Woodford Concerns

Sailtheworld

The 'they' is those who invested, lost money, are wise after the fact but, instead of taking a step back, play the blame game instead of looking at the root cause of the problem.

92% of fund managers under-perform their indices over 15 years. Woodford under-performed and the chances are that Terry Smith will too. He had to issue an apology about his emerging equities investment trust so he's hardly infallible. I like the way he has a different domain name for each fund - makes inconvenient truths easier to hide from the punters.

AnotherJoe

Sailtheworld wrote: »

The 'they' is those who invested, lost money, are wise after the fact but, instead of taking a step back, play the blame game instead of looking at the root cause of the problem.
Can you give an example of one of those people or companies? And what is the root cause if its not being incompetent at choosing tech companies and analysing the books of major companies?

92% of fund managers under-perform their indices over 15 years. Woodford under-performed and the chances are that Terry Smith will too.

I very much doubt that since after 9 years of significant overperformance and with a global selection of solid household names its unlikely they will significantly underperform the relevant indexes over the next 6 by enough to be under over the 15. Odds must be he will overperform even if just due to past performance.

Starting from now for the next 15, yes thats a possibility but unlikely anyone could choose as bad as Woodford has across all his funds. Look at the junk he's just bought. Again, more badly performing companies. BT and IAG are little more than pension funds that happen to also run a company.

He had to issue an apology about his emerging equities investment trust so he's hardly infallible.
Strawman argument. Who said he was infallible.
I like the way he has a different domain name for each fund - makes inconvenient truths easier to hide from the punters.

Of course there's a different name for funds in different domains ! If you dont wish to invest in EM its best if the fund name includes EM isnt it? And it rather than "hide" anything it makes it clearer ! Talk about chucking the kitchen sink at someone. Maybe "Smith" is a common name and thats a ruse to hide his performance?:rotfl:

Sounds as if you should steer clear of Smith when it comes to EM just like you should steer clear of Woodford when it comes to biotech, impossible tech, startups, large companies, high dividend paying companies , unlisted companies, companies listed on the Guernsey stock market or on AIM, companies hes contractually bound to make massive cash infusions to to keep them afloat, ...... OK, everything he touches pretty much. If he invested in something i hold, I'd be worried and would look again at it though i guess by pure chance he will occasionally buy something good.

Sailtheworld

AnotherJoe wrote: »

Of course there's a different name for funds in different domains ! If you dont wish to invest in EM its best if the fund name includes EM isnt it? And it rather than "hide" anything it makes it clearer ! Talk about chucking the kitchen sink at someone. Maybe "Smith" is a common name and thats a ruse to hide his performance?:rotfl:

The 'usual' way of doing this is that if someone wanted to buy, say, a Scottish Widows fund they'd head to Scottish Widows in the first instance. Smith doesn't do that - he has separate domain names. I know why.

AnotherJoe wrote: »

Sounds as if you should steer clear of Smith when it comes to EM just like you should steer clear of Woodford when it comes to biotech, impossible tech, startups, large companies, high dividend paying companies , unlisted companies, companies listed on the Guernsey stock market or on AIM, companies hes contractually bound to make massive cash infusions to to keep them afloat, ...... OK, everything he touches pretty much. If he invested in something i hold, I'd be worried and would look again at it though i guess by pure chance he will occasionally buy something good.

Or, without the drama, invest by all means but expect, over the longer term, under-performance against the indices but with higher charges.

If someone can anticipate future out or under performance of a fund against an index then good on them (although I'd question why they don't use this skill to pick stocks themselves). They'll know just when to jump.

Those with this skill should ask themselves how much they lost on Woodford and reflect.

Moe_The_Bartender

Sailtheworld wrote: »

The 'they' is those who invested, lost money, are wise after the fact but, instead of taking a step back, play the blame game instead of looking at the root cause of the problem.

92% of fund managers under-perform their indices over 15 years. Woodford under-performed and the chances are that Terry Smith will too. He had to issue an apology about his emerging equities investment trust so he's hardly infallible. I like the way he has a different domain name for each fund - makes inconvenient truths easier to hide from the punters.

Smith didn’t have to apologise for only making 23% over three years. The fact that he did says much about him and that he sets the bar very high. He then went on to put more of his own money in.

Malthusian

AnotherJoe wrote: »

Given NW's propensity for bad decisions I can see where the concern comes from but if something did go bad with Atom your money is protected. I wonder how anyone would have done who shorted every company he invested in since he left Invesco? I suspect pretty well.

