Capita's share price has plummeted 40 per cent this morning after the company issued a profit warning, providing more gloom for fund manager Neil Woodford, one of the outsourcing company's biggest backers.
The company's share price started plunging after it issued a profit warning and suspended its dividend.
Underlying profits for 2018 would be between £270m to £300m, the company's CEO said - short of the consensus forecast of £400m predicted by analysts.
Woodford Investment Management is the second largest holder of Capita stock, having bought up nearly 10 per cent of the company, according to data from the Financial Times.
While Capita is not one of the top 10 holdings in either of Mr Woodford's funds, it is just the latest of one of his holdings to see its share price take a tumble in recent months.
Provident Financial's share price fell off a cliff last year when problems were revealed in its doorstep lending business and the company's share price is currently £6.75 compared to the £28.50 it was in December 2016.
It followed smaller but significant falls for other major holdings over last summer, chief among them AstraZeneca, Imperial Brands, Allied Minds and the AA.
Woodford Investment Management declined to comment on Capita's share price fall this morning, but pointed to a recent update for its Equity Income fund, published a couple of days ago.
In this update, the company said: "Capita [...] performed poorly, following the release of its interim results. Although the results were broadly in line with expectations, there were a number of complicating one-off elements and a mixed outlook statement, which came at a time when investors are keen to see clearer evidence of recovery.
"The shares declined by 12 per cent on the day of the results which looks very harsh to us in the context of Capita’s already low valuation. The shares yield over 7 per cent here which suggests that some investors fear a dividend cut may be required.
"With a new chief executive now in place, clearly that eventuality cannot be completely ruled out, but having met Jon Lewis during the month, we are reassured that decisions around capital structure and the dividend will be informed by a clearer long-term strategy for the business, something we expect to hear more about later this year.
"In the meantime, we have maintained the portfolio’s exposure to this business, seeing the potential for significant value creation in the future as Capita is restored to the high quality, successful and well-run business that it used to be."
Woodford's woes across a number of stocks have led to his flagship Equity Income fund underperforming its sector, the IA UK Equity Income.
Over the past year, the £8.2bn fund has lost 0.07 per cent while the sector has gained 11.15 per cent and over the past six months it has lost 6 per cent, compared to the 3.4 per cent gains made by the sector.
The underperformance led to Mr Woodford apologising to investors who lost money in his funds over 2017 but he confirmed he was sticking to his view that the consensus view of the world is wrong.
In Capita's profit warning this morning Mr Lewis, who was appointed the company's chief executive in October, said the business was "too complex", was driven by a short-term focus and lacked "operational discipline".
He said: "Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth.
"Capita needs to change its approach. I have initiated a transformation programme, appointed a chief transformation officer and formed a new executive committee to drive this change.
"An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity."
