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Barnett faces Woodford sell-off problem

Barnett faces Woodford sell-off problem
 Mark Barnett, fund manager of Income and High Income funds at Invesco

Invesco’s Mark Barnett faces headwinds as stocks that feature in both his and Neil Woodford’s income funds face a sell-off.

Mr Barnett took over from Mr Woodford at Invesco in 2014 after the latter left to set up Woodford Investment Management.

According to Invesco there was approximately a 3 per cent overlap between Mr Barnett’s Income and High Income funds and Woodford’s Equity Income fund in terms of unquoted and illiquid stocks holdings as at September 30, accounting for roughly £267m of Mr Barnett’s combined £9bn funds.

However Mr Barnett is believed to have sold some of the shares involved in the overlap since September.

Among this overlap is a £180m invested in Oxford Nanopore Technologies through Mr Barnett's Income and High Income funds.

Oxford Nanopore is one of the illiquid and unquoted holdings held in Mr Woodford’s Equity Income fund - which was suspended in June - and is due to be sold off as part of that fund's closure.

According to Invesco, the 2 per cent invested in Oxford Nanopore is a “successful investment holding”.

But the stock's value is expected to face pressure as Mr Woodford's fund is closed and the company tasked with selling the holdings returns cash to its investors.

According to Jason Hollands, director of communications at wealth manager Tilney, having a known-seller in the market would push down the price of the companies and cause problems for other shareholders.

He said: “In a programme of trying to exit these funds, there is then a known seller in the market who has a mandate to try to release the cash. This is clearly going to cause headwinds for other shareholders.”

Since administrators Link decided to wind down Mr Woodford’s flagship Equity Income fund, it was announced American finance house PJT Park Hill had been tasked with selling off the illiquid and unquoted holdings within it, meaning there is currently a known-seller in the market for the stocks in the fund.

Woodford’s Equity Income fund is expected to be wound down by mid-January, meaning buyers in the market are aware that PJT Park Hill is under a certain amount of time pressure to sell the shares and therefore might bargain for a low price, potentially bringing down the overall share price and affecting Mr Barnett’s funds which also have the holdings.

A spokesperson from Invesco said: “Liquidity in the portfolios continues to be very manageable and liquidity management is a key element of our approach to fund management.”

They added: “We do not expect any long-term fundamental impact to the Invesco portfolios [over the selling of these assets].

“Markets and some stocks have an immediate reaction to shock announcements and negative news flows, but since the announcement by Woodford Investment Management on October 15, trading in these stocks almost immediately recovered to previous levels and others were not impacted at all.”