Having looked at Woodford’s Equity Income Fund earlier HERE, I will now turn to Woodford Patient Capital Trust (WPCT) which as ever, even though the goalposts keep moving, is up against its limits and with the portfolio remaining awash with cash guzzlers, I’m struggling to understand how Neil Woodford gets out of the mess.
The performance for WPCT for June was very impressive with NAV increasing by over 10%, with the IPO of the Autolus ADS’s in the US at an excellent price and the price has jumped nicely since too. As a result, Autolus is now the largest position in the trust by some way at 13.14% of gross assets, that equates to 15.6% of NAV. The top 10 positions now make up 60% of gross assets, which equates to over 70% of NAV, and if we acknowledge that Benevolent AI is actually a healthcare business as it has a lab and loads of scientists and is developing drugs rather than a tech business, then that sector accounts for 49% of gross assets in the top 10 (58% of NAV). I know Neil, Benevolent AI has a large computer and is actually a tech business but I’m discounting that as I’m struggling to find evidence that it has ever been turned on.
From an unquoted perspective, one will remember that at the start of the year the investment policy was changed from an unquoted stock limit of 80% of net assets to gross assets and at year-end, its percentage was 68% of gross assets. Well, Neil doesn’t set it out but I have just been through the portfolio by hand and I estimate the total of unquoted stocks as at end-June to be 79.9% of gross assets. As I mentioned earlier, I am assuming that Autolus remains unquoted as Woodford’s holding isn’t listed anywhere. The reality is that this looks more and more like a biotech venture fund, not that it was, or is, ever marketed as such. And the debt position hasn’t improved. Again, it isn’t stated on the monthly factsheet explicitly but can be calculated at about £146 million, which is over 19% of NAV. In summary, the unquoted position is at its limit, the debt is at its limit, there are a host of other illiquid quoted stocks in the portfolio too and the vast majority, if not all, of the stocks in the portfolio burn cash. So…..where does the trust go from here?
In the next 6-9 months, I anticipate significant cash calls for Immunocore, Mereo Biopharma and Thin Film Electronics as well as potentially already committed amounts to Benevolent AI and RM2 International. In addition, there’s a huge tail of potential cash requests – Proton Partners, Inivata, Amo Pharma, Xeros Technology, Seedrs, any of the Allied Minds portfolio……the list goes on and on. The half-year report is due out within the next month and is going to make very interesting reading. I am genuinely intrigued to find out what happens next – can one of the big unquoted holdings be sold off at par? I so hope Woodford proposes some more investment policy changes, perhaps the trust will take on more debt or remove the unquoted limit altogether! I will be watching.
Filed under: Woodford Patient Capital Trust, Woodlarks, Walker Greenbank, Ariadne Capital, Tern, fracking
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