Fund Research

Woodford Patient Capital Trust

Last update 05 March 2019

Woodford Patient Capital (WPCT) is a concentrated portfolio of early stage unquoted and quoted companies, focused on technology and healthcare, with high return potential and high levels of stock-specific risk. It is run by Neil Woodford, one of the most high-profile fund managers in the country.

Whilst the trust has had its share of difficult periods, NAV returns in 2018 were strong, with the trust’s NAV up 7% while the FTSE All Share fell 9.5%. Undoubtedly the high level of unquoted assets held (66%) helped the trust outperform in a falling market. However, there were also valuation increases on some stocks which hit milestones, as well a successful IPO of Autolus - a major holding at 10.9% of NAV.

On 1 March the trust announced it had agreed to purchase £72.9m of stock in unquoted companies held by the Woodford Equity Income Focus fund (WEIF) with new shares issued at NAV in a tap issue, and also received £6m to fund those companies from WEIF in the deal. This allows the trust to increase its exposure to stocks Neil thinks are some of the most promising in the portfolio: Atom Bank, Carrick Therapeutics, Cell Medica, RateSetter and Spin Memory.

Prior to the announcement we spoke with the team to get an update on the progress of the portfolio companies, which we discuss in detail below. The team believe that there is scope for 2019 to be even better than 2018 in performance terms, with the portfolio companies largely at more mature, less risky stages of development and a number of significant milestones on the horizon, which we analyse later.

Although the greatest contributor to performance in recent months since our last review has been Industrial Heat, written up by 357%, there have been interesting developments in other portfolio companies which could prove more significant in the longer run, such as with Oxford Nanopore (see portfolio section). Proton Partners’ listing on the NEX Exchange in February 2019 at a substantial uplift to WPCT’s initial investment could also prove to be a significant step for that company.

The discount has narrowed since we first highlighted the trust, coming in to 12.8% from the wider range of 15-20% through much of 2018.

WPCT has no annual management fee. Although there is a performance fee, after the March tap issue it won’t be payable until the NAV reaches 146p, a 50% uplift to its current level. This means that investors will only pay the 0.18% ongoing charges until that mark has been passed.

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Fund History: Woodford Patient Capital Trust

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