Multi-Million Pound Stake in the AA Sold by Neil Woodford

Photo via Citywire

One of the largest shareholders of AA has flogged a multi-million-pound stake after the shares of the breakdown firm nearly doubled in a matter of weeks.

According to a regulatory announcement that was released today, Neil Woodford cut down his position in the AA, selling a one percent slice worth approximately £9m. The star fund manager continues to be one of the biggest backers of AA, owning 13.88 percent of the company.

The AA is aiming a speedy return to the mid-cap index of London next week after being relegated earlier in 2018.

The motoring organisation has had a tumultuous 12 months, starting with the sacking of ex-boss Bob Mackenzie last summer after an altercation with a fellow executive. This provoked a hefty sell-off last August, which was followed by a second sharp decline in mid-March as investors negatively reacted to the turnaround plans of AA.

Rising from a nadir of 74 percent 10 weeks ago, shares bounced to 146p in mid-April.

Meanwhile, Woodford has seen his flagship Equity Income fund dramatically decline in size. Having peaked at £10.2bn at this time during the previous year, the fund has dropped to £6.6bn in size. However, in the recent weeks, it has already staged a comeback.

Provident Financial is one of the top four holdings of Woodford. It has mounted a comeback in the past weeks while Burford Capital, litigation funder, has almost doubled in size itself since the beginning of 2018. The equity income fund is up nearly five percent over the last three months, though this compares with an eight percent return from the corresponding index.

The fund manager also operated a listed investment trust called Woodford Patient Capital. The reshuffle on Tuesday evening could well see the fund trade places with the AA, falling out of the FTSE 250.

Adrian Lowcock, the investment director of Architas, stated: “Ultimately investors shouldn’t read too much into this as the trust focuses on long-term investments which are higher risk and in doing so it was always likely that the bad news would come ahead of any good news and therefore the trust would lag the performance of the wider market especially in a bull market.”