LONDON -- 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 pounds of client money. His Income fund has generated a superb 251% return over the last 10 years, compared with a 135% return for the average U.K. equity income fund.
The latest annual report for Woodford's Income fund has just been published, and the document reveals which stocks he's been pumping cash into and which stocks he's disposed of.
Two big sells
It's been widely reported that Woodford has lost faith in telecommunications titan Vodafone (LSE:VOD). Woodford has said he has "reservations" about the company's ability to generate profits from data services. Also, he's concerned about the level of cash flow cover of the dividend, which he views as "uncomfortably low."
Woodford began selling down the Income fund's holding in Vodafone last summer, disposing of more than 105 million shares. He has now exited his position entirely with the sale of the fund's remaining 149 million shares.
According to my calculations, Woodford achieved an average price of 180 pence a share on his first tranche of sales, but just 161 pence on his second. The total proceeds amounted to 430 million pounds at an overall average price of 169 pence.
Sweeteners group Tate & Lyle is another holding that Woodford began selling last summer and has now disposed of completely. My sums tell me he sold at an average price of 673 pence, raising just more than 129 million pounds.
Vodafone's shares are now 14% higher than the average price at which Woodford sold; Tate's are 21% higher. Schadenfreude time for those of you who like to indulge!
Remember, though, that Woodford plays a long game and it will be some time before his sells -- and what he bought with the proceeds from the sales -- pan out. One thing's for sure, if his quarter-of-a-century track record means anything at all, he'll outperform many funds and private-investor portfolios that currently still hold Vodafone and Tate!
Woodford's biggest buy over the past year from the FTSE 100 elite has been security group G4S (LSE:GFS). He first bought in before the company's staffing fiasco for the Olympic Games, and has continued to buy heavily on share-price weakness since.
Woodford has pumped close to 150 million pounds into G4S for his Income fund during the year, and I calculate his average buy price as 261 pence a share.
Invesco Perpetual, as a group, now owns more than 15% of G4S. Interestingly, renowned U.S. value investors Tweedy, Browne have also been attracted to the 3.5 billion-pound security firm, holding 5% of the shares, and another notable U.S. value outfit, Harris Associates, is a 5% holder, too.
You can pick G4S' shares up today for 247 pence -- close to their 52-week low and at a 5% discount to Woodford's average buy price. The company is on a forecast current-year price-to-earnings ratio of 11.5, falling to little more than 10 next year. Analysts put the dividend income on offer this year at 3.9%.
Over the year, Woodford further bulked up the number of shares his Income fund holds in both companies, investing a net 96 million pounds in Astra and 78 million pounds in Glaxo. According to my sums, Woodford paid an average per-share price of 2,918 pence for Astra and 1,434 pence for Glaxo.
Astra's shares are now trading at 3,388 pence (up 16% on Woodford's average buy price), putting the company on a forward P/E of 10 and a dividend yield of 5.3%. Glaxo's shares are changing hands for 1,713 pence (up 19%), giving a forward P/E of 14.5 and a yield of 4.5%.
Woodford has been generally cool on utilities for the last year or two, but has added 15 million shares to an existing 77 million holding in Centrica (LSE:CNA), the owner of British Gas and other energy businesses.
My calculations say Woodford invested about 53 million pounds at 356 pence per share. The shares are 7% higher at 380 pence today, trading on a forecast P/E of 13.5 and offering a prospective dividend income of 4.5%.
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.
If you're interested in reading an exclusive analysis of eight dividend-paying blue chips Woodford currently favors, 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.