The suspension of trading in Neil Woodford’s flagship fund is set to continue until December. News of the suspension extension emerged shorty after Woodford Patient Capital Trust said it is considering a change of management.
Woodford suspended trading in the Woodford Equity Income Fund last month after investors pulled more and more cash out of the underperforming investment vehicle. With investors withdrawing up to £10 million ($12 million) a day and the prospect of a £250 million withdrawal looming, Woodford stopped trading in the fund to buy time to shift the portfolio away from illiquid biotech holdings.
That process could continue into December. Woodford plans to use the extra time to sell holdings in privately held companies and invest the proceeds in larger businesses that trade on the London Stock Exchange. Woodford’s private holdings include BenevolentAI and Oxford Nanopore.
The fund sought to frame the extension as being in the best interests of investors, but Woodford acknowledged some people will be angered by being prevented from accessing their money for about six months.
“I understand the frustration, inconvenience and anxiety the continued suspension of the fund will be causing you and I am extremely sorry for putting you in this situation. The suspension itself did appear to have had a further immediate impact on performance in the short term, but we are of the view that the worst is now past,” Woodford said in a statement.
The frustration of investors may have increased when they read an update published by Woodford Patient Capital Trust shortly before news of the extension dropped. The update revealed Woodford sold 60% of his stake in the trust weeks ago, pocketing close to £1 million, but only told the board over the weekend. Woodford sold the shares “to meet personal financial obligations, including a tax liability.”
Woodford may soon face further problems. Having been contacted by groups about the ongoing management of Woodford Patient Capital Trust, the company’s board is considering whether to sack Woodford and put new leadership in place.
“The board intends to engage with a broader range of third-party managers in order to undertake a full assessment of all potential management options, which may or may not lead to a change in the company's management arrangements,” the board wrote in a statement.