Broker slaps ‘sell’ rating on new Woodford trust

Broker slaps ‘sell’ rating on new Woodford trust

Investment trust broker Stifel has recommended investors sell the recently-launched Woodford Patient Capital trust after the shares have surged since their April listing.

The trust, which was listed on April 21, has already risen by 16 per cent, in spite of only a small increase in its underlying assets.

This has resulted in the trust trading on a premium - the amount the shares are valued above the trust’s assets - of 13 per cent.

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But Stifel’s head of investment company research, Iain Scouller, said the “shares have risen too far, too soon” and that investors should sell out of the trust.

A major cause of the surge in the trust’s share price, highlighted by Mr Scouller, has been the trust’s recent inclusion in the FTSE 250 index, which has attracted a large amount of money from index tracker funds, which have been forced to buy in.

Mr Scouller said he would normally wait for some time on a new trust before initiating coverage but said “given the elevated premium....we think it is worth highlighting the expensive nature of the shares to investors at this early stage”.

The investment trust analyst pointed out the trust “will take some time to fully invest, especially in the unquoted companies” but said this was not being reflected in the share price, which should be closer to the net value of its assets in such circumstances.