Ryan Hughes, head of active portfolios at AJ Bell, comments on the latest letter to Woodford investors on the second capital distribution:
“Woodford Equity Income investors will be pleased that they are getting a little more of their money back, with a £142m payout from the fund due to reach investors around the 25th March. As the BlackRock assets were previously sold off and the proceeds distributed to investors, this suggests that Park Hill has had some success in selling some of the illiquid assets. This shows a glimmer of hope as previously there had been no sales from this chunk of the portfolio.
“However, this distribution only represents 20% of the remaining assets, so there’s still a long way to go. What’s more, we’ve seen market conditions deteriorate considerably, meaning that selling any unlisted and illiquid assets is likely to become much harder. Sadly this means that it looks like investors are in for a long wait before they see the remainder of their money paid out of the fund. This is particularly the case as Link has warned that Park Hill is selling the most liquid assets from the portfolio first, meaning that as it moves through the investments it will be harder and harder to offload assets. While the asset manager will balance the competing needs to sell assets at a good price versus the saga dragging on for years, it seems inevitable that this will rumble on into 2021.
“The latest information also gives us a price update on the fund, with it now standing at 19.9p a unit. Since the last communication to investors the fund’s value has fallen by another 4.85%, however, this is far less than the fall we’ve seen in markets, which have dropped 20.3% during that same period.”