Woodford Concerns

talexuser

Losing the management fees from running the Equity Income Fund, which generated £65,000 a day, would have left the company unable to cover the group’s £12m salary and pension costs. So he is closing Woodford Investment Management.

eskbanker

talexuser wrote: »

The Grauniad says Woodofrd has quit from his TWO remaining funds, ie Income Focus too.

:rotfl:

Was that a verbatim typo?

londoninvestor

talexuser wrote: »

So we're swapping a manager who takes no fees for someone who does take fees? Unless the idea is to just wind it up.

It will need a rename I suppose...perhaps to "Not Quite THAT Patient Capital Trust"?

seacaitch

FYI, one of today's WPCT sellers in size:

https://wise-funds.co.uk/news/woodford-patient-capital-trust-1

"All in all, we believe that today’s announcement significantly increases the risk in WPCT. We thus decided, reluctantly, to liquidate our entire position for the TB Wise Multi-Asset Growth fund. This was completed this afternoon."

"Overall, this position cost the fund about 1.8% since inception in March 2018. For that, we can only apologise to our investors."

Seems they bought in the ~70-80p range and dumped ~2.25 million shares today in the mid/low 30s.

AnotherJoe

The rename will be to "Dead In the Water Trust"
Its contents are toxic, whats in it for anyone to do anything with it but get some fees for closing it?
I guess equity focus will also be wound up or possibly merged into another fund it doesnt seem to have the same issues as WEIF and WPCT?

Reaper

From that "Wise Funds" report this is the bit that concerns me

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.

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.

AnotherJoe

Reaper wrote: »

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.

Brian65

Reaper wrote: »

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.

AnotherJoe

Brian65 wrote: »

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.

Sailtheworld

Prism wrote: »

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.

Prism wrote: »

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.