Woodford Concerns

bowlhead99

Seems if he is running an investment fund he should be holding investments rather than cash.

While he will intend the fund to have cash on hand and very liquid investments to meet redemptions once redemptions are allowed, he doesn't actually need cash now, - and he intends to dispose of other less liquid holdings which would raise cash balances, prior to reopening; so the cash he has currently available could be invested and form part of whatever longer term portfolio he intends to keep on.

If you are right in your previous assessment that it never properly reopens and is simply wound up, there won't be a 'longer term portfolio'. But if that's six months to a year away, it's not appropriate for an equity fund to be wholly or substantially in cash for that length of time.

Aretnap

It's an equities fund, not a cash fund. If he was holding large piles of cash, he would be straying from the fund's remit (again).

Provided the shares he's buying are sufficiently liquid (eg BAT, IAG, BT) there will be no issues with selling them in December should there be a mass exit. There's no need to stockpile cash if your shares are liquid enough that you can generate enough cash to meet expected redemptions in a few hours.

Yes the shares could rise or fall in price between now and December, but that's sort of the point of an equities fund. He shouldn't be changing the fund's whole focus to suit a subset of investors who might be thinking about cashing out soon.

I'm not offering a prediction as to whether the fund will actually reopen in December, but if that is plan, then filling it up with liquid FTSE100 companies (as opposed to either cash or illiquid equities) is exactly what he should be doing.

cogito

It appears that WEIF has now lost 19.4% of investors' money since the fund was gated, placing it at 2759 of 2760 UK based funds over the period.

talexuser

cogito wrote: »

placing it at 2759 of 2760 UK based funds over the period.

So Woodford can take comfort that someone else has done worse! :rotfl:

AnotherJoe

Fair points re holding investments so just the question why he bought a load that have gone down in value since he bought them. D

talexuser

Guardian reports on possible trouble at HL AGM due to Woodford.

https://www.theguardian.com/business/2019/oct/04/hargreaves-lansdown-agm-neil-woodford-fund-shares

Borisgraph today reports the gating could well last another 6 months after December to guarantee enough liquidity for the forthcoming cash in when it opens again (if ever!).

bowlhead99

AnotherJoe wrote: »

Fair points re holding investments so just the question why he bought a load that have gone down in value since he bought them. D

Perhaps he didn't expect that they would go down very much when he bought them.

AnotherJoe

bowlhead99 wrote: »

Perhaps he didn't expect that they would go down very much when he bought them.

Why ever not given his history of purchases ?

Or, being serious, was he not aware a BA strike was on the cards, did his team of due diligence experts not warn him that a profit warning was coming at Imperial Brands, etc?

Scarpacci

I just don't understand the logic in Woodford's stated viewed that the global economy isn't as strong as equity markets imply and the investments he's recently made in two British banks, an airline and an insurer.

The former view certainly looks a reasonable proposition and one he might have been ahead of the curve on, but how that would convince someone to buy cyclical companies like that is beyond me.

Even ignoring Brexit and its potential effects on the UK economy, as the old cliche goes: when the world catches a cold, Britain sneezes. I can't see any reason to expect the UK cyclical companies would hold up any better in the event of a worldwide downturn.

iglad

cogito wrote: »

It appears that WEIF has now lost 19.4% of investors' money since the fund was gated, placing it at 2759 of 2760 UK based funds over the period.

They are lucky as the Investment trust he runs has lost almost 60% over the past 3 years.