed on the shares.

This has been exacerbated by a derating of the shares, which had enjoyed a premium to net asset value (NAV) in their first few months of trading, but now trade at a discount. At yesterday's close the shares were trading hands at 74.1p, 9.2% below NAV.

The FTSE reshuffle will be calculated on Tuesday's closing prices, and will come into effect on 18 June.

Marks and Spencer on the brink

Marks and Spencer (MKS), a perennial member of the FTSE 100 since the index's launch in 1984, is among the blue-chip stocks at risk of relegation.

'At the moment it looks like M&S will hang on in there by a very fine thread,' said Laith Khalaf, analyst at Hargreaves Lansdown.

'It's some way clear of the automatic drop zone, so its fate depends on how many companies achieve automatic promotion to the FTSE 100  and how its share price fares in the next couple of days versus other FTSE 100 laggards like Severn Trent (SVT) and Mediclinic (MDCM).' 

G4S (GFS) looks a surer bet for relegation, ending a brief return to the FTSE 100 for the outsourcing group, which only gained promotion a year ago.

'A pick-up in new contract wins and improved cash flow under a turnaround plan led by boss Ashley Almanza had returned the shares to investors’ favour,' said Russ Mould, investment director at AJ Bell.

'However, the shares topped out at around 340p last summer and promptly fell by a third to around 240p, despite increased profits and reduced debt in 2017, as the fall-out from Carillion’s collapse has weighed on sentiment toward the support services sector.'

Ocado soars towards blue-chip status

Ocado (OCDO) is likely to take its spot, after a stunning 270% rally in the shares that has taken the market capitalisation of the online supermarket to £5.8 billion, following a succession of international tie-ups.

Also vying for promotion is GVC (GVC), now boasting a market cap of £5.7 billion after the takeover of rival bookmaker Ladbrokes earlier this year.

'Promotion to the FTSE 100 would be a stunning achievement for boss Kenny Alexander and a firm whose shares only began trading on the Alternative Investment Market in 2004,' said Mould.

Retail relegations

Further down the stock market, the gloom surrounding the UK retail sector looks set to be reflected in the relegations of Carpetright (CPRC), Mothercare (MTC) and Moss Bros (MOSB) from the FTSE All-Share.

'While promotion to and relegation from the FTSE 100 is clearly the highest profile element of the reshuffle, ejection from the FTSE All Share is actually much more significant in terms of liquidity and impact on a company’s share price,' said Khalaf.

'That’s because of the large number of passive funds which track the broader All Share index, who will no longer need to hold these stocks going forward,' he added.

'Losing a spot in the FTSE All Share is not good news for these high street retailers, but they’ve got bigger problems to contend with right now.' 

9 comments so far. Why not have your say?

CHMM

May 25, 2018 at 17:20

Quite right too, the concept is flawed. As can be seen by the performance. he is out of his depth on this stuff.

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halfinchnut

May 25, 2018 at 19:49

Minimum 25% discount to NAV before looking at WPCT again, or 50p, whichever comes first.

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duke10

May 26, 2018 at 10:59

Woodford. I am quite sanguine about the occasional investment errors on my own account and without any training or knowledge have stayed a few percent ahead of the market for 30 years.

When I invested on behalf of my children, I though - play it safe.

How could you lose money as a Find Manager over the last 2/3 years.

Mr Woodford by strategy, hiring errors, lack of, err, everything it seems put himself in a TINT minority of Fund Managers who have pulled off the same trick. That's you Fidelity chaps by the way.

Fortunately the stunning performance by 5 of the 7 funds I chose, and thank you again very much Mr Smith, has still given them a decent return.

But that's not the point.

Pay someone to do a job - make a bit of money in bull market and watch them ***s 10% away.

Shocking

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mc2

May 26, 2018 at 11:33

Looks like now is the time to buy Woodford Patient... I have, and I will be doing fine if only reaches up back to it's launch price...

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CHMM

May 26, 2018 at 12:00

mc2 I'd be fascinated to know how you reach the conclusion now is the time to buy.

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mc2

May 26, 2018 at 13:32

@CHMM... simply because i did not buy it at launch and now it's 26% cheaper...

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Abstract Artist

May 26, 2018 at 16:04

I have to agree with @duke10, Woodford has run three quite similar, yet distinct funds into the ground over a 3 year period, and not just any 3 year period, one where even inexperienced investors could hardly make enough errors and lose money.

Yet there are still some big names in the industry who keep stating that things will improve for him, well the law of averages says that this will surely happen at some stage but how can a man who is supposed to be a star fund manager be so consistently wrong?

Three years is a very long time, and for a man of 60 years say, that is a 20th of an entire lifetime, of course when his funds do revert there will be the usual pundits, ie Dampier & Co, extolling the virtues of sticking with him but it will take some doing to make up for the shortfall and catch up with the likes of Smith, Train and Henry Dixon.

This must be the only industry where people can be consistently wrong and get paid for it, and I know WPCT fee structure is different but his 2 oeic funds have charges. The sad part is that the money he is playing with is hard earned by many of his investors who can ill afford to lose it year on year. At least Woodford is not as arrogant as Barnett.

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Big boy

May 27, 2018 at 18:18

Why do private investor alway fall for the hype at the top of the market then blame someone else.(many be its greed) Those same investor that flooded into WPC would not be a BUY now on a small discount when you get much better value.. Over many years the time to buy is when most have lost trust in the investment and the shares trade on massive discounts. What will be the next stock/Fund Manager to fall from grace .....SMT???

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huudi

May 30, 2018 at 07:34

The early premium was killed(along with reputation) by a block listing. The ability to issue/buyback shares removes a vital part of an I.T. He diluted the share price and his loyal followers together. He once said that he just stuck to his knitting(what he knows), he should have kept to that.

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