Woodford dumps Vodafone from £12bn High Income fund

Star fund manager Neil Woodford has sold his long-standing Vodafone stake in his £12 billion Invesco Perpetual High Income fund.

Vodafone had been one of Woodford’s top holdings in the fund, accounting for 4.9% at the end of 2011. But he has now sold out of the stock due to reduced forecasts for revenue growth and concerns about its ability to maintain margins, according to The Telegraph.

Invesco product director Mitchell Fraser-Jones told the paper: ‘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,’ he added.

‘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 ability to get the big calls right on the fund, such as selling out of banks before the credit crisis, and avoiding the dotcom bubble, means the fund has enjoyed a stellar long-term performance record.

The fund marked its 25^th anniversary this week, and would have returned 1,906% to investors who reinvested dividends since its launch.

Vodafone yesterday issued results reporting a 2.6% decline in group service revenues for the last three months of 2012, as it was hit hard by continued weakness in Europe. But its shares closed up 2.9p, or 1.7%, yesterday at 173.3p, with analysts Charles Stanley claiming the company remained a good buy.