Neil Woodford’s Latest Buys And Sells: Mega-Million-Pound Calls On AstraZeneca plc, Imperial Tobacco Group PLC And G4S plc

G A Chester examines Woodford’s big decisions on AstraZeneca plc (LON:AZN), Imperial Tobacco Group PLC (LON:IMT) and G4S plc (LON:GFS).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s always useful to see which shares the experts are buying and selling — and Neil Woodford is as expert as they come.

Through his Invesco Perpetual Income and High Income funds, Woodford looks after more than £20 billion of client money. His High Income fund has generated a superb 220% return over the last 10 years, compared with a 123% return for the average UK equity income fund.

The latest half-year report for Woodford’s High Income fund has just been published, and the document reveals which stocks he’s been pumping cash into and which stocks he’s been selling.

Cheap tobacco

Woodford slightly trimmed back his holding of British American Tobacco, but whacked up his stake in Imperial Tobacco (LSE: IMT) (NASDAQOTH: ITYBY.US). The master investor purchased a net 2.55 million of the latter’s shares for around £60m at what I calculate to be an average buy price of 2,339p.

This is Woodford the contrarian value investor at work, as the earnings and dividend valuations within the table below show.

Company Current share price Forward P/E Forward dividend yield
Imperial Tobacco 2,132p 9.7 5.8%
British American Tobacco 3,255p 14.7 4.4%

Cheap pharma

Woodford added over a million shares to the High Income fund’s stake in AstraZeneca (LSE: AZN) (NYSE: AZN.US) at a net cost of getting on for £33m. My sums say he paid an average of 3,026p a share. As with the tobacco companies, Woodford upped his stake in the lowlier rated of the two FTSE 100 big pharma firms.

Company Current share price Forward P/E Forward dividend yield
AstraZeneca 3,178p 9.6 5.6%
GlaxoSmithKline 1,645p 14.2 4.4%

A FTSE 100 financial

Woodford, who famously sold out of big financials before they were hammered by the global banking crisis, has invested in a FTSE 100 financial company for the first time since. What a turn up for the books that is! The company in question is insurer Legal & General. Woodford made a relatively small purchase of 2 million shares. Unfortunately, I can’t tell you how much he paid, but the average price during the period was 166p and the shares are trading at 187p today.

Will Woodford further build his stake in L&G (my guess is yes)? And is he now ready to invest in more FTSE 100 financials (I’m not so sure about that one)? We’ll have to wait and see.

A £48m sell and three £16m top-ups

Woodford reduced his holding in household goods group Reckitt Benckiser from 15 million shares to a bit less than 14 million. The sale raised in excess of £48m, and my sums tell me the average sale price was 4,283p a share. The shares are currently trading at 4,428p.

The proceeds from Reckitt Benckiser are matched by three £16m top-ups. Woodford added to his existing holdings in: BT (average buy price 318p; current price 336p), Centrica (345p; now 386p) and G4S (LSE: GFS) (290p; now 258p). The last-named company, then, is the one you can buy cheaper today than the average price Woodford paid. G4S is trading at a forecast P/E of 14 for the year ending December 2013, falling to 12.4 for 2014.

Woodford winners exclusive

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 over a quarter of a century.

If you’re interested in reading an exclusive, newly-updated analysis of eight of Woodford’s favoured blue chips, help yourself to this free Motley Fool report.

The report is full of valuable investing insights and is free to download right now: simply click here.

> G A Chester does not own any shares mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »