Woodford to leave Invesco

talexuser

thelawnet wrote: »

They can introduce a dilution levy at some point in the future if there are too many sellers.

A possibility sometime in the future, but not very relevant to HI one day price movements now 'supposedly' based on the manager change announcement.

The fund is so big that very large cash calls involving selling many shares might just affect individual share prices?

Richard_DandR

talexuser wrote: »

No, High Income does not have a bid offer spread, it is single price.

When I was there four and bit years ago, three prices were calculated for each share class of an OEIC - bid, mid and offer - and depending on the balance of the buyers and sellers on any given day, it could swing from bid/mid/offer. A single price would be quoted.

Bid to offer, or vice versa, would move the quoted price by around 1%.

talexuser

Oh, you're talking about how they work out the price internally?

So they can reduce the value of the shares that investors own by 1% and pay you less than your shares are worth if they want to?

A_Flock_Of_Sheep

EDIN appears to be trading back at par to NAV. It seems Redbuzzard you did well to buy in at 560p.

Apparently Woodfords resignation did have a moving effect as I read an article that capitas share price was moved down by this.

block10

Some info on Woodford's successor - Mark Barnett below. Apparently he has outperformed Woodford over the last 5yrs.

[FONT=&quot]Sitting next to the same person at work for 17 years would typically display a lack of imagination. For Mark Barnett, however, the move has been career enhancing.[/FONT]
[FONT=&quot]For it so happens his neighbour is Invesco Perpetual star manager Neil Woodford, who will surrender £31 billion of the £33 billion he manages to Barnett when he steps down in April.[/FONT]
[FONT=&quot]In a bid to retain the money, Barnett stressed his investment philosophy does not differ from his mentor: “We talk an awful lot about stocks. We take account of macro-economic considerations when we take a view. Our largest holdings are quite similar.”[/FONT]
[FONT=&quot]Prior to Invesco Perpetual, Barnett worked at Mercury Asset Management, later bought by BlackRock. But Neil Woodford has done more to shape Barnett's view of stocks than Mercury's former co-leader Carol Galley: “Mercury seems like a million years ago,” he said, speaking from Invesco's offices in Henley-on-Thames. [/FONT]
[FONT=&quot]Rival managers, and consultants, are far from convinced that Barnett, who manages £1.5 billion, will find it easy to get to grips with Woodford’s huge portfolios, once he loses his wise counsel in April.[/FONT]
[FONT=&quot]But Barnett said he can maintain their view that stocks should be bought because they are fundamentally cheap, and owned for the long term. “I believe my investment philosophy is scaleable, particularly since Neil and I have worked in the same team for 17 years." He added: "Nothing is firm, but I believe any change in Neil’s portfolios should be evolutionary."[/FONT]
[FONT=&quot]He sees no reason why Invesco Perpetual should break up Woodford’s two biggest retail funds – Income and High Income – to make them easier for him to handle.[/FONT]
[FONT=&quot]He concedes they are 10% weighted in stocks with no or low liquidity, whose performance is overwhelmed by large stocks. Shouldn't this portfolio be spun off, at the very least? Barnett said: “That may be possible, but it is something we are not considering. Even a 10 basis point weighting in a small stock is worth having, when it goes up 10-fold.” [/FONT]
[FONT=&quot]Barnett noted that a large part of Woodford’s small cap portfolio comprises companies formed around relationships developed at universities: “Some of them are maturing soon. And you can get a big differential between the price you pay for them, and the value they achieve.”

