Woodford Investments

ArchBair

Two major investment houses (Aviva and Jupiter Merlin) have now dropped Neil Woodford from their range of funds and re-invested with alternatives. Jupiter has moved its funds over to Threadneedle UK Equity Income.

I know he has had a bad year but is this not hitting the panic button after all investment strategies are supposedly over a long term period?

https://uk.finance.yahoo.com/news/second-giant-investment-house-drops-094531409.html

talexuser

Possibly. I was with him in Perpetual High Income through the dotcom boom, and most of the same arguments applied before the crash. After the fact it was a good decision to stay with him. One year is possibly too soon to judge, we don't know when another correction will come (as it has to eventually) and only then will his punts either stand or fall.
I have dumped previously good performing funds between two and nearer three years under performance in the past to broadly equivalent manager alternatives.
My stake shows 28% since launch today, which does not sound too bad, but his 5 year figure will be dragged down by this, and there is the possibility that many will jump ship only to find the following 5 years have great profits. The low could be a good time to buy... but to sell...???

ChopperST

Beat me to it - http://www.telegraph.co.uk/investing/news/second-giant-investment-house-drops-woodford-fund/

Under-performed the market by 12%

fun4everyone

I think this is over two years of under performance now for the main income fund. Certainly the whole of 2016 and 2017 and I think looking at graphs the latter half of 2015 also. I doubt he has lost it as his track record is immense and one can forgive "unlucky" or "active management" poor performance (AA, not holding resource stocks in 2016 etc). However there have also been some clear failures of due diligence such as Northwest Biotherapeutics where investors money was not treated correctly and these are the sort of things that worry me.

There is going to be a big day either way for him in the future when Prothena report on phase 2b/3 trials of lead drug NEOD001 (he holds 30% of the stock and it is by far and away the biggest holding in WPCT as well as a significant one in Equity Income). Some lot in the US called "Kerrisdale Capital" have taken on a big short position in Prothena and say this drug is "certain" to fail. They even call out NW in their report saying he is inexperienced in these sort of companies.

https://www.prnewswire.com/news-releases/kerrisdale-capital-issues-negative-report-on-prothena-corporation-plc-and-announces-conference-call-schedule-300551842.html

chrisgg

The main issue I have with Woodford at the moment is not his recent underperformance. He hold very large proportions of many small caps due to the large size of the fund. If anything goes wrong with these he won't be able to get out. I read recently that one of his key holdings, Prothena, is being shorted and attacked by a US hedge fund who thinks the company's upcoming drug trial will fail. Even if Woodford agreed, he wouldn't be able to sell his holding at a worthwhile price given how high a percentage of the company he holds.

ArchBair

IanManc wrote: »

No it isn't "hitting the panic button".

it is a calm and considered decision by the analysts at two investment houses.

You are characterising it as "panic" because you disagree with it, and want to marginalise it.

:beer:

I neither agree or disagree with it, I was only asking the question and people's views on the article in general.

fun4everyone

chrisgg wrote: »

The main issue I have with Woodford at the moment is not his recent underperformance. He hold very large proportions of many small caps due to the large size of the fund. If anything goes wrong with these he won't be able to get out.

I agree with this as well. Some of his holdings are such large stakes in the companies it seems impossible for him to sell without suffering price falls. If he wants out of something it seems a tricky spot. An unfortunate side effect of his main fund being so large. For a position to be meaningful it takes huge chunks.

jamei305

fun4everyone wrote: »

I agree with this as well. Some of his holdings are such large stakes in the companies it seems impossible for him to sell without suffering price falls. If he wants out of something it seems a tricky spot. An unfortunate side effect of his main fund being so large. For a position to be meaningful it takes huge chunks.

I suppose if one holds such a large stake in a company which then goes pear-shaped it's almost worth trying to do a WPP with it instead of getting out at a loss.

Prism

All UK income funds are way to risky for me. To much concentration in a few large and often average companies just to get a small dividend. Sure when and if the stock market crashes you should still get that dividend but that's assuming those companies don't cut it.

I think the Woodford funds are even riskier by combining that with various punts on smaller finance and biotech companies which could go either way. I did hold the fund last year for a while but decided I had made a mistake and got out before this years fall.

bigadaj

IanManc wrote: »

it is a calm and considered decision by the analysts at two investment houses.


:beer:

How do you know it is calm and considered?


Analysts views and recommendations are still more politically and commercially driven in most cases than any clam and analytical view of the actual situation. They are also always backward looking.

dunstonh

The Woodford fund fell off our list last year. The income focus is still on there though. I'm not surprised to see life companies drop it as they are required to carry out due diligence and remove funds and add funds based on research and not any pay to play deals.