Woodford Concerns

Sailtheworld

Brian65 wrote: »

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.

[Deleted User]

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.

Reaper

AnotherJoe wrote: »

I think you've confused "cheap" with "lower priced". The two are not synonymous.

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.

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.

Sailtheworld

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.

Reaper

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/a1281556

Prism

Reaper wrote: »

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/a1281556

Well thats, that then. All because he invested unquoted stocks in an open fund

Thrugelmir

AnotherJoe wrote: »

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.

Fire sales, as has been commented on previously, will result in a messy poor outcome. Probably cause wider market disruption as the sizable holdings are offloaded. The poor fund holders likewise will bear the cost of winding the trust up.

atush

They also said WPCT is being wound up

Reaper

atush wrote: »

They also said WPCT is being wound up

Are you sure? I haven't seen that

AnotherJoe

Reaper wrote: »

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.


Absolutely. I was just copying the current valuers method


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.
Only those not allowed to write using sharp implements

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.

"And there's the rub". If one of the startups currently valued at say £50M needs £20M to keep it going, and that isn't forthcoming because Woodfords run away from the scene of the crime, then its value doesn't just fall, it goes to zero. I think theres quite a few like that plus others that simply may not survive plus of course some that are worthless but still valued in the £75M plus range (AFAIK).

I believe looking at the current NAV of 64p and thinking "well maybe its not that but it must be some fraction of it, say half" is an example of anchoring. I fell into that trap a few months back.

In reality we have very little clue what the value is but provably neither does Link, the people who have valued it, and we have no reason to believe the "true" NAV is associated with the number 64.