Having cut Neil Woodford’s flagship Equity Income fund from its list of preferred holdings just a week ago, Charles Stanley Direct has taken a more optimistic position on the star manager’s Patient Capital Trust.
Charles Stanley Direct says that now might be the right time to buy into the trust, despite its relegation from the FTSE 250 yesterday.
As at its relegation, shares were trading at 74p, down from £1 at launch in 2015, but still a 12 per cent discount on an estimated net asset share price of 83p.
Platform Focus: Charles Stanley Direct – well heeled but reassuringly inexpensiveAs opposed to the household names that feature in his equity income funds, Charles Stanley notes that Woodford’s venture capital approach in the trust, combined with a closed-ended structure offering better liquidity, means that bets in early-stage companies may pay off for investors.
Charles Stanley Direct pension and investment analyst Rob Morgan says: “There are some FTSE tracker funds that own the Trust that will be forced to sell when it is no longer a constituent of the index, though many such index funds tend to exclude investment trusts, and it is likely that all of this could add to depressed investor sentiment.
“However, the relegation could prove a good entry point for those that believe Mr Woodford’s assertion that the trust has stakes in several companies that could be worth billions of dollars each in the future.”