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How Neil Woodford’s stocks have performed since his fund closed – and whether you should buy them

Sam Benstead
Neil Woodford - Jeff Gilbert

A year ago Neil Woodford’s £2.9bn Equity Income fund was gated and its holdings were frozen in time, destined to be sold off as the fund was wound up. 

Some investors argued that it was unfair to freeze the fund and that, given more time, Mr Woodford's stock picks would come good, as they had in the past. He was not regarded as Britain's leading fund manager for nothing. At one point he had had turned £10,000 into £45,000 against a market return of £18,000. 

But by the time he was fired he had cut this down to £26,000 – almost the same as what investors would have made from a cheap tracker fund.

Telegraph Money has analysed his five largest holdings have performed since the fund was suspended and asks whether they are worth buying now.

Barratt Developments

One of the largest residential property developers in Britain, including brands Barratt Homes and David Wilson Homes.

Its share price rallied 70pc from June 2019 to March 2020, which would have delighted Mr Woodford and his investors, but then crashed hard after Covid-19 struck Britain. It has now just risen 1pc since Woodford Equity Income was suspended. While this is better than the 11pc drop of the FTSE All Share, it is hardly impressive. 

House building was one of the clearest losers from the economic shutdown because construction sites shut and unemployment shot up, which tends to affect demand for homes. However, the sector has been tipped by stock analysts to bounce back as lockdown eases.

Barratt reopened constructions sites on May 11 and its show homes and sales offices have begun to open up, too. Peel Hunt, a stock broker, said sales activity since the lockdown has continued, but at low levels. It has a "hold" rating on the stock.

Taylor Wimpey

Another house builder, although valued slightly lower, Taylor Wimpey's share price also rallied hard into 2020 but then came undone when the economic shutdown was announced.

Its share price rose 60pc from June 2019 to March, but then fell into negative territory.  It is bouncing back as the lockdown eases but has still only risen by 5pc in the past 12 months, which would not have been enough to justify Mr Woodford's large position in it. 

Killik & Co, an investment manager, said the company is on track to normalise its business after the lockdown and, like Barratt Developments, is starting to reopen shows homes and sales centres. 

IP Group

Part of the FTSE 250, IP Group is an investment company itself and backs early stage companies, particularly science and technology firms with links to British universities.

Holdings include medical technology firm Oxford Nanopore Technologies, Uniformity Labs which makes 3D printing technology and Oxehealth, which uses technology to monitor health.

IP Group's share price is down almost 20pc in the past year. As such, Mr Woodford's faith in some of Britain's best scientific brains would not have paid off yet.

That is not to say it never will. Analysts at stock broker Berenberg recently put a "buy" rating on the stock and said its share price could rise from 65p today to 100p in the future.

Provident Financial

Provident Financial is a "sub-prime" or doorstep lender, which specialises in lending to higher-risk parts of the economy via credit cards and online loans. The nature of its loans makes it vulnerable to defaults during a recession.

Provident Financial's share price was stable up until the economic lockdown was announced, which sent it plunging 70pc at its lowest point as fears set in about the scale of defaults. Its share price has been volatile since March but has been heading upwards since.

That would have been little consolidation to Mr Woodford if he had help the stock for the past year. Its share price is 50pc lower than its June 2019 price.

Peel Hunt analysts have a "buy" rating on the stock on the back of an "overly pessimistic" valuation. "Whilst uncertainty will persist, the long-term value argument still stacks up and we remain at 'buy'," it said. 

 

Burford Capital

Like Provident Financial, Burford Capital is a specialist lender in this case of law suits.

An August 2019 research report from American hedge fund Muddy Waters claimed Burford Capital had been "egregiously misrepresenting" its return on investments and was "arguably insolvent." This triggered a 50pc drop in its share price and the shares continued to fall to mid-March before rallying.

In the past year, its share price has fallen 70pc. This would have severely damaged Mr Woodford's fund if he had held onto it as it accounted for 6pc of assets at the end of April 2019.

Burford Capital's outlook is uncertain. Peel Hunt said it was waiting to pass judgement on the stock until it had received its payout from a number of pending legal cases, but noted that the company has become more transparent about its finances.