Woodford Concerns

Moe_The_Bartender

itwasntme001 wrote: »

If you look at arguably the greatest investor of all time, Warren Buffet, even he underperforms the market at times. He obviously has done very well over many decades compared to a broad US stock index (presumably his benchmark) but over the last 5 years he has pretty much matched the US stock market.

The problem for Buffet is that his investment vehicle is so big that he is the market.

jaybeetoo

More bad news for Woodford https://www.bbc.co.uk/news/business-49445495

Eddie Stobart Shares suspended.

AnotherJoe

bowlhead99 wrote: »

'follow the philosophy' does not mean that if income is in the name of the fund, everything must produce a high level of income. The fund needs to produce income but it also needs to grow. Some holdings can yield 6%, others 3%, others 0%, in pursuit of the objective.

It needs to provide income, and that comes either from dividends, or growth and selling portions of that growth. Which is a fundamental problem with start ups or unlisted companies that might take 5 -10 years to come to fruition and be unsellable before then, which puts more load onto the listed side, an unfeasible amount of load, since even if half (say) is unlisted his dividend picks have to perform double what any other funds dividend picks will do.

BTW, I see another of his picks has come off the rails this morning.
https://www.telegraph.co.uk/business/2019/08/23/fresh-blow-neil-woodford-eddie-stobarts-listing-suspended/. :eek::eek:

Oh and icing on the cake, Industrial Heat has been "marked down" as well, a travesty since it hasn't been marked to zero, though thats all they will get for it in the end, unless the office furniture and PC's is worth something or they own some offices? I guess it would be too embarrassing for Link to write it all off in one go. If Link can value any amount of IH as worth £70M I'd count their other valuations as valueless.

Neil if its really worth £70M, for gods sake
Get Out Now

edgex

Malthusian wrote: »

If Woodford was doing something dodgy, e.g. getting kickbacks into an offshore account from the scam companies he invests in, that would merit action from the regulators. However there is absolutely no evidence that Woodford is doing anything like that, and more importantly no reason he would want to do that, unless it turns out that he was hundreds of million pounds in gambling debt to the mob.

In the absence of a debt to the mob, Woodford already had enough money to afford his current lifestyle forever when he launched Woodford IM. Which is why he stopped trying to make money for investors and started to indulge in non-existent grandiose concepts like "patient capital".

Woodford being gulled by scam companies because he is halfway to his yacht, lazy, and motivated by a self-righteous desire to "support fledgling British business" rather than make money for his investors, is not dodgy and does not merit action by the FCA. (Other than writing a few "lessons must be learned" reports to occupy some bureaucrats and keep the public happy.) That is just bog-standard, 100% compliant fund manager incompetence.

Investing in a 'property' company that appears to have done nothing but make a website...
Investing in wack job 'science' that he could have googled...
Arranging weird Guernsey stock market listings...

Most incompetence is the failure to do something. All of the above, & more, are actual actions.

Prism

Interesting read here

https://www.reuters.com/article/us-woodford-inv-suspension-advisers/woodford-struggles-to-build-bridges-with-uk-financial-advisers-idUSKCN1VD14Z?il=0

What I find surprising is that IFAs (5 in this example) would even considering putting their clients money in an obviously high risk small cap income fund that was kicked out of the income sector for not actually producing enough income. Exactly which gap was it supposed to fill.

Aminatidi

Prism wrote: »

Interesting read here

https://www.reuters.com/article/us-woodford-inv-suspension-advisers/woodford-struggles-to-build-bridges-with-uk-financial-advisers-idUSKCN1VD14Z?il=0

What I find surprising is that IFAs (5 in this example) would even considering putting their clients money in an obviously high risk small cap income fund that was kicked out of the income sector for not actually producing enough income. Exactly which gap was it supposed to fill.

It does rather make you wonder what most consumers reactions would be if their IFA said "Don't worry, it was just a bump in the road" whilst trying to take them back into Woodford.

edgex

bowlhead99 wrote: »

Well, BDO signed off the group consolidated financial statements for Sabina Estates Limited for 2018 showing in their cashflow statement that they had added over €21m of property inventory (taking the total to €77m) while issuing €40m of new preference share capital during the year. Inventory went up by more than €21m total because in addition to the few million Euros of purchases and the €16m of direct development costs and €1.5m of allocated overheads, there was also capitalised interest cost (standard practice in a property development business).

