Here's what the City super-investor has been buying and selling.
It's always useful to see which shares the experts are buying, especially in times as uncertain as these.
Neil Woodford is as expert as they come. Through his Invesco Perpetual Income and High Income Funds, he looks after more than £20 billion of client money. His Income Fund has generated a superb 335% return over the last 15 years -- eight times the return of the FTSE All-Share index.
So what has Woodford been buying and selling during the summer? Well, the latest half-year report for his £9 billion Income Fund has just been published, and the document reveals which stocks he's been pumping cash into and which stocks he's been cutting back on or disposing of completely.
Here's what caught my eye.
Big pharma gets bigger
Healthcare continues to be Woodford's biggest sector bet -- it represents over a third of the portfolio -- and big pharmaceutical groups are among his most prominent holdings.
Woodford was a net buyer of the generally unloved 6%-yielding AstraZeneca (LSE: AZN) during the period. He also added to GlaxoSmithKline (LSE: GSK), which offers a prospective 5.5% yield. Astra and Glaxo remain the top two holdings in the fund, each weighing in at over 8%.
Elsewhere in the healthcare sector, Woodford substantially increased his holding in Smith & Nephew (LSE: SN). According to my calculations, his £41 million investment in the medical devices firm increased his stake by a third and was made at an average buy price of 632p a share.
Smith & Nephew's shares are currently trading at 659p, giving a current-year forecast P/E of 14 with an expected dividend yield of 2.2%.
Averaging down on security
Woodford made a new investment in security group G4S (LSE: GFS) before the firm's Olympics staffing blunder sent the shares heading south. He has subsequently averaged down.
Woodford's total investment in G4S during the period for his Income Fund was over £75m and my sums say he bought at an average price of 258p a share. Invesco Perpetual, as a group, has continued to pour money into G4S and as of last week holds over 13% of the firm's shares.
G4S's share price currently stands at 248p, giving it a current-year forecast P/E of 11 and a prospective dividend yield of 3.5%.
Elsewhere in the support services sector, Woodford bulked up his stake in outsourcing group Capita (LSE: CPI) with a £46 million investment at what I calculate to be an average buy price of a little under 700p.
Shares in Capita are now trading at 770p, putting it on a current-year forecast P/E of close to 15 with an expected dividend yield of 3%. As a result of the additional investment and the rise in share price, Capita has recently appeared in the Income Fund's top 10 holdings.
Oil and gas gone
Woodford has been bearish on oil majors Royal Dutch Shell (LSE: RDSB) and BP (LSE: BP) for several years, and his Income Fund has now exited what was a substantial holding in the Footsie's third-ranking oil and gas company, BG Group (LSE: BG).
The proceeds from the disposal of BG amounted to a whopping £343 million, and my sums tell me Woodford sold at an average price of 1,235p a share. That looks like a timely sale, because the shares are currently trading at 1,078p after the company's recent shock announcement that it expects flat production next year.
Phones and food reduced
Woodford's second-largest sale during the period was mobile giant Vodafone (LSE: VOD). The Income Fund's holding fell from 254 million shares to 149 million. My calculations tell me Woodford sold at an average price of 180p a share, netting him proceeds of £190 million. Again, this looks a timely sale, as Vodafone's shares are now around 160p.
Tate & Lyle (LSE: TATE) is another stock that Woodford has significantly reduced, the Income Fund's holding falling from 19 million shares to 7 million. My sums say Woodford sold at an average price of around 670p a share. With Tate's shares currently trading at 770p, the £82 million raised from the sale would today be worth £95 million; so Woodford missed out on some further upside on this one.
Secret of success
Woodford may not get every share call right -- that's impossible, even for him -- but what he has is a philosophy and strategy that have enabled him to build an extraordinary long-term performance record.
If you're interested in learning more about Woodford's market-thumping approach and some of the dividend-paying blue chips he currently favours, help yourself to the exclusive Motley Fool report, "8 Shares Held By Britain's Super Investor". The report is full of valuable investing insights and is free to download right now: simply click here.
> G A Chester does not own shares in any of the companies mentioned in this article. The Motley Fool owns shares of Smith & Nephew and has recommended shares in Vodafone.