Woodford Concerns

Thrugelmir

bowlhead99 wrote: »

FWIW, WPCT has not moved much. Having bought in the mid 60p range, and not done any 'averaging down' since then, I am a buyer today at 37p.

Brave move in my personal opinion. When trading in the fund reopens will there be further "firesales" of stock to fund redemptions. Confidence in not just Woodford but the board of WPCT must be at rock bottom.

Scarpacci

AnotherJoe wrote: »

Woodford isn't waiting for the Pound to rise. Woodford is waiting for the disastrous selection of failing/failed companies he bought to come good.

He is waiting for a turn to these UK-focused companies and away from global growth. The pound certainly moves those global UK companies, and as a barometer of sentiment on the UK economy (and Brexit) it does often move in line with those UK stocks.

As bowlhead99 has noted better than I did, those UK-focused stocks are having their day [and perhaps it will only be a day] in the sun.

All I'm saying is there are signs that the market winds may be moving in the direction of what Woodford [in his own words] has been waiting for with regard to his equity income fund and the listed holdings. No, it's not going to change the narrative on those unlisted companies

AnotherJoe wrote: »

If "being right eventually" consists of the pound rising by 2% in a few days perhaps you can inform us what colour the sky is on your planet.

Don't get me wrong, I'm not extolling the virtues of Woodford's record. I don't invest in funds, but if I were to line up behind anyone it would Terry Smith, Nick Train, et al. I've got a portfolio of shares in the Fundsmith/Lindsell Train style, so my only interest here is in seeing where the markets are moving.

I'm not banging the drum for Woodford, merely noting the change in market sentiment over the last two months. In an entire thread devoted to noting just how bad Woodford's performance has been, maybe there's room between posts on the horrors of the unlisted stocks and disasters like Kier to note when those listed stocks he's been buying seem to be in vogue.

Now, I didn't say he was right. I said if the move he is waiting for does happen, it still might not matter at this point given the outflows and damage to his name. He wouldn't be the first fund manager who seemingly comes right too late.

grnglide

When trading in the fund reopens will there be further "firesales" of stock to fund redemptions. Confidence in not just Woodford but the board of WPCT must be at rock bottom.

But WPCT is an IT and isn't gated.


Since it isn't closed, how can it "reopen"?

bowlhead99

Thrugelmir wrote: »

Brave move in my personal opinion. When trading in the fund reopens will there be further "firesales" of stock to fund redemptions. Confidence in not just Woodford but the board of WPCT must be at rock bottom.

WPCT is the closed ended one, which is not required to do firesales for redemption purposes, and has been given some leeway on its bank covenants to avoid selling illiquid assets to repay its funding facility as quickly as might have otherwise needed to be the case.

There may of course be sales of assets at knockdown prices if a strategic buyer is looking to buy a substantial position in something also held by Woodford's open ended one as 'job lot'. The lack of confidence in asset quality or manager/ board quality is something that one would expect to lead to a large discount to published NAV - and there is one - but doesn't strike me as irrational to think that discount will reduce over time and that the loss from the current published NAV will be lower than the large discount.

As an aside, The European Investment Trust plc (EUT) proposed a change of manager this week after some poor years - having made some swift gains in the past I still held a couple of thousand pounds of that as a play on the discount coming good, mentioned in threads here in the past. Baillie Gifford will take it over and reposition as a growth fund and I think some unwinding of the discount will now come to pass, over time (currently 822p share price vs 922p NAV). The discount on the portfolio of European assets allows some insulation from a potential pound strengthening, so I've doubled my holding in the last couple of days.

Thrugelmir

bowlhead99 wrote: »

There may of course be sales of assets at knockdown prices if a strategic buyer is looking to buy a substantial position in something also held by Woodford's open ended one as 'job lot'.

If Woodford holds a sizable holding in a Company, Burford Capital and Amber Crystal for example. Then the stock will get placed at a discount, some off book. Even liquid stocks can suffer from market indigestion.

WPCT is the closed ended one, which is not required to do firesales for redemption purposes, and has been given some leeway on its bank covenants to avoid selling illiquid assets to repay its funding facility as quickly as might have otherwise needed to be the case.

WPCT holds silmilar stocks to the open ended fund. The performance has a high possibility of being correlated as a consequence.

AnotherJoe

Scarpacci wrote: »

I'm not banging the drum for Woodford, merely noting the change in market sentiment over the last two months. In an entire thread devoted to noting just how bad Woodford's performance has been, maybe there's room between posts on the horrors of the unlisted stocks and disasters like Kier to note when those listed stocks he's been buying seem to be in vogue.

You mean, the ones he's literally been forced into buying because his unlisted (and a fair bit of his listed) picks have been a disaster zone? The ones that pretty much any old dull UK equity income fund had been holding anyway?

Those arent Woodfords bread and butter and any profits he's made are more happenstance than his awesome stock picking skills.

Thrugelmir

AnotherJoe wrote: »

You mean, the ones he's literally been forced into buying because his unlisted (and a fair bit of his listed) picks have been a disaster zone? The ones that pretty much any old dull UK equity income fund had been holding anyway?

Damned if he does, damned if he doesn't. There'll be a reason behind the policy.

Scarpacci

AnotherJoe wrote: »

You mean, the ones he's literally been forced into buying because his unlisted (and a fair bit of his listed) picks have been a disaster zone? The ones that pretty much any old dull UK equity income fund had been holding anyway?

Those arent Woodfords bread and butter and any profits he's made are more happenstance than his awesome stock picking skills.

I'm just interested in the market movements. I'm not trying to praise Woodford, just point out what looks to happening right now. Happenstance profits are still profits, and I think a thread about Woodford is a reasonable place to note any movement that may affect his fund.

Like I said, I have a Fundsmith/LT-style portfolio myself, so I'm seeing the market move against my type of portfolio and towards some of the stocks that Woodford currently owns.The reasons he came to own those have been well detailed here, but own them he does.

Yes, the same stocks any dull UK equity fund might own, but this thread happens to be about Woodford. It is a wider point about the shift from global growth to UK domestics, but given there are only about three fund managers on here that are regularly discussed and that most of the talk happens in this Woodford thread, this seemed like a place to discuss it.

AnotherJoe

Thrugelmir wrote: »

Damned if he does what hes been doing, damned if he [STRIKE]doesn't[/STRIKE] claims credit for doing what hes been forced into . There'll be a reason behind the policy.

FTFY.



BTW, according to Woodford September was a very poor underperforming month.

Some posters here might think theres been a "change of sentiment over the past two months" but even if so, Woodford according to his own words* has underperformed and its only the usual stock market overreaction to news today that caused all those stocks to shoot up today. Its disingenuous to try to claim (may not have been you but someone did) that he's been on the up for a couple of months




*Equity Income

During the latest 28-day period, which covers much of September, the fund has underperformed in relative and absolute terms

bowlhead99

Thrugelmir wrote: »

If Woodford holds a sizable holding in a Company, Burford Capital and Amber Crystal for example. Then the stock will get placed at a discount, some off book. Even liquid stocks can suffer from market indigestion.

Yes, I know the price of liquid stocks can suffer of there is an overhang from a large seller, or the large seller offloads some stock to a placee and it's known that was done at a discount. So I mentioned that WPCT (closed ended without requirement to sell up) could have its NAV tainted by disposals in WEIF (requirement to sell up to meet redemptions) where the companies are similar.

However, that doesn't represent a long term problem to the closed ended vehicle, which doesn't need to sell at the temporarily downwards dislocated prices, and when the overhang clears (following substantial selling by the open ended entity) the market becomes orderly again. And so buying or holding at a discount to current price - with intention of holding until shorter term issue are resolved - is not necessarily a super-high risk strategy, as a discount for the overhang would no longer be so justifiable after the main WEIF fund had dumped it's stock.

On the two specific companies you mention (and yes I get that they are just examples), they are not great examples as even if WEIF decides to be a seller of them, neither are actually held by WPCT on latest public info. For a time last year, Crystal Amber held some millions of WPCT, as a part of its concentrated portfolio, raher than the other way around. Burford was also not in WPCT's June portfolio list, so not hit by the price drop unless they bought a load of it from WEIF after the results and before Burford's troubles.

WPCT holds silmilar stocks to the open ended fund. The performance has a high possibility of being correlated as a consequence.

As discussed elsewhere in the thread in recent days, WPCT has c.85% of gross portfolio in unquoted or untraded companies, while WEIF was only pushing up against a 20% unquoted,/ untraded level before it 'went dark' and started repositioning in favour of liquid holdings.

So, there may be correlation due to similarity in style and certain large overlapping stocks, but not really a high correlation, due to the massive extra unlisted quotient within the ~50 stocks held by WPCT.

AnotherJoe wrote: »

Some posters here might think theres been a "change of sentiment over the past two months" but even if so, Woodford according to his own words* has underperformed and its only the usual stock market overreaction to news today that caused all those stocks to shoot up today. Its disingenuous to try to claim (may not have been you but someone did) that he's been on the up for a couple of months.

Woodford said performance had been poor, and it was.

However, Woodford's claim for some time has been that UK stocks were getting overlooked and sentiment about how bad brexit would be, was overdone.

Two months ago, with Boris fresh in office, and then going on to lose every proposal tabled while storming towards a 'nobody can stop me' type of no deal... and then a little over a month ago proroguing parliament with a transparently cynical aim to avoid his 'get it done, a no deal exit is fine' attitude being blocked... things looked quite bleak for UK local economic prosperity.

But the most recent news is that Ireland were receptive yesterday to what he had to say towards a deal, and Barnier is talking about constructive talks, whereas in previous weeks (and earlier this week) the EU leaders were reportedly not receptive and the tunnel had no light at its end.

So, it seems to be fair to say, as Scarpacci did, that he's 'noting the change of sentiment over the past two months' towards an environment where Woodford's thesis can do better. It doesn't really matter that the change wasn't gradual and that a good part of the 20% rise in Lloyds share price happened in the last 24 hours. Woodford doesn't invest for 1-day periods so it doesn't matter to him if sentiment turns slowly (0.3% rise for 60 days) or quickly (20% rise in a week), what matters is that the potential in the UK-exposed businesses does get unlocked rather than continuing to be suppressed.

Nobody is "disingenuously claiming that he's been on the up for a couple of months". Rather, they are saying that over the couple of months (during which he followed for his listed stocks, much of the same strategy previously criticised), some value is emerging or recovering, even if it emerged at the end rather than evenly throughout. As Scarpacci notes, the spike in positive sentiment towards the sort of things he holds in the income fund may be short-lived. Time will tell.

I agree with Thrug that Woodford is damned if he does or if he doesn't, and you have proved the point by saying something along the lines that if Woodford has any good results it is only because he was forced into following a strategy that gave him good results. You're unable to see past some historic bad calls on stocks and so in your mind from hereon in, any gains must be pure luck (because he selects at random and doesn't perform any research or due diligence), even if those gains are gains (or reversal of losses) from things that match a strategy he has touted for a while (longstanding holding NRR up 9% today, LLOY up 12% today).

We know you're not a fan, because you've bashed him in almost 100 posts over the last 28 pages of the thread. So, no surprises that if he has something that goes up in value like a property holding company or a UK focused bank, which throw off some of the shackles of Brexit uncertainty and posts a good price rise for a change, you'll say that they are things he never usually holds and he is now just copying income funds; whereas if he has something that goes down in value he is terrible at selection. Damned if he does or doesn't.