Provident Financial - Woodford, Barnett & Darwall

Bazofts_Revenge

Most of the issue as I understand it is that they haven't got the repayments in on time and as such the dividends will eat into the companies capital. The loans people have signed up for will still exist so interest will still be building whether people make payments or not. Therefore the monies due will still be coming in until the company decides to write it off. Prior to that I would sell off the debt to other debt companies as a last resort. Once word gets around that the debts have been sold to persons who charge highter rates and possibly have more effective means of getting the money back other may start to pay back on their own accord. Currently sitting on a 50% paper loss just wish I had kept some cash back for a punt earlier in the week but I was waiting for pay day. Will probably just keep an eye on them for a couple of months before topping them back up.

bigadaj

Bazofts_Revenge wrote: »

Most of the issue as I understand it is that they haven't got the repayments in on time and as such the dividends will eat into the companies capital. The loans people have signed up for will still exist so interest will still be building whether people make payments or not. Therefore the monies due will still be coming in until the company decides to write it off. Prior to that I would sell off the debt to other debt companies as a last resort. Once word gets around that the debts have been sold to persons who charge highter rates and possibly have more effective means of getting the money back other may start to pay back on their own accord. Currently sitting on a 50% paper loss just wish I had kept some cash back for a punt earlier in the week but I was waiting for pay day. Will probably just keep an eye on them for a couple of months before topping them back up.

That's an interesting view.

They are already operating at the very sub prime area of the market, are you suggesting that they will be selling debts onto big tony?

Once the relationship has been lost with the individual agents they borrowers will view the provi as just another bank, if they can get away without paying then that ain't going to worry them, previously not paying Debbie who popped round for a chat and was a near neighbour was a totally different thing.

dividendhero

Bazofts_Revenge wrote: »

Most of the issue as I understand it is that they haven't got the repayments in on time and as such the dividends will eat into the companies capital. The loans people have signed up for will still exist so interest will still be building whether people make payments or not. Therefore the monies due will still be coming in until the company decides to write it off. Prior to that I would sell off the debt to other debt companies as a last resort. Once word gets around that the debts have been sold to persons who charge highter rates and possibly have more effective means of getting the money back other may start to pay back on their own accord. Currently sitting on a 50% paper loss just wish I had kept some cash back for a punt earlier in the week but I was waiting for pay day. Will probably just keep an eye on them for a couple of months before topping them back up.

I would expect the Provvy to freeze interest payments, it's not the fault of their customers that they can't pay back loans if the provvy haven't come round to collect it.

I guess the Provvy could sell the loans on, but doubt they'd do that - they do want their customers to stay and debts being sold will end up being bought by "Big Tony", though not legally the responsibility of the original lender, the mud will stick

bigadaj

dividendhero wrote: »

I would expect the Provvy to freeze interest payments, it's not the fault of their customers that they can't pay back loans if the provvy haven't come round to collect it.

I guess the Provvy could sell the loans on, but doubt they'd do that - they do want their customers to stay and debts being sold will end up being bought by "Big Tony", though not legally the responsibility of the original lender, the mud will stick

From what I understand they and a fairly flexible model, so borrow £100 and pay back at £10 a week for 12 weeks say. If the borrower didn't have the money they weren't penalised, even to the extent of not paying extra interest, a week was missed and the twelves weeks were extended to thirteen.

The huge Apr was mitigated to an extent by the flexibility and lack of penalty, the new model just doesn't work in the same way, if at all. The old methods were being questioned as legitimate as the regulator would see it, but it's what people were used to and has been operating for £150.

Now they've altered it then it'll be difficult to change it back, reading the times business today a former director has set up a direct competitors and recruited a lot of the old agents with more being added.

They really are between a rock and a hard place as a business.

Dird

jimjames wrote: »

As long as it's less than the times he gets it right and still beats benchmark I think investors will stick with him.

