Woodford Concerns

AnotherJoe

talexuser wrote: »

The vultures circle.

The borisgraph today reports top city lawyers stand ready to sue Woodford on behalf of investors. So as well as losing money in the fund, you can give more money away to expensive QCs to lose more money for a tiny chance of recovering a tiny bit more.

They should sue Link for their fictitious valuations (which are still going on on a daily basis) and, though i dont suppose its possible, everyone at FCA for being asleep at the wheel.

C_Mababejive

Im far from being an expert and i have a tendency toward multiasset funds and trackers . Machines have no emotion. They are not affected by arrogance, bravado and similar. They just churn away day in day out . Low overheads,low costs. What other high rollers do we have out there who are seen as the golden boys( or indeed girls) at the moment..?

I guess the key as always is to always keep a watch and have an exit strategy especially with higher risk/higher reward stuff that may have holdings which over represent certain sectors.

AnotherJoe

C_Mababejive wrote: »

Im far from being an expert and i have a tendency toward multiasset funds and trackers . Machines have no emotion. They are not affected by arrogance, bravado and similar. They just churn away day in day out . Low overheads,low costs. What other high rollers do we have out there who are seen as the golden boys( or indeed girls) at the moment..?

I guess the key as always is to always keep a watch and have an exit strategy especially with higher risk/higher reward stuff that may have holdings which over represent certain sectors.

The two 'obvious' high rollers' in the UK are Train and Smith.The difference between them and Woodford is both in the companies they buy, and their behavior.
It has to be understood that Woodford went completely off piste in what he did in almost every respect and basically got a free pass by most of the investment community until quite recently even though it was apparent that there was something seriously wrong with what he was doing.

bowlhead99

AnotherJoe wrote: »

For your own sake consider if you have anchored on the NAV when it was around 60p, and still believe that to be a true reflection of its worth, when actually all signs point to it being considerably lower than even the current price.

If all signs pointed to it being considerably lower than the current price, it would likely not be trading at the current price.

Clearly some signs must post to it being worth equivalent to the current price, or higher. The fact that it is public knowledge that WEIF needs to - over time - dump tens of millions of pounds of WPCT stock as part of its liquidation process, representing a significant oversupply of shares to the market, yet people are still willing to pay 33p today, does not imply that all signs point to the fair value being lower than 33p.

I am not saying 60p is a true reflection of its worth. I had jumped the gun when buying a few months ago as a punt on market overreaction (though I noted then that I did not expect to have been catching the bottom and would reassess it if it fell further). That investment was made with the assumption that the then-NAV was too high but the mid sixties at that time could be a reasonable entry point if there was 20p of garbage and the rest of the portfolio would be able to develop over time. I am not mentally 'anchored' to 60p being the right price.

However, the current NAV of 63 p (which will inevitably still include flawed valuations) is at least now stated after some of the large writedowns that we expected would have been needed from the 80p NAV level. For example in August / September they took 4p off Benevolent AI, over 3p off IH, and over 3p off three unnamed holdings (which could have included more on BAI or IH) at end of September.

You could (and based on what the market is thinking, should) take some more write-downs and write-offs to get the 63p down to some lower number. Certainly any new group coming in to take over the management will have a practical incentive to value conservatively and overprudently as a day-one clear-out in pursuit of eventual glory or a performance fee in turning it around and realising value. However, if cash conversion from the existing assets is not easy, there may be a practical incentive to maintain high values to support the finance facility without increasing the interest rate or requiring a fire-sale to settle it.

Investors will be hoping for some transparency within the fair valuation process as it does not help long-term value accretion if a new manager does deals with secondary portfolio purchasers and throws in lots of minor holdings for nothing to sweeten a particular transaction in the short term. It may be that there is long term value to be had, but new management and board instead convince shareholders to approve a wind-up, throwing out whatever babies exist within the bathwater, and ultimately recover well under half the current reported NAV, which would be a loss from the current share price. It is of course possible that the bathwater doesn't even contain any babies, leading to the same result.

So that is a risk if you buy today. Just as a forced fire-sale due to the banking covenants is a risk. Those various risks (together with the overhang of a distressed investor's 9% ownership being up for short term disposal) contribute to the share price being down at 33p.

