LONDON — It’s always useful to see which shares the experts are buying and selling — and Neil Woodford is as expert as they come.
Through his Invesco Perpetual Income and High Income funds, Woodford looks after more than 20 billion pounds of client money. His Income fund has generated a superb 251% return over the last 10 years, compared with a 135% return for the average U.K. equity income fund.
The latest annual report for Woodford’s Income fund has just been published, and the document reveals which stocks he’s been pumping cash into and which stocks he’s disposed of.
Two big sells
It’s been widely reported that Woodford has lost faith in telecommunications titan Vodafone Group Plc (ADR) (NASDAQ:VOD). Woodford has said he has “reservations” about the company’s ability to generate profits from data services. Also, he’s concerned about the level of cash flow cover of the dividend, which he views as “uncomfortably low.”
Woodford began selling down the Income fund’s holding in Vodafone Group Plc (ADR) (NASDAQ:VOD) last summer, disposing of more than 105 million shares. He has now exited his position entirely with the sale of the fund’s remaining 149 million shares.
According to my calculations, Woodford achieved an average price of 180 pence a share on his first tranche of sales, but just 161 pence on his second. The total proceeds amounted to 430 million pounds at an overall average price of 169 pence.
Sweeteners group Tate & Lyle PLC (LON:TATE) is another holding that Woodford began selling last summer and has now disposed of completely. My sums tell me he sold at an average price of 673 pence, raising just more than 129 million pounds.
Vodafone Group Plc (ADR) (NASDAQ:VOD)‘s shares are now 14% higher than the average price at which Woodford sold; Tate & Lyle PLC (LON:TATE)‘s are 21% higher. Schadenfreude time for those of you who like to indulge!
Remember, though, that Woodford plays a long game and it will be some time before his sells — and what he bought with the proceeds from the sales — pan out. One thing’s for sure, if his quarter-of-a-century track record means anything at all, he’ll outperform many funds and private-investor portfolios that currently still hold Vodafone Group Plc (ADR) (NASDAQ:VOD) and Tate & Lyle PLC (LON:TATE)!
Woodford’s biggest buy over the past year from the FTSE 100 elite has been security group G4S plc (LON:GFS). He first bought in before the company’s staffing fiasco for the Olympic Games, and has continued to buy heavily on share-price weakness since.
Woodford has pumped close to 150 million pounds into G4S plc (LON:GFS) for his Income fund during the year, and I calculate his average buy price as 261 pence a share.