Who Is: Neil Woodford
He may be younger than many of the other investors that we’ve profiled, but Neil Woodford has a habit of being right on major trends. His contrarian and dividend-focused approach has long been popular in Foolish circles.
Background and early career
Born in 1960, Neil Woodford graduated with a bachelor’s degree in economics and agricultural economics from the University of Exeter, UK in 1981. Woodford’s career took him through Dominion Insurance, TSB, and Eagle Star, before joining Perpetual in 1988.
In 2000, when Perpetual was bought out by Amvescap (now Invesco (NYSE: IVZ)), Woodford reportedly made £50m on the deal, in addition to retention bonuses.
Invesco Perpetual and beyond
Woodford’s main concerns at Invesco Perpetual were the management of its two big equity income funds: Invesco Perpetual High Income, which manages assets of £7.9 billion, and Invesco Perpetual Income, with £5.8 billion under management.
In 2014, Woodford left Invesco to start his own investment-management company, Woodford Investment Management. The Woodford Funds flagship fund, the CF Woodford Equity Income Fund highlights three goals:
- A commitment to delivering attractive long-term returns;
- a focus on companies that can deliver sustainable dividend growth; and
- a growing income stream paid quarterly.
Woodford is not afraid to swim against the current, and he doesn’t flinch in the face of criticism. Avoiding the frothy technology sector during the bubble in the late 1990s caused him to underperform the market, but he stuck to his position and was ultimately shown to have been correct.
And while his targets are “value” companies paying big dividends, he wisely shunned the banking and property sectors long before the financial-crisis-era issues came to light. Of course, although he could see problems coming, his fund required that he invest in equities rather than cash, so he weighted the portfolios heavily towards defensive sectors such as pharmaceuticals, utilities, and tobacco.
His advice in May 2008 that “this is certainly not a time to be deserting equity,” does look a little unfortunate given the turmoil of that year, but it should also be considered he is looking at typical holding periods in excess of five years or more, and over that time period the carnage wasn’t quite as bad.
Historically, Woodford has had a bias towards large companies, but where he can he also takes positions in smaller operations. In the past, he noted that “the reality is that I have quite a long tail of small-cap stocks in the portfolios. I build positions over time, sometimes over several years, and if I pick the right company, it will grow into a bigger one.“