Neil Woodford Sells Vodafone Group Plc

<%= article.AuthorDisplayName %>

By

Sam Robson

Published in Company Comment on 11 February 2013

Woodford's Invesco Perpetual fund sells its stake in Vodafone Group plc (LON:VOD).

Last week, City super-investor Neil Woodford sold his holdings of Vodafone (LSE: VOD) (NASDAQ: VOD.US) from the Invesco Perpetual High Income fund that he manages.

The move comes after a turbulent few months for the telecommunications shares, having spent November and December wavering between 154p and 163p, but regaining some of their lost value throughout January and into February, settling at around 174p in recent days.

Mitchell Fraser-Jones, a director of Invesco Perpetual, commented: 

"In terms of trading activity, the fund has now completed the sale of its holding in Vodafone.

"The company has reduced its forecasts for revenue growth on the back of ongoing weakness in its core southern European markets and the cash flow cover of the dividend has fallen to what we view as uncomfortably low levels.

"The company announced a share buy-back rather than the hoped for special dividend with its dividend from Verizon Wireless, while we also have reservations about the company’s ability to maintain its margin on data revenues."

Woodford's move out of Vodafone is in contrast to many City analysts, who believe that the company's latest set of results were encouraging, despite the continued tough economic climate globally.

Famously, Woodford sold out of banks prior to the credit crisis, and -- similar to Warren Buffett -- resisted joining the dotcom bandwagon and thus avoided the losses that crippled those unfortunate enough to have bought into the bubble at its peak. He's beaten the FTSE 100 by 200%-plus during the 15 years to October 2012 by identifying large-cap winners on a regular basis -- so is his 'cashing out' call the right one, with regards to Vodafone?

The shares are currently on a prospective yield of around 5.8% -- that's hard to ignore. However, if you're looking for income outside of Vodafone, then you may wish to read this exclusive in-depth report about another high-income opportunity within the FTSE 100.

The blue chip in question offers a 5.7% income, might be worth 850p versus around 690p now -- and has just been declared the "Motley Fool's Top Income Stock For 2013"! Just click here to download the report -- it's absolutely free.

> Sam owns shares in Vodafone. The Motley Fool has recommended shares in Vodafone.

Share & subscribe

Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

jeff700 11 Feb 2013 , 12:33pm

The latest monthly portfolio update from the brilliant Personal Asset Investment Trust (PNL) has revealed that too has dumped all of it's stake in Vodafone.

kiffberet 11 Feb 2013 , 2:09pm

Any idea when and at what price Mr Woodford sold for?

loocan 11 Feb 2013 , 2:50pm

We are all in this share to make a profit just because someone sells dosen`t mean a thing , Just wait a while and reap the rewards.

anecdotage 11 Feb 2013 , 4:40pm

Just hope these large scale sales are enough to send Vodafone over the edge. I would love to buy them at a substantially lower price.

mcturra2000 11 Feb 2013 , 4:54pm

David Einhorn likes Vodafone.

apprenticeDRL 11 Feb 2013 , 5:06pm

Anecdotage - I echo your sentiments with these large sells heres hoping that the price drops back to mid / low 150s

Badgerd 11 Feb 2013 , 6:23pm

As an ex-customer of Vodafone, I would never invest in a company that provides such a cynically bad customer experience as Vodafone UK does.

ANuvver 11 Feb 2013 , 7:03pm

Reading the director-speak, it looks like Invesco are doing what they do best - playing it ultra-safe on dividend cover and banking a long-held winner. The retreat into buybacks from the Verizon Wireless payout is a disappointment to some, but is to my mind a necessary defensive move in the ongoing game between VOD and VZN. In short, this seems to me to be primarily about risk mitigation, in line with the funds' mandate/mantra.

I'd be more interested in what Woodford et al are planning to do with the proceeds from selling significant holdings in VOD, NG, etc. I wonder what better opportunities they can see, or even whether they just currently see cash as valuable...