He added: “There should always be a place for small holdings in early-stage businesses."[/FONT]
[FONT=&quot]Right now, he is more concerned about prospects for equities than his ability to scale up and see off challenges from rival products.[/FONT]
[FONT=&quot]“I think the market is fair value. But we have seen a re-rating over the last year, and we need more earnings upgrades to move the market higher.” [/FONT]
[FONT=&quot]Six of the top 10 stocks owned by Woodford’s High Income fund and Barnett’s Strategic Income are the same, according to FE Trustnet. Top 10 stocks held by Strategic but not High Income are pharmaceutical companies Novartis, AstraZeneca and GSK, plus travel company Thomas Cook. Each fund easily has its biggest weighting in pharmaceuticals – 33% for Woodford, though a rather smaller 23% for Barnett.[/FONT]
[FONT=&quot]Woodford’s Edinburgh Investment Trust and Barnett’s Keystone Investment Trust have eight out of their top 10 picks in common. Again, Barnett has a personal preference for Novartis and Thomas Cook.[/FONT]
[FONT=&quot]Analysts say Barnett has lagged Woodford over 10 years. But over five, Barnett has beaten Woodford. His Strategic funds had delivered an annualised 13.1% over the five years to September, against 11.4% from Woodford's High Income, according to Invesco Perpetual. [/FONT]
[FONT=&quot]Barnett concedes his turnover in stocks, equivalent to 15% to 20% is slightly higher than Woodford’s. According to analysts, his funds have tended to fall slightly more during periods of adversity. One rival manager said Barnett's outperformance resulted from his funds being smaller and easier to manoeuvre. A former Mercury colleague said: "He's good, but he's no Neil Woodford." [/FONT]
[FONT=&quot]One analyst said successors to star managers rarely perform as well, citing the mixed experience of investors who chose to retain portfolios previously managed by star manager Anthony Bolton at Fidelity.[/FONT]
[FONT=&quot]A manager at another firm said Barnett would probably be more pragmatic: “I find it particularly hard to believe that Mark will be as stubborn as Neil in seeking to extract value in takeover situations.” [/FONT]
[FONT=&quot]But Barnett said he compares notes closely with Woodford in issues relating to corporate governance and corporate actions. This leads to joint decisions where stocks are held in common. Like Woodford, he has a clear preference for lobbying to take place behind closed doors, away from media distractions. [/FONT]
[FONT=&quot]He concedes a proposed $78 million pay off by Novartis to former chief executive Daniel Vasella earlier this year was “excessive”. But the Novartis board later slashed the payment to $5.9 million: “I thought they handled the situation pretty well.” Time and again, he says, companies become unstuck: “When they forget who they are working for.”[/FONT]
[FONT=&quot]Woodford and Barnett jointly made the decision to go public with their opposition to BAE Systems proposed merger with European aerospace company EADS in 2012: “We made that decision because governments were involved, and it was hard to get their attention any other way.” In event, Germany played a big role in blocking the deal.[/FONT]
[FONT=&quot]Differences between the two men emerge when comparing the stocks which lie outside their top 10 holdings. Barnett says: “If you look at the rest, we end up with 50% in common.”[/FONT]
[FONT=&quot]He confesses to owning a slightly higher weighting in telecoms stocks and a much bigger slice of the non-life insurance sector. Insurance helps to explain why his Strategic fund has a second-placed 19% weighting in financials. [/FONT]
[FONT=&quot]Woodford’s High Income financials weighting comes fourth at just under 8%. Barnett, however, is less of a fan of industrial stocks than Woodford.[/FONT]

talexuser

My experience of star mangers being replaced is that the fund always suffers in the short or longer term (Littlewood, Bolton etc). A manager may take over a failing fund and turn it around but by definition that is not replacing a star but becoming one. Woodford was notorious for long term holdings a la Buffet, since churning can easily eat up all your gains. I think Barnett was more small company orientated which explains his recent outperformance compared to HI easily. I am not optimistic for the longer term but we shall see, lots of other funds to choose while we monitor.

JohnRo

I'm keeping an eye on EDIN and if it gets to a decent discount I'll probably be buying. Invesco are no chumps, isn't it debatable who has made who?

Star manager or not, they have an awful lot of talent to call upon. Who knows Ciaran Mallon may become the new "star" manager everyone is talking about in years to come.

gadgetmind

talexuser wrote: »

My experience of star mangers being replaced is that the fund always suffers in the short or longer term.

However, extensive studies have failed to find a "hot hands" effect and therefore haven't identified any way to improve investment returns by monitoring manager changes.

talexuser

Not really surprised by that, depends on the criteria used I suppose. I concede the number (of star managers) are so small compared to the whole industry perhaps they are more lucky than skilful, just the handful at the very top end of the distribution curve of performance? To be lucky over 20 years say is perhaps a skill in itself?

gadgetmind

The problem is that by the time you have enough data to differentiate skill from luck, it's too late to benefit from it.