Neil Woodford’s long-standing investment in Allied Minds is worth even less this morning (17 August) as the company reported increased losses for the six months to the end of June.
Allied Minds is a business that seeks to provide capital to companies, often university start-ups, as they expand.
Losses for the six months to June 30 were $58.2m (£41.5m) as compared to $52.2m (£40.4m) for the same period a year earlier.
Allied Minds shares are down 5 per cent this morning, at £1.52. The company has halved in value over the past year, as the shares were £3.68 on this day (17 August) a year ago.
Earlier this year, Mr Woodford described the negativity around the shares as “noise”.
The share price falls mean Allied Minds is no longer among the top ten holdings in any Woodford fund.
But in the annual report of the £988m Patient Capital Investment Trust, released he on 4 August, he reaffirmed his commitment to Allied Minds, despite the shares beginning to fall in April when Allied Minds stopped financing seven of its subsidiaries.
Mr Woodford said at the time: “It is my view that the market has overreacted....I remain attracted to the Allied Minds investment case – indeed I remain a strong supporter of the broader intellectual property commercialisation sector. The businesses I have backed have diverse portfolios of young, disruptive businesses with significant long-term potential.”
He added: “The model works best, in my view, when small amounts of capital are deployed at a very early-stage to help establish businesses and evidence the potential of their technology.
"More capital is selectively deployed as and when those companies demonstrate successful progress against subsequent milestones. Indeed, that is the model that we deploy for the company.
"As is natural in this space, not all of them will fulfil their potential, and so it can become necessary to withdraw support and funding from certain businesses. These are obviously difficult decisions but it is an important discipline and sends a positive message to shareholders about a management team’s intent.”
Mr Woodford said he never believed all of the subsidiary companies within Allied Minds would prove to be successful investments, and that his optimism around the prospects for the company centres on the potential of some of the more successful subsidiaries.
The profit drop announced by Allied Minds is the latest blow to Woodford holdings, after a trio of FTSE 100 investments plummeted in value over the past month.
The shares of AstraZeneca - the largest holding in the £10bn CF Woodford Equity Income fund, making up 8 per cent, or £800m of the total - fell 16 per cent in a single day, and have not recovered.
That shock was preceded by the shares of Provident Financial, a top ten holding in the £10bn Woodford Equity Income Fund, announcing a 45 per cent drop in profits. The company's shares have fallen from £32.45 three months ago to £20.80 on 8 August.
The share price of AA - which is a 0.9 per cent holding in the Equity Income fund, and in which Woodford Investment Management is the largest institutional investor - has dropped to £2.07, having been as high as £3.09 during the past year, following news its chief executive has been sacked
But despite the wave of bad news associated with some of his largest holdings and general below-par performance, advisers told FTAdviser they haven't been put off investing their clients' capital into the giant funds run by Mr Woodford.
David.Thorpe@ft.com
