LONDON -- 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 pounds 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-pound 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 health care sector, Woodford substantially increased his holding in Smith & Nephew (LSE:SN). According to my calculations, his 41-million-pound investment in the medical devices firm increased his stake by a third and was made at an average buy price of 632 pence a share.
Smith & Nephew's shares are currently trading at 659 pence, 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 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 75 million pounds, and my sums say he bought at an average price of 258 pence 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 248 pence, 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-pound investment at what I calculate to be an average buy price of a little under 700 pence.
Shares in Capita are now trading at 770 pence, 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 and 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.
The proceeds from the disposal of BG amounted to a whopping 343 million pounds, and my sums tell me Woodford sold at an average price of 1,235 pence a share. That looks like a timely sale, because the shares are currently trading at 1,078 pence 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 180 pence a share, netting him proceeds of 190 million pounds. Again, this looks a timely sale, as Vodafone's shares are now around 160 pence.
Tate & Lyle 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 670 pence a share. With Tate's shares currently trading at 770 pence, the 82 million pounds raised from the sale would today be worth 95 million pounds, 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 favors 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 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.