LONDON — It’s always useful to see which shares the experts are buying, especially in times as uncertain as these.
Neil Woodford is as expert as they come. Through his Invesco Perpetual Income and High Income Funds, he looks after more than 22 billion pounds of client money. His High Income Fund has generated a superb 342% return over the last 15 years — outperforming the FTSE All-Share index by more than 200%.
So, what has Woodford been buying and selling? Well, the latest annual report for his 12.5 billion pound High Income Fund has just been published, and the document reveals which stocks he’s been pumping cash into and which stocks he’s been cutting back on or disposing of completely.
Security guards wanted
Woodford’s biggest company purchase from within the FTSE 100 during the period was global security group G4S plc (LON:GFS). The maestro’s timing wasn’t great on this one as he began buying before the company’s Olympic Games debacle.
However, he has since averaged down with a vengeance, bringing his total investment to over 200 million pounds. According to my calculations, his average buy price was 260 pence.
The shares have recovered nicely and are currently trading at around 290 pence, or 11.5 times forecast 2013 earnings. The earnings multiple is below the FTSE average, while a forward dividend yield of 3.2% is about in line with the market.
Hipster and hooked on drugs
Woodford’s second-largest buy from among the U.K.’s blue chips was Smith & Nephew plc (ADR) (NYSE:SNN) . The company, which makes hip-replacement and other medical devices, attracted a 175 million pound investment from Woodford.
My sums tell me he paid an average price of 632 pence for this stock, which is currently changing hands for more than 700 pence. The forward price-to-earnings (P/E) ratio of over 14 appears to be a fair rather than bargain rating, while the dividend yield is a subpar 2.3%.
Health care in general, but big pharma in particular, continues to be Woodford’s most heavily backed sector. He has been a net buyer of Europe’s five drugs giants.
The U.K.’s big two, GlaxoSmithKline plc (ADR) (NYSE:GSK) and AstraZeneca plc (ADR) (NYSE:AZN), saw continued inflows, along with France’s Sanofi and Swiss groups Roche and Novartis. Woodford dug deepest into the coffers for the last named, investing around 225 million.
Not ringing Woodford’s bell
Following his much-discussed disposal of all the fund’s shares in Tesco Corporation (USA) (NASDAQ:TESO) at the start of last year, Woodford’s biggest sale since has been Vodafone Group plc (LON:VOD) .