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Woodford Concerns
Comments
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From that "Wise Funds" report this is the bit that concerns me
WPCT is so cheap now I am getting increasingly tempted but I will wait for a few months for the WEIF selling to have an effect. If that means I miss the boat I'm not too worried as the risks are still high.The closure of WEIF will directly weigh on WPCT’s assets and share price. Firstly, there remains a number of unquoted stocks in WEIF that are also held in WPCT. The fact that WEIF was a forced seller of those assets isn’t new. The ACD had given the manager time to sell those assets though, thus limiting the downside pressure. This is no longer the case and one can only expect the forced selling to intensify. This will also put pressure on the gearing in the trust, already close to the maximum permitted. Secondly, WEIF holds 9% of WPCT’s shares. Those will need to be redeemed too, weighing on the price of the trust.0 -
WPCT is so cheap now I am getting increasingly tempted but I will wait for a few months for the WEIF selling to have an effect. If that means I miss the boat I'm not too worried as the risks are still high.
I think you've confused "cheap" with "lower priced". The two are not synonymous.
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From that "Wise Funds" report this is the bit that concerns me
WPCT is so cheap now I am getting increasingly tempted but I will wait for a few months for the WEIF selling to have an effect. If that means I miss the boat I'm not too worried as the risks are still high.
All that seems insignificant compared to the prospect of one or two WPCT companies 'striking gold'.
Unfortunately, I haven't a clue whether that will happen or not. Except that, statistically, its very unlikely.0 -
All that seems insignificant compared to the prospect of one or two WPCT companies 'striking gold'.
Unfortunately, I haven't a clue whether that will happen or not. Except that, statistically, its very unlikely.
Statistically it's well beyond that.
Given Woodfords track record in pIcking companies its astonishingly unlikely. This isn't just a random selection of companies, This is a handpicked selection of wildly overpriced over optimistic companies some of which at least are great at duping investors.
Given what we know about the financial health of the companies within WPCT it's beyond astonishingly unlikely since many won't last long enough to strike gold even were there that possibility given their source of funding has run out along with everyone's patience.
Given what we know about the chance WPCT will last out the end of Jan 2020 (owes £110M, quite possibly realisable assets worth less than that) it's as near as dammit impossible.
Currently it's worth 30p or so, realistically looking at what can be extracted in the next few months before it's closed * , it might be worth Zero, it's not "cheap" as another poster put it, it's actually very very expensive.
*if I was going to bet I'd say it's either going to be shut down within a couple of weeks or you'll see a massive re-evaluation of the NAVwriting it down to less than 15p a share.
But I think closure is the much more likely outcome since ut will avoid the embarrassment of acknowledging how poor the current NAV valuation is.0 -
Not with a fund you don't - you sell back to the fund itself. There is no other party
Yes in practice but the effect is that you're selling to the existing fund holders who (if you're correct about it being time to sell) are making the wrong call to stay put.Because the theory is they can do it at least 1% better than I can and possibly 0.8% better than a passive fund can. Always a risk of course
For most people, most of the time that theory is wrong.
If, in your case, your fund picks do indeed consistently outperform a passive fund by more than the charges then you're either lucky or have an edge. I'm going for the latter because people get a bit prickly if there's even the slightest hint they might not have an edge.0 -
What if I'm retired and selling to pay for my retirement, to someone who is buying to save for their retirement.
Both buyer and seller can be making the right call.
Most funds underperform their index. The more time that passes the less likely outperformance becomes.
Perhaps much of this can be explained by people buying and selling funds / shares for reasons other than making a profit. Probably not I would've thought.0 -
Sailtheworld wrote: »You sell to someone who thinks it's time to buy. 50% of the people in a trade are making the wrong call.
Not always.
Say you are a broker for a house of managed funds (call them Hargreaves Lansdown) incorporating a suite of independent funds under one name (call them Woodford).
On Monday, you may very well be advised to re-balance the exposure to risk of certain of your funds, and swap Woodford Patient for Woodford Glacial.
On Tuesday, prudence may impel you to move those funds further, or back, according to market conditions and your firm's own parameters. Assuming all the Woodford funds are moving back and forth under the aegis of your house, you are making double brokerage fees for each "re-calibration" of fund weighting. Nice synergy.
Most investors, most advisers come to that, simply focus on management and platform fees and are unaware of the ongoing running costs involved with day to day re-balancing of funds.0 -
The difficulty is knowing what the true NAV is. In a later post you suggested 15p but I suspect you somewhat plucked that out of the air.AnotherJoe wrote: »I think you've confused "cheap" with "lower priced". The two are not synonymous.
In theory the current NAV is 64p, making the current 32p price a bargain, but I don't think anybody here is going to try and claim the 64p price is realistic.
However unless companies are going completely bust they have a value and therefore a price below which they are cheap. The market moves on sentiment and sentiment is very much against Woodford at the moment. That can be a good time to buy, but as I said before the risks are a little too high for me to plunge in right now. In a couple of months I might have a small flutter if I haven't missed the boat.0 -
Thrugelmir wrote: »Edges are generally limited to specific companies or sectors. Broader investing requires research. Research costs money (or a lot of personal time).
Keep that heresy to yourself in these parts.
Most fund mangers even with access to the best research fail to justify their fees. Some demonstrate this in spectacular fashion but most do it slowly over time.
The most likely place to find an edge is within the sector you work. The issue with that is there would be a temptation to pay little heed to diversification - no problem if that edge exists but problematic if it doesn't.0 -
I just heard Woodford is going out of business and trading in his Income Focus fund has now also been suspended.
https://citywire.co.uk/investment-trust-insider/news/woodford-income-focus-suspends-dealing-after-managers-resignation/a12815560
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