Mari11ion 11 Feb 2013 , 7:25pm

Maybe such large sales explain the downward pressure on the share price over the last week or two, so we should now see an uplift. Oh, and the Fool might want to update it's Woodford report advertised in this article which is now out of date.

adjames 11 Feb 2013 , 8:33pm

I'm still a customer of Vodafone but I'm amazed they get any new business via their website, it is appalling. Judge them on that alone and they are a sell.

Avalaugh 11 Feb 2013 , 10:20pm

Blue horseshoe loves Vodafone

jaizan 11 Feb 2013 , 11:53pm

Overall, the shares have crept up over the last 3 months. So Mr Woodford shares must have been snapped up by eager buyers.

I figure Vodafone is a hold. Also selling is difficult, in the absence of a better idea. Obviously Woody has found one.
Maybe Motley Fool can find out what it is and
do another special report for us.

SevenPillars 12 Feb 2013 , 9:06am

It is interesting that he would sell something that has a 5-6% yield with the prospect of regular dividends from Verizon Wireless to come in the future though. Vodafone are buying back their own shares with the Verizon Wireless money this year, but no one knows what they will do with the next one, etc.

Einhorn seems to like Vodafone because he thinks the market is totally ignoring the value of the Verizon Wireless stake which is a good point. He also seems to think that Verizon might make a move for Vodafone, although as usual this is all speculation. The share price since the new year seems to have largely gone up on the back of this and Vodafone buying back its own shares rather than any real conviction that the negatives surrounding the company have improved.

There must be quite a few doubts now about whether the dividend will be maintained. It's funny, but even if Vodafone were to cut the dividend in half it would still be pretty good, especially against a backdrop of next to nothing IR's for cash in the bank, but it would probably be a big negative for the share price.

Perhaps Woodford will put some of that money back into Tesco? He seems to have missed the low on that one.

ANuvver 12 Feb 2013 , 11:49am

Voda is one of those stocks that has rewarded patience. Headline news when Verizon finally caved on the dividend and they sprayed it around as a special, then they decide to shore up the price with the second payment so everyone's wringing their hands.

Gets me to wondering about investors' levels of ambition. By my fag-packet calculations, VOD has delivered roughly 10% total return in the past year and a half, and has a relatively secure forward yield north of 5% (this at a time when the share is sitting on the naughty step). Sneeze at that.

Yes, reader, I am married to them.

hcidata 12 Feb 2013 , 12:08pm

My take in the Verizon/Vodafone spat is that the eventual solution will be Verizon takes over Vodafone or vice versa or a merger. Vodafone will have a huge Capital Gain Tax if it tries to sell Verizon Wireless.

So, I will continue to be a long term holder.

nnnnineteen 12 Feb 2013 , 3:45pm

All of the peopel I know who are on Vodafone contracts can't wait to get off them. I've looked at the share and though too high priced; could be right/wrong!

goodlifer 12 Feb 2013 , 5:12pm

ANuvver
"I'd be more interested in what Woodford et al are planning to do with the proceeds."

So would I.

Join the conversation

Please take note - some tags have changed.

Line breaks are converted automatically.

You may use the following tags in your post: [b]bolded text[/b], [i]italicised text[/i]. All other tags will be removed from your post.

If you want to add a link, please ensure you type it as http://www.fool.co.uk as opposed to www.fool.co.uk.

Hello stranger

To add your own comment, please login.

Not yet registered? Register now.

Get straightforward advice on what’s really happening with the stock markets, direct to your inbox. Help yourself with The Motley Fool Collective, a FREE email newsletter designed to help you protect and grow your portfolio wealth.

By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. The Motley Fool respects your privacy. Please read our Privacy Statement and Terms & Conditions.

For all queries please email CustomerServices@Fool.co.uk or call The Motley Fool on 020 7462 4300 between 9am – 5pm, Monday – Friday.

More articles in this section

Beta

Tags for this article

This article hasn't been tagged yet. Be the first to add a tag below.

Login or register to add tags.

Beta

Related content