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Neil Woodford, one of the most influential fund managers in the UK, has been in the High Court in London this week denying allegations that he conspired with former Stobart CEO Andrew Tinkler to purchase a majority stake in the Stobart aviation business and then sell it for a major profit.

The dispute is swirling around Stobart’s plans to acquire discount airline Flybe. Woodford filed a witness statement with the court on Monday in which he denied the allegations, pointing out that any supposed plots to injure Stobart would backfire on him and the investors in his funds.

Woodford holds almost 20% in Stobart shares, which constitutes a considerable slice (10th largest holding) in Woodford’s Equity Income Fund. It is also owned by his Income Focus Fund, but at a smaller proportion.

“Why would I want to ‘injure’ Stobart, in which I have chosen to invest my investors’ funds, is never explained, as is the allegation that I conspired with Andrew Tinkler to pursue his interests over Stobart…I owe duties to the funds I manage, and it is in the best interests of these funds for Stobart to be as successful as possible,” Woodford said in a statement.

Woodford is claiming that he was actually approached by Stobart’s current bosses to invest in a separate company, effectively to be a co-investor alongside Stobart Capital, in an effort to help Stobart to acquire Flybe.

Stobart’s bitter board feud

Woodford has been dragged into a bitter board-level feud, as he has been supporting Stobart ex-CEO Tinkler, and opposing the re-election of Iain Ferguson as chairman of Stobart. His former employer, fund manager Invesco, which owns a staggering 24% of Stobart shares, has been backing Ferguson and the current management team. Tinkler is also suing Stobart for unfair dismissal.

Tinkler originally stepped down as CEO of Stobart in July 2017 with a plan to split his time between Stobart (where he was to remain as an executive director) and new venture Stobart Capital, which was going to be investing in new opportunities for the group.

Woodford has backed Philip Day (owner of Edinburgh Woolen Mills) to be chairman of Stobart, but current management has seen this as part of a conspiracy between Woodford and Tinkler to undermine Ferguson and ‘damage’ the company. While the proposal of Day for chairman has been defeated in a shareholder vote, Stobart has decided to reach for the legal guns and has attacked one of its largest shareholders.

All this is doing wonders for the Stobart share price, which is being quoted at 188-189 today, down from a year high of 287. The stock has seen heavy selling pressure in October and most brokers covering Stobart shares at the moment have it on either a hold or a sell.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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