I'll admit to buying another 3000 shares on Friday for £1k (about 10% cheaper than what I paid for 3000 shares the Friday prior to the resignation). Will I be buying at a lower price in future, or writing them all off to nothing? Who knows. My 'speculative stocks' budget is more than £2k, but there are always other opportunities (we are yet to see how todays Commons voting plays out across the markets for example).

Or are you in fact a step ahead of the game and looking long term, reckoning that you buy at say 30p and eventually get 60p, perhaps 2/3 of that via Link, when their complete incompetence is eventually exposed? If so a dangerous and cunning game but fair play to you. Whether LInk have enough money to pay this, or are insured enough, I have no idea

No, my investment case for buying at 33p is not predicated on getting 20p of value from the portfolio and 40p compensation from Link. I can't see there would be a penny of compensation from Link. The investment is based on the potential for realisable NAV being greater than 33p in due course, albeit without being able to say what the probability of that is.

This makes it a high risk investment but the asset class itself is at least within my area of expertise, so I can recognise the types of risks there are likely to be, which will not be the case for a lot of holders. Fundamentally though, an investment based on uncertain information is still a punt and I recognise that - I am well aware of the concept of 'a little knowledge is dangerous'.

I know that there is a risk that the 33p of underlying value is not necessarily there for the taking - and even if it is, if some or all positions are wound up prematurely, the 33p+ may never be realised.

Good luck to all fellow holders! as they cheerily say on the pump and dump bulletin boards.

AnotherJoe

BH, I think you are 180 degrees wrong but i respect your opinion.

I have no skin in this game (I'm not shorting it for example) so i wish you all the best.
I reckon you'll be lucky to get 20p back per share, so good luck.

bowlhead99

AnotherJoe wrote: »

BH, I think you are 180 degrees wrong but i respect your opinion.

I have no skin in this game (I'm not shorting it for example) so i wish you all the best.
I reckon you'll be lucky to get 20p back per share, so good luck.

Thanks - if I thought 20p back per share was an optimistic outcome I wouldn't have bought it. But it is of course a possibility, as is 40p+ or 50p+ over the longer term. I don't think for a minute that anyone could firesale the assets for 40p or 50p within the next six months, but 50% return from 33p over the coming few years could work.

I have had decent returns with some things 'priced for failure' over the years, and some losses of course.

Brian65

Best FT article I have ever seen published today; Neil Woodford: the inside story of his rise and dramatic fall
Stockpicking aside, Woodford comes across as the polar opposite of the mild-mannered Buffet. Stocky, foul-mouthed, cropped hair ex rugby player, using that to intmidate and bully, charging through doors busting the magnetic locks rather than use his security card at Invesco, when he flew into a rage after being thwarted from buying the stocks he wanted by their risk and compliance team.
No such problems when he got his own firm and could fire them.
The stockpicking seems to have come unstuck because he didn't have the audited accounts that were easily available for the big plc's he bought into at Invesco. Being outside London he wouldn't get to hear of so many investment opportunities. Rather, it seems to have appealed to his ego, going round the locality being treated like Royalty having the power to change people's fortunes by making a massive investment in their start up. Crucially, the valuations appear to be based on information supplied by the start ups themselves!! - and they are high-tech businesses a non-technical fund manager wouldn't really understand.
The other big difference is, as already stated on this thread, they need interminable rounds of fundraising before they may or more likely may not start making a profit.
Commentators were as sarcastic about Woodfords claim his sell out when the share price was in the 60's was 'to pay a tax bill', as they are of HL's claim that their 'Wealth 50' list does not constitute advice.
I'm afraid there was nothing to indicate WPCT is under-valued.

Novice_investor101

At least one insurance company got rid of the Woodford funds from its personal pension & Bond life funds about 18 months ago - clearly unhappy with where he was steering them...

itwasntme001

Novice_investor101 wrote: »

At least one insurance company got rid of the Woodford funds from its personal pension & Bond life funds about 18 months ago - clearly unhappy with where he was steering them...

About the same time as i sold

[Deleted User]

The fingerprints of Hargreaves Lansdown all over this fiasco.
Nearly 300,000 of their clients put into Woodford funds, if this link is credible

https://finance.yahoo.com/m/6f59694c-01bd-30f1-9314-d149a5105294/angry-investors-count-the.html