Woodford cuts Atom Bank stake as Capita and Purblebricks investments take toll on his fund

Star fund manager Neil Woodford has cut his stake in challenger bank Atom Bank amid a £1bn fall in the value of his flagship fund.

Woodford Investment Management declined to participate in Atom Bank’s £150m share issue which was announced last week.

Following the rights issue Woodford’s stake in Atom Bank will fall from 20 to 18 per cent.

The decision not to stump up the cash, which was first reported by Sky News, comes after a torrid start to 2018 which saw his key fund shrink by £1bn in the first five weeks of the year.

Read more: Woodford suffers a £1bn blow

Stakes in outsourcer Capita and online estate agency Purplebricks have been the main factors behind this year’s poor performance.

The value of Woodford’s 11 per cent stake in struggling outsourcer Capita has plummeted in recent weeks following a collapse in its share price, while his stake in Purblebricks has also fallen in value after Jefferies analysts claimed the firm had hidden the true number of homes it was selling.

A spokesperson for Woodford said: “Neil has to make decisions about the allocation of capital all the time.

“When we sell, or don’t participate in a funding round, it is not a function of an inability to follow on, but typically a function of our preference to focus our capital on businesses earlier in their lifecycle or which have the potential for more attractive returns.”

Read more: Woodford throws his weight behind Provident… and he had to

Recent investments for Woodford include a recently announced rights issue for doorstep lender Provident Financial and an investment in biotech company OxSyBio.

Sky News was the first to report that Woodford had declined to support Atom Bank’s share issue.