That would be SABINA ESTATES GROUP HOLDINGS LIMITED ?
ultimately controlled by SABINA ESTATES LIMITED, a Company incorporated in Guernsey

The Holdings company has zero property assets, but a loan of E83m to subsidiaries
It's even got negative equity

It is receiving interest on that loan (E6.5m for 2018) but it's cost them E5.8m as a finance expense.
Borrowed from the parent company in Guernsey?
It's supposedly a $400m project.

The Guernsey company makes a cash loss.
The directors of which are taking out E200k a year in fees. (One of them has been taking E400k a year in fees from a subsidiary)
Loads of preference shares, which they are already paying out interest on.



So, what is the actual investment?
Presumably the villas will be for sale, which leaves a clubhouse.
Will a fancy bar & maybe a restaurant show much capital growth, or income?
Is it something an investment fund should have invested in?

bowlhead99

edgex wrote: »

bowlhead99 wrote:

Well, BDO signed off the group consolidated financial statements for Sabina Estates Limited for 2018 showing...

That would be SABINA ESTATES GROUP HOLDINGS LIMITED ?
ultimately controlled by SABINA ESTATES LIMITED, a Company incorporated in Guernsey

It is the ultimate controlling party (Estates Limited) I'm taking about, who have provided audited consolidated group accounts which are appended to the Holdings accounts filed at Companies House.

The Holdings company has zero property assets, but a loan of E83m to subsidiaries
It's even got negative equity

You would not expect the holding company to hold the property assets. Its purpose is to hold debt or equity in the other companies within a financial group. The property development and operational management will be done in the operating subsidiaries or propcos.

It is receiving interest on that loan (E6.5m for 2018) but it's cost them E5.8m as a finance expense.

Would you expect a holding company to be particularly profitable, or simply to make enough margin on its financing activities to cover most of its costs? The latter would be typical.

The Guernsey company makes a cash loss.

No real reason to expect it to be profitable when the properties have not yet been developed and sold to allow dividend income or other capital distributions to repatriate the cash to the Guernseyco and owners/lenders to the group.

The directors of which are taking out E200k a year in fees. (One of them has been taking E400k a year in fees from a subsidiary)

In your experience do directors of multi million pound property development businesses work for free?

Loads of preference shares, which they are already paying out interest on.

Would you expect Woodford or other financial investors to let the property development group have their cash (funding tens of millions of euros of property investment so far, plus cash in the bank for future development work or refinancing existing loans), for free?

So, what is the actual investment?
Presumably the villas will be for sale, which leaves a clubhouse.
Will a fancy bar & maybe a restaurant show much capital growth, or income?
Is it something an investment fund should have invested in?

I am not sure who is missing the point here, you or me.

Are you seriously asking "why would an income fund invest in preference shares of a property developer paying a healthy coupon?"

Or are you asking "why would anyone with an investment fund want to put money into a property developer whose business model is to build properties and sell the properties for more than it cost to build them"?

Maybe there is a smarter way you could ask the question.

But please don't shoot the messenger. I don't know much about the nature of Woodford's investment here, or its prospects.

Maybe Woodford had the wool pulled over his eyes However, if people are going to say that it is all a scam and Woodford has done a staggering lack of due diligence etc, simply on the basis that they don't understand that they should expect to see intercompany loans in a holding company's financial statements, or interest accrued on preference shares where the shareholders' money has been taken into the business and used, etc, or they don't understand why an investment fund would want to invest into a property developer, or they think the directors should take lower salaries... there is only so much time I can put into a response on a bank holiday long weekend

Brian65

Shares in Stobart, in which Woodford is the largest investor, have now been suspended over accounting irregularities.
As he contemplates his £7million salary and £30 million dividend, does Woodford regret being such a failure?

arnoldy

Absolutely fuming with Link Solutions. Quite why they have a licence to practice in UK is quite beyond me after the Hargreaves Landsdown - Woodford - Link Solutions Shenanigans.


So they have marked down IH massively - without as far as I can tell any new evidence. Thus affecting WPCT.


What has changed since the last valuation? What new facts have emerged? Or rather as I suspect they completely overvalued Industrial Heat, and can now bury the bad news on a pre bank holiday Friday.


In most professions that level of professionalism would get you banned.


Sorry for the rant.