New Woodford Fund

bowlhead99

Exactly, it might not be oversubscribed, especially if they can expand the size to accommodate. It is in quite a niche and the promise of 10% returns (which they don't have a track record for) may not be enough to lure people in from tangential sectors. There of course examples of some investment trusts launched by well regarded managers which moved swiftly to a premium, but it would need to be on a 2% premium to cover the costs of launch anyway.

Personally I do think it will trade at a premium but if you put a token £1000 in, you're not going to make 30% on day one like you could with Royal Mail, and as it's a listed instrument you'll have to sell on market, nobody offers fee free sales.

While it's admirable to try and get a quick win from a 'patient capital' fund, I wouldn't bother with that myself. If they spend 1.5% on launch and then the rest of the assets drop with the markets two or three percent in the first day or week or month, then you need a 5% premium to break even.

dunroving

Just an observation but considering it is called the "Patient" Fund, and the idea is that profits will come in the long term, there's an awful lot of of people "rushing" to buy it.

redbuzzard

dunroving wrote: »

Just an observation but considering it is called the "Patient" Fund, and the idea is that profits will come in the long term, there's an awful lot of of people "rushing" to buy it.

Fear and greed, dunrovin, fear and greed! I can feel it myself

Once it's in your head that it would be a loss to miss out, the list of compelling reasons to buy soon grows:

- why would he do it unless he's confident it will cement his image as the second Buffett?

- surely he must have some ace ideas up his sleeve to engineer a spectacular start?

- the Woodford name alone, and the limited capital, will probably push it to a premium

etc etc.

That's me convinced. Now, how much?

(I hope any casual reader realises this is not advice!)

jimjames

dunroving wrote: »

Yep, I get that - I have been investing with them for some time. I was just saying I found it interesting that they had a big blurb on it when it is not a product they can help their customers invest in.

That's probably because the Fidelity fundsnetwork platform isn't one setup to buy and sell shares.

There's a fudge in place for showing their own investment trusts bought via their savings scheme but you can't buy via their platform.

TCA

jimjames wrote: »

There's a fudge in place for showing their own investment trusts bought via their savings scheme but you can't buy via their platform.

I was looking at this last night and found this below, about their ShareNetwork account. It's all pretty confusing how this hangs together:

https://www.fidelity.co.uk/investor/share-dealing/accounts/sharenetwork-account/default.page

jimjames

Ryan_Futuristics wrote: »

It's a dilemma for me knowing how much to invest ... I put a lot of stock in Woodford's opinions, but I agree it is a new prospect, and will be an experiment for them ... My comfort zone is knowing valuations, and this is really putting faith in a manager (and in the UK economy - I've been much happier with equity income since QE) ... But I've been waiting for an opportunity to increase my UK smaller cos. and private equity - private equity being very popular with big investors because of how uncorrelated it tends to be to the stock markets ... I'm thinking around 3-5% of my portfolio - because despite the unknowns, I imagine it'll be trading on quite a premium quite quickly

Be aware (if you weren't already) that a big name fund manager doesn't mean the investment will be an immediate success.

A few years back a well known fund manager with a 20 year record of growth launched a new investment trust that immediately went to a premium and additional shares were sold at a premium too.

Roll on a few months and the trust is at a significant discount as well as having dropped 20% on the launch price.

rdtrdt

Reaper wrote: »

Just a thought... while sold as a long term investment might there be a short term opportunity?

The investment trust is only issuing £200m of shares, which is not a lot. If you think this is likely to be over subscribed then there would be a short term jump in the price as those who missed out buy on the open market.

On the flip side:
1) It might not be over subscribed
2) They have said they may issue more shares if demand is high

It appears WPCT can raise up to £550m.

Firstly, while £200m is the target to raise, 500 million is the maximum numbers of shares than can be issued during the initial offer. That would raise £500m.

Secondly, WPCT can, immediately following admission, issue a further 10% of issued share capital, at its discretion, during the first year. Presumably, if the initial offer is oversubscribed, this facility would allow WPCT to immediately offer additional shares to favoured institutions/brokers who didn't get the allocation they were seeking.

There should be a lot of interest in this trust, but potential staggers should bear in mind the above, which may serve to lessen any anticipated premium.

le_loup

What bothers me is any scaling back. I only want a few but I don't want less than a few. So should I oversubscribe and sell some if I get more than I want? That is my plan currently.
Is there a real danger of this being closed early, I wonder? Presumably the timing is to catch new year ISA money ... but if oversubscribed it could close before 6th April!

bowlhead99

While it says they may issue more if demand is high, which makes sense, and although they allowed themselves headroom by having £500m in the legal documents as maximum shares which can be issued, they're (my opinion) not going to get close to raising that. The target is £200m and so they won't push to find investors once they get that covered.

It just looks embarrassing / greedy to raise 3x the target amount when you had stated your investment strategy as aiming to deploy half the pot into early stage companies. It wouldn't do much for their credibility if they said they were aiming to find and fund 40 companies at £2million deal size and instead end up doing 40 at £5million deal size or 100 at £2million. Also it means they have to be able to deploy two and a half times as much than they had planned at a better than 10% return before they can earn any fees, which is surely a much tougher challenge.

The 10% additional issue per year is just some standard term that it's sensible to have in the company's articles, as a premium control mechanism as well as being able to place a few shares for cashflow reasons if it's convenient to do so when funding some of the deals.

So, I think the chance of them raising £550m is between slim and none although you never know of course.

bowlhead99

le_loup wrote: »

What bothers me is any scaling back. I only want a few but I don't want less than a few. So should I oversubscribe and sell some if I get more than I want? That is my plan currently.
Is there a real danger of this being closed early, I wonder? Presumably the timing is to catch new year ISA money ... but if oversubscribed it could close before 6th April!

Yes, the chance of scaling back is a problem with all IPOs.

But say you want £2000 of shares. My attitude would just be, apply for the £2000. If it gets scaled back 50% you will have £1000 of shares in your account but you won't have suffered any real transaction costs or losses as you don't pay a broker fee or stamp duty to buy them and presumably that £1000 will still trade at £1000+ because of the high demand causing a premium. And presumably you will be happy to keep them 'patiently' for years to come as originally planned.

You can then decide, do I want to pay a tenner trading commission and a fiver stamp duty to deploy my other £1000, or not. If you do, it has cost you £15 more than expected to deploy your £2000. That's not much of a movement in your overall price (<1%) and doesn't really hurt long term returns. IPOs of individual companies often have 10%+ price ranges when you're buying in.

If you decide not to invest the 'spare' £1000 after all, then, no harm done, you just have a smaller investment than you really wanted. If being left with that 'annoyingly small' investment is something you can't live with, then it would just be a question of whether to dump it for a minimal loss or more likely, buy the rest that they didn't allocate you.

If you guess there's going to be an oversubscription and you like the prospects anyway - you'd said in an earlier post you'd be pretty happy to throw money at this one without waiting for the fine print - then maybe just go for more shares. But they won't be doing scale backs until £500m according to the prospectus and my instinct is telling me they won't be launching at 2.5x target size so I think the average 'retail level' investor will not get squeezed out - they'll just cool down the marketing on the bigger investors if it is going well.

So, if I wanted £1k-£5k I would just go for whatever number I wanted to keep, on the assumption I won't be scaled down. I don't know that I would be so keen on a £500m or £1bn vehicle making focussed early stage investments so if they raised a monster amount and had to scale me back, I'd actually be OK with it.