Woodford Concerns

AnotherJoe

Brian65 wrote: »

Best FT article I have ever seen published today; Neil Woodford: the inside story of his rise and dramatic fall
<snip>
I'm afraid there was nothing to indicate WPCT is under-valued.

Yeh, good article.
Read this one from May about the sort of people that were bamboozled by NW even that late

https://www.thisismoney.co.uk/money/investing/article-7062597/Why-buying-Woodford-Patient-Capital-Wise-Funds-Tony-Yarrow.html and how they thought it was undervalued.

A few companies they think will do well, Immunocore (halved in price in a day only a month after the article), and Ultrahaptics (sold at a profit but that of course means the concentration of dross in WPCT increased, that was the equivalent of throwing your gold out to keep the ship afloat) stand out. But it looks like the Dog and Pony show WIM put on convinced these guys to stick with it, until they capitulated and sold out their entire holding last week at about a 50% loss.
They were also "surprised" that WEIF was shut down (this is on their website) , they honestly thought it would reopen in December. They should have been reading here

gadgetmind

Sailtheworld wrote: »

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.

I played that game for decades, and at times had 90% of our assets other than property/pension in the semiconductor sector, and often over 50% in the company I worked for!

It all worked out in the end, but it wasn't exactly low stress. I'm now 90% passive, with 50% in bonds and a good international spread.

Brian65

AnotherJoe wrote: »

Yeh, good article.
Read this one from May about the sort of people that were bamboozled by NW even that late

https://www.thisismoney.co.uk/money/investing/article-7062597/Why-buying-Woodford-Patient-Capital-Wise-Funds-Tony-Yarrow.html and how they thought it was undervalued.

A few companies they think will do well, Immunocore (halved in price in a day only a month after the article), and Ultrahaptics (sold at a profit but that of course means the concentration of dross in WPCT increased, that was the equivalent of throwing your gold out to keep the ship afloat) stand out. But it looks like the Dog and Pony show WIM put on convinced these guys to stick with it, until they capitulated and sold out their entire holding last week at about a 50% loss.
They were also "surprised" that WEIF was shut down (this is on their website) , they honestly thought it would reopen in December. They should have been reading here

'unrivalled network of contacts' LOL - I stopped taking the Daily Mail seriously when they hired Adam Faith as their Financial Editor and his TV Money Channel went bust. FT have talked to insiders who say one of the problems was Woodford's contacts book was very thin because he was outside the London circle.
He didn't need contacts for the stuff he was investing in at Invesco because the information he needed was easy to access in the public domain. Quite different to what he invested in later, wher has was blinded by science, they could tell him anything, and he wouldn't have the contacts who could verify what others were telling him.

Brian65

gadgetmind wrote: »

I played that game for decades, and at times had 90% of our assets other than property/pension in the semiconductor sector, and often over 50% in the company I worked for!

It all worked out in the end, but it wasn't exactly low stress. I'm now 90% passive, with 50% in bonds and a good international spread.

Sometimes a little knowlege can be a bad thing. Because your limited knowlege might only be a positive where you miss the negative like I did. I bought into Marconi at about 20p because I knew they owned technology vital to BT. What I did not forsee was the banks being allowed to over rule the shareholders and force them out with a derisory 1/2p per share. It only cost me about 1% of my portfolio directly, but cost me a lot more by frightening me away from equities so I was late to the party when they recovered.
Now I'm nearly all in cheap S&P500/World index tracker ETFs.

Brian65

ZingPowZing wrote: »

Just to add:

"Hargreaves Lansdown funds with exposure to Neil Woodford’s collapsed investment vehicle have bled a net £439m over the past four months, sparking fears that the liquidity crisis that engulfed the former stockpicker could spread to a new cohort of investors. Hargreaves, the UK’s largest fund supermarket, operates an £8bn own-brand multimanager portfolio range that invests in the Woodford Equity Income fund, which is suspended due to problems stemming from its exposure to hard-to-sell assets. A recent run of investor redemptions from the Hargreaves range is fuelling concern that as the multimanager reduces its position in other funds to pay the withdrawals, the Woodford fund will make up a larger proportion of the portfolios, endangering remaining investors."

https://finance.yahoo.com/m/ddbc4a5b-c3e0-3f58-b438-b0b257ceaa02/hargreaves-fund-outflows.html

The FT article highlighted how difficult it would have been for HL to withdraw Woodford from their best buy list even after they had serious doubts about him. Mark Dampier had promoted Woodford (Oh sorry their Wealth 50 list 'doesn't constitute advice') so much that when he