Invested with Neil Woodford? You could wait a while to get your money back

Today marks 28 days since the Woodford Equity Income fund was suspended. However, it could be suspended for a while longer.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When Neil Woodford’s Equity Income fund was suspended on 3 June, there was a little confusion as to when the fund would be reopened for trading. For example, a number of sources said the fund would only be locked up for 28 days. However, a statement on the Woodford Investment Management website actually read: “We will keep all investors appropriately informed about the suspension, including its likely duration,” meaning there was no timeframe provided.

As I write this on 30 June, there’s still no news in relation to when the lockup could be ended. And by the time you read this on Monday morning, it will be 28 days since the suspension was announced. Will it end soon? That’s hard to say. However, there’s a chance investors could be waiting a while longer to get access to their funds.

Portfolio repositioning

Woodford’s plan to sort things out is to unwind the current portfolio, which consists of a number of smaller growth stocks and unquoted companies and reinvest the proceeds into more liquid FTSE 100 stocks. That’s a sensible strategy, in theory. However in reality, it could prove to be quite difficult due to the fact that Woodford had such large positions in some of his companies.

Should you invest £1,000 in Games Workshop right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Games Workshop made the list?

See the 6 stocks

According to analysis from Morningstar, Woodford (across his multiple funds) owned over 19% of 23 different companies and over 15% of another 13 companies. This means he was a major shareholder in a large number of companies.

Examples include mattress maker Eve Sleep, in which Woodford owned over 45% of the stock and the Equity Income fund owned 11% of the company, and Xeros Technology, where Woodford owned 40% of the company and the fund owned around 19%.

Now if you only hold a few shares in a company, it’s generally not hard to liquidate your position. However, if you own 20% of the company, it’s a completely different story. Getting out without crashing the stock is likely to be a challenge and will take time.

Slow progress

In order to avoid crashing the share prices of the stocks he owns, Morningstar believes Woodford could sell up to 20% of each stock’s 30-day average trading volume per day until the position is exited.

So, in the case of Eve Sleep, where its average trading volume is around 1.2m shares, Woodford would need 119 trading days to completely sell out, assuming he finds keen buyers for the stock. Similarly, selling the Equity Income fund’s position in Xeros Technology could take nearly a year.

So overall, it could take many months for Woodford to sell his entire portfolio and reposition it in FTSE 100 stocks. Morningstar’s worst-case scenario is that it takes the portfolio manager around 260 days to liquidate the entire portfolio.

I really hope, for the sake of all the investors who need access to their capital, that it doesn’t take that long for the trading suspension to be lifted. For now though, all we can do is wait patiently and see what happens.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

One English pound placed on a graph to represent an economic down turn
Investing Articles

FTSE shares: a once in a blue moon chance to get rich?

Christopher Ruane explains why he thinks hunting for blue-chip FTSE bargains in the current market could help an investor build…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

4 stocks Fools have bought for growth and dividends

Sometimes, an investor doesn’t have to make the choice between buying a growth stock or dividend shares! Some investments offer…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Is there no limit to how high Rolls-Royce shares might go?

Christopher Ruane sees some reasons Rolls-Royce shares could continue pushing upwards. But is he persuaded enough about the potential value…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

How much could £20k in a Stocks and Shares ISA be worth in 2030?

UK investors have enjoyed spectacular returns in their Stocks and Shares ISA's over the past five years. Would could the…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

Is the FTSE 100 good for passive income?

Our writer considers whether investing in the UK’s largest listed companies could help generate generous levels of passive income.

Read more »

piggy bank, searching with binoculars
Investing Articles

Here’s the growth forecasts for International Consolidated Airlines (IAG) shares through to 2028!

Shares of International Consolidated Airlines (LSE: IAG) have risen following a strong set of first-quarter financials last week. Is the…

Read more »

DIVIDEND YIELD text written on a notebook with chart
Investing Articles

These 10 FTSE income stocks could generate £33,137 a year in dividends

Our writer looks at the highest-yielding income stocks on the FTSE 350 and considers what level of return they might…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

What to do now before the next stock market crash

The recent stock market volatility seems to have subsided… for now. But that gives investors a chance to get ready…

Read more »