Woodford Patient Capital

MaxiRobriguez

Reaper wrote: »

The price dropped below 60 this morning which made me re-evaluate whether I should get in...

Reasons to buy:
* It's out of favour with sentiment pushing the price way below NAV. That is often a good time to buy.

Reasons not to buy:
* 75% of WPCT assets are invested in the same things as Woodford Equity Income, so if that is forced to keep selling that pushes the prices of the same assets down.
* As it shrinks Woodford Equity Income may sell some WPCT to rebalance, pushing its price down.
* Shorters are out in force, which can also lower the price in the short term.
* It has high gearing at 16%, so downward pressures can be magnified.

On balance I think it has further to fall so I will not be buying yet. I realise there is a good chance I will miss the bottom as a result but the risk/reward is not one I feel comfortable with.

Likewise I'm monitoring for now, but I suspect the majority of the selling has been done already now.

Johnnyboy11

Not for me, wouldn't touch it at 50p and a 50% discount. Who knows what horror stories lurk under the bonnet of WPCT?

MaxiRobriguez

Johnnyboy11 wrote: »

Not for me, wouldn't touch it a 50p and a 50% discount. Who knows what horror stories lurk under the bonnet of WPCT?

Indeed, but if it wasn't risky in the first place the declines would be more muted. People circling will do so knowing the large element of risk, and presumably are smart enough to only allocate small amounts of their capital to it if and when they buy in.

fun4everyone

The board of WPCT have issued a statement this morning

The board of Woodford Patient Capital Trust plc (the “Company”) notes the recent developments at Woodford Investment Management Ltd.

Following the events relating to LF Woodford Equity Income Fund (“WEIF”), the board also notes the reaction in the company’s share price and the share prices of certain quoted portfolio companies in which WEIF is also invested.

The board is pleased with the operational progress of its portfolio companies, which the board believes continue to have the potential to deliver attractive returns, in line with the long-term mandate of the company. The operational performance of these businesses is not impacted by recent events.

Susan Searle, chair, commented: “The board is closely monitoring the situation and is engaging with its shareholders and advisers. Separately, the board is in regular dialogue with the portfolio manager. The board wishes to emphasise the long-term approach of the company and will continue to keep shareholders updated as necessary.”

https://quoteddata.com/2019/06/woodford-patient-capital-board-statement/

fun4everyone

From what I have read every single one of the board, except Susan Searle, have links to Woodford via his investment in their companies in the past. Let's see them buying some shares then.

Reaper

I don't subscribe to the view it is toxic and not worth it at any price. Everything has a fair price, you just have to take a view what that price is.

However the negative feeling is interesting. When the Equity Income fund eventually re-opens if that feeling is widespread we will see a mass exodus. The more people sell the more it makes others think they should be doing the same until the fund gives up and closes.

For the reasons I stated previously this will affect Patient Capital.

Things can change but my feeling currently is that I probably will not buy until a few days after Equity Income has re-opened and the remaining damage has been done.

MaxiRobriguez

The board could hardly say otherwise. The current pressure on price is being driven by illiquidity in WEIF as punters fear contagion. If the board had said "maybe there were some problems" then it calls into question not just the manager but the purpose and effectiveness of the trust itself and by virtue the board members.

No one is ever wrong in the finance industry...

Johnnyboy11

Good FT article on WPCT here.

Freecall

MaxiRobriguez wrote: »

No one is ever wrong in the finance industry...

Too true.

Apart from investors of course, who apparently are solely responsible for their own stupid decisions.

... or so the industry would have us believe.

Reaper

fun4everyone wrote: »

From what I have read every single one of the board, except Susan Searle, have links to Woodford via his investment in their companies in the past. Let's see them buying some shares then.

Actually Susan Searle works for 2 companies the fund has invested in (Mercia Technologies and Benchmark Holdings).
I think in total 3 members of the board have links, though that is quite a lot.