Payday lender Provident Financial, in which fund manager Neil Woodford has put a significant amount of investors' funds, has reported a 46 per cent drop in profits for the first half to the year.
Provident Financial is the fourth largest holding in the £10bn CF Woodford Equity Income fund, at 4.65 per cent of the fund.
He also holds it as the fourth largest holding in his £707m CF Woodford Income Focus fund, at 3.99 per cent.
The CF Woodford Equity Income fund has returned 37 per cent over the past three years, compared with 25 per cent for the average fund in the IA UK Equity Income sector in the same time period.
Provident Financial issued a profit warning in June, which caused the shares to fall, and today's (26 July) confirmation of the drop in profits hit the shares further.
The shares of the company were £32.45 three months ago on the FTSE 100, and today are £21.88.
But Mr Woodford has defended his stock pick, taking the view problems at the company are "transitory".
In a recent blog post Mr Woodford wrote: “The company issued a profit warning related to its consumer credit division. This was due to the reorganisation of its doorstep-lending business, which has involved bringing its self-employed agents in-house.
"The process is largely complete and should prove highly beneficial for the business in the medium and long-term as it will enable Provident Financial to better manage customer relationships, improve debt collection and drive higher profits in the future.
"However, the disruption to trading caused by the departure of agents which were not taken on as full-time employees has been greater than management had previously anticipated.”
He continued: "Although this is clearly not helpful, more often than not, the market over-reacts in response to bad news, even if the causes are only transitory.
"We believe this to be the case here – it doesn’t disrupt the long-term investment case, in our view."
"We believe that Provident’s dividend is unlikely to be affected by this temporary event and the long-term attractions of the group remain very much in place.”
Mark Barnett, Mr Woodford's replacement at the helm of the Invesco Perputual Income and High Income funds when he left in March 2014, also holds Provident Financial among the ten largest investments in his £5.6bn Invesco Perpetual Income fund.
The fund has returned 24 per cent over the past three years, compared to 26 per cent for the average fund in the IA UK All Companies sector in the same time period.
Provident Financial’s travails come in the context of recent comments from the Bank of England policy maker Alex Brazier, executive director for financial stability at the Bank of England who cautioned about the levels of unsecured credit in the UK economy.