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What Woodford bought and sold in the first quarter
by Emma Dunkley on May 10, 2012 at 10:32
The Citywire Selection manager said the fund’s holdings in UK tobacco benefited the fund over the first quarter, despite the sector’s traditional share-price dip in January and a more risk-on appetite among investors.
Woodford said: ‘While valuations in the sector may not be as low as they were a decade ago, in our view they still look attractive considering the quality, dependable characteristics they offer along with providing a reliable income stream.’
BT was the top performing stock in the fund, growing by 0.8% in the quarter. The telecom company said it had reached an agreement with its pension scheme trustees on a plan to reduce its deficits, which Woodford said should allow BT more room to increase future returns to shareholders.
It should also allow the stock market to focus more on the value which Woodford sees in BT.
Woodford pointed out Capita’s shares underperformed in 2011 due to concerns over the impact of government cost cutting on the company’s outsourcing business, although it announced last quarter that it expects revenue growth to rise in 2012.
‘We have long believed that fiscal austerity would eventually lead to an increased amount of government outsourcing and news of an important new contract to provide training to the civil service suggests that this may finally be starting to happen,’ said Woodford.
Woodford took some profits from the tobacco sector, as well as in BT and Vodafone, on the back of strong outperformance, although these stocks remain core holdings in the fund.
Elsewhere Woodford added to holdings in Capita and Serco, as well as the healthcare sector. He also made two new investments in French pharmaceutical firm Sanofi and UK medical devices business Smith & Nephew.
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