Ace fund manager Neil Woodford has long had FTSE 100 pharma giant GlaxoSmithKline (LSE: GSK) as a core holding, and has been singing the company’s praises for as long as I can remember.

However, Woodford followers who looked at the latest portfolio listing for his Patient Capital Trust, published today, may have been alarmed to find that Glaxo has disappeared. It’s not a mistake. The trust has indeed exited its position.

Don’t panic!

There’s more to the story. If you turn to the portfolio listing for Woodford’s mainstream Equity Income Fund, you’ll find Glaxo has retained its place as the third-largest holding in that portfolio. So, what’s going on?

The commentary of this month’s Patient Capital Trust explains:

“We remain attracted to the long-term Glaxo investment case but it was sold to provide capital to take advantage of the profound and unjustified share price weakness in several earlier-stage opportunities”.

Woodford was persuaded that capital would be better deployed in his more growth-orientated Patient Capital Trust by freeing-up cash from Glaxo and taking advantage of the US biotechnology sell-off, as well as some depressed prices among UK biotech companies.

Meanwhile, the commentary of the Equity Income Fund, shows that Woodford continues to rate Glaxo as a solid blue-chip investment:

“All four of Glaxo’s major component businesses could be FTSE 100 companies in their own right, and we strongly believe that any future break-up would unlock considerable shareholder value”.

The break-up value isn’t the only thing to like about Glaxo. The company this week declared a fourth quarterly dividend of 23p and a 20p special, which can be picked up by anyone investing before the ex-dividend date of 18 February. And management reiterated its intention to pay a dividend of 80p for both 2016 and 2017, giving an annual yield of 5.7% at the current share price.

Best of the rest

Woodford increased his holding in Legal & General (LSE: LGEN) on share price weakness. The Equity Income Fund commentary explained:

“In the case of Legal & General, the market appears to be increasingly nervous about its exposure to corporate bonds in an environment of deteriorating credit quality in that asset class. We are less concerned — Legal & General does hold a substantial portfolio of corporate bonds on its balance sheet but it has provisioned over £2bn against future losses. It experienced no bond defaults in the financial crisis and we expect a similarly robust performance from its high quality portfolio of corporate bond assets going forward …”

Legal & General is another stock with dividend appeal for Woodford and his team: “We remain very positive on the prospect of consistent and attractive long-term dividend growth”.

The shares have fallen further since Woodford was buying in January, pushing the prospective yield up to 6.3%.

Next, G4S and Provident Financial were other blue chips to which Woodford added during the month.

Mail drop

Woodford sold the remainder of his holding in Royal Mail (LSE: RMG), which he had reduced in December. The fund commentary explained:

“This is still an attractively valued business, in our view, but we are increasingly concerned about the regulatory environment and the ability of the company’s management team to retain the benefits of cost rationalisation and potential property disposals for its shareholders, rather than for other stakeholders such as staff and pensioners”.

If Woodford is right, Royal Mail’s prospective price-to-earnings ratio of 12.9 and dividend yield of 4.9% may be less attractive than they appear.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.