On here the benchmark is pretty much LS100. 3 years annualised, down 5.7%. £1k 3 years ago = £1,270 with Woodford or £1,506 with LS100

bigadaj

Dird wrote: »

On here the benchmark is pretty much LS100. 3 years annualised, down 5.7%. £1k 3 years ago = £1,270 with Woodford or £1,506 with LS100

On where?

Very different funds which differ in approach, risk, geography etc etc

Dird

bigadaj wrote: »

On where?

On here.
newuser: What should I invest in?
response: LifeStrategy

bowlhead99

Dird wrote: »

On here the benchmark is pretty much LS100. 3 years annualised, down 5.7%. £1k 3 years ago = £1,270 with Woodford or £1,506 with LS100

Woodford's benchmark is not "LS100" because he is not aiming to deliver the return of unhedged global equities weighted by market capitalisation (and re-weighted a bit towards large FTSE listed stocks), and his investors know that.

His equity income fund that you're measuring is deliberately aiming to be substantially invested in UK listed or UK based stocks, with a higher level of sustainable natural income (or potential for it) than the FTSE index. It will have a weighted average portfolio company size smaller than that of the global index and it will be tilted towards the sectors in which he is interested or feels there is better prospective potential in the current market conditions.

If you are deliberately offering a portfolio composition very different to that offered by a cap weighted world equities index, it would be useless for investors to 'benchmark' yourself against a cap weighted world equities index or a LS100. The benchmark against you are measured has to be something meaningful in the context of what you are trying to achieve.

Dird wrote: »

On here.
newuser: What should I invest in?
response: LifeStrategy

Yes, the love here for Lifestrategy products is clear and will no doubt be self-sustaining until the next major crash.

Still, nobody is recommending Woodford Equity Income as a rival or competitor to Vanguard Lifestrategy. Your example could be expanded on:

newuser: "What should I invest in ? I don't know where to start?"

or

newuser: "What should I invest in ? I have selected a list of funds that I've heard of, it's as long as your arm. I was thinking about investing in these proportions. Is it the best thing to do?"

Response from crowd: Either build yourself a bespoke portfolio of specialist funds and periodically rebalance them, or buy one multi-asset fund that gives you exposure to the major sectors and asset classes around the world. Examples of the latter include the x series of funds from x manager, the y series of funds from y manager, and the z series of funds from z manager, or the Lifestrategy series of funds from Vanguard. What those funds have in common is they are cheap, rebalanced by the manager not the investor, and built on indexes, and I am not going to dare to bother mentioning slightly more expensive but decent multi-asset funds that aren't built on indexes because then I have to get into another [expletive deleted] argument about passive versus active for the umpteenth time and you probably don't have a huge amount to invest anyway so who cares.

newuser: OK cheers so I will just do Lifestrategy then because I heard about it before and from the charts pretty much everyone who invested since launch has made a profit. Lifestrategy sounds great. I will do as you suggest and consider whether it is still suitable for my needs and knowledge level in a few more years when I have a bigger portfolio and a bit more experience of investing, or more time on my hands or more wealth to pay for professional advice. Meanwhile I will tell all other new users I meet that I was once like them and I did Lifestrategy and you don't have to think about it very much and it has worked for me so far as we haven't had a crash so even if I picked the wrong version of Lifestrategy for my needs, I haven't noticed yet.

Of course, if someone building a bespoke portfolio asks for a recommendation for a UK-focused equity income fund, nobody suggests Lifestrategy to fill that role in their portfolio, as it isn't a competitor or benchmark for that type of specialist fund.

dividendhero

bigadaj wrote: »

Now they've altered it then it'll be difficult to change it back, reading the times business today a former director has set up a direct competitors and recruited a lot of the old agents with more being added.

While anyone can recruit staff/agents from the Provvy, i'd imagine there's NDA's in place to stop them directly taking customers..

bowlhead99

dividendhero wrote: »

i'd imagine there's NDA's in place to stop them directly taking customers..

That sounds very unlikely.