Invesco Perpetual selling down Rolls-Royce as Harrison buys in

Invesco Perpetual appears to have been selling down its stake in blue chip Rolls-Royce just as Threadneedle's head of UK equities Leigh Harrison and his colleagues have been buying into the stock.

Invesco Perpetual is still Rolls' largest shareholder with a 5.56% stake at the end of July, but the position has been gradually trimmed over the last year after Woodford appears to have been taking some profits after Rolls' strong performance in 2009.

At the end of last year Invesco Perpetual's total stake in Rolls-Royce had been 6.12% with Woodford's Invesco Perpetual High Income and Invesco Perpetual Income funds holding stakes of 2.7% and 1.9% respectively on 26 July.

Invesco Perpetual had sold some 10.5 million shares in the group over the last three quarters to the end of July which at today's price of 575.50p have a market value of around £60.3 million. 

Shares in the firm hit a 52-week low of 434.50p last November and hit a year high of 631.50p in April. Invesco Perpetual has sold the 10.5 million shares between the start of the year and the end of July with the vast majority held within Woodford's funds. The group still holds more than 103 million shares in the group, which has seen its share price rise  by 21.2% in the year to date.

Strong order book

At the same time Threadneedle's UK equity team has been buying into the firm for its strong earnings visibility and recurring revenues.

The firm had no exposure to the stock prior to May, but Leigh Harrison's UK Equity Income fund, Simon Brazier's UK Growth fund and the some of the firm's institutional mandates have been buying into the stock over the last three months. At 26 July the firm held more than 13.3 million of its shares, equating to almost 0.75% although they have continued to add.

Threadneedle UK Mid 250 fund manager Simon Haines, who covers the aerospace sector for the group, told Citywire the firm had been buying in on the firm's long term visible earnings and has  bought more on weakness in the last few days.

Haines said Rolls' series of Trent engines which were being installed in the latest generation of wide-berth Airbuses and Boeing's new Dreamliner aircraft have given it a very solid order book and visible recurring revenues over the next few years.

'Orders for its higher margin larger aircraft engines can sustain it for most of the next decade. Rolls Royce is at a premium to its peers but it has around 50% of the jet engine market.