Scale of the discount offered by Woodford fund revealed after American buyer turns a quick profit

The American investment fund that scooped up healthcare stocks from the Woodford Equity Income fund earlier this month has turned a quick profit, highlighting the scale of how cheaply the investments were sold and the problems facing Neil Woodford’s investors.

Acacia Research Corporation snapped up £224m worth of biotechnology stocks from the fund in early June as administrator’s Link try to wind up the portfolio. The sale meant investors suffered a 20pc haircut on their remaining savings.

However, the scale of the discount at which Link sold the healthcare holdings has been made clear after Acaia turned some of the investments into a huge profit in a matter of days.

It sold a small portion of a £150m holding for a £128m. Although the profit made on each holding is not known, regulatory filings show the American firm sold Mr Woodford’s former 9.9pc stake in Midatech Pharma for a large gain, according to specialist investment website Citywire.

It bought the shares for £65,000, but days later offloaded them for £817,000, a profit of £750,000 and 12 times the initial investment.

Shares in Acacia Research have risen 50pc since the start of the month as investors rewarded the firm for getting the better of Link and Woodford’s trapped investors.

Link’s attempts to wind down the portfolio and return the money back to savers has come under criticism following continuous and substantial falls in the value of the fund.

Investors have also been paying for BlackRock and private equity specialists Park Hill to help offload the fund’s investments. Park Hill has been involved in selling the unlisted and hard-to-sell portion of portfolio since March 2019 but has yet to generate any substantial profit for investors. BlackRock was charged with winding down Mr Woodford’s holdings in large, listed businesses.

Link is seen as a “forced seller” in the market due to the nature of the situation and its requirement to generate cash to return to investors. Potential buyers have demanded huge discounts for the fund’s holdings.

June 3 marked was the first anniversary since Mr Woodford was forced to shutter his fund after running out of ready cash to pay back investors following a stampede for the exit. The manager had invested too much in difficult-to-sell small and private companies, leaving funds inaccessible.

At the time the fund was worth £3.5bn. Some £2.3bn has been returned to investors since the decision to close the fund and sack Mr Woodford in October last year.

The fund’s last valuation put remaining assets at £444m, including the £224m in cash received from Acacia. Even if investors get back the remaining money in full – which is highly unlikely – losses since it shut will be staggeringly high.

Link declined to comment.