The really bad ones you couldn't short because they're unlisted. To short a company you have to find someone willing to lend you the shares for a given time period, sell them immediately on the open market, then buy them back again to repay the loan. All those steps are difficult or impossible with unlisted or otherwise illiquid shares.

If you shorted all his liquid investments, I suspect you might have done pretty badly as not all of Woodford's holdings have gone bust or tanked. (If they had his performance would be much worse.) The money you made on shorting the likes of Provident Financial could easily be cancelled out by the average or good performance of shares that reflected the performance of the bull market.

Shorting shares isn't just holding them upside-down.

Prism

Sailtheworld wrote: »

The 'usual' way of doing this is that if someone wanted to buy, say, a Scottish Widows fund they'd head to Scottish Widows in the first instance. Smith doesn't do that - he has separate domain names. I know why.

Yeah he is hiding the other funds from people so they don't find them. Classic marketing trick that one.

Or, without the drama, invest by all means but expect, over the longer term, under-performance against the indices but with higher charges.

No I expect the opposite. Investing isn't a numbers averaging game.

If someone can anticipate future out or under performance of a fund against an index then good on them (although I'd question why they don't use this skill to pick stocks themselves). They'll know just when to jump.

Those with this skill should ask themselves how much they lost on Woodford and reflect.

I must be one of those people.. it feels good. For your specific question about Woodford \I lost nothing because I didn't invest. The fund didn't look very good at any point.

AnotherJoe

Malthusian wrote: »

The really bad ones you couldn't short because they're unlisted. To short a company you have to find someone willing to lend you the shares for a given time period, sell them immediately on the open market, then buy them back again to repay the loan. All those steps are difficult or impossible with unlisted or otherwise illiquid shares.

If you shorted all his liquid investments, I suspect you might have done pretty badly as not all of Woodford's holdings have gone bust or tanked. (If they had his performance would be much worse.) The money you made on shorting the likes of Provident Financial could easily be cancelled out by the average or good performance of shares that reflected the performance of the bull market.

Shorting shares isn't just holding them upside-down.

Well yes I should have said "shorted the listed ones".
Not so sure he had enough good performance to outweigh the bad just among the listed.

Its a long list of sorry financial results.
Provident Financial, Kier, Purplebricks, The AA, Eddy Stobart, Allied Minds, Imperial Brands. All down 60-80% or more. Probably more, thats what i can recall.

I'm not counting Prothena because that was dependent upon a drug trial and could have gone either way. The ones I've listed had bad structural issues and management problems, these are the sort of things a top financial guru with a team of analysts should be able to spot. If not, what value do they bring to the table?

Sailtheworld

Prism wrote: »

Yeah he is hiding the other funds from people so they don't find them. Classic marketing trick that one.

Not so they don't find them but so that one doesn't contaminate the other if/ when things go t**ts up. Very important when you're selling a brand that has your name in it. It's a long road back.

Prism wrote: »

No I expect the opposite. Investing isn't a numbers averaging game.

I must be one of those people.. it feels good. For your specific question about Woodford \I lost nothing because I didn't invest. The fund didn't look very good at any point.

If you expect the opposite and can pick outperforming funds ahead of time and dump them before they under-perform then you should feel good as you have a valuable skill. You're in a very small minority but congratulations.

It's a pity people didn't listen to you before investing in Woodford in the first place.

Prism

Sailtheworld wrote: »

If you expect the opposite and can pick outperforming funds ahead of time and dump them before they under-perform then you should feel good as you have a valuable skill. You're in a very small minority but congratulations.

It's a pity people didn't listen to you before investing in Woodford in the first place.

Its not really a case of dumping funds before they under-perform. Its more choosing ones that don't actually under-perform for long or by much. I rarely sell a fund unless it changes style or I find one I think is a better fit.

How do you know I am in a minority? There are no obvious stats on how successful individuals are with their fund selection.

Sailtheworld

Moe_The_Bartender wrote: »

Smith didn’t have to apologise for only making 23% over three years. The fact that he did says much about him and that he sets the bar very high. He then went on to put more of his own money in.

2% per year ahead of cash since launch with quite a lot more risk being taken. High bar?

He's done the sensible thing and 'taken a step back' from managing it though to get the stink off his hands.

Always a good idea for a star investor to put their own money in (good PR). As he was charging 1.25% per year on £350m invested he probably had a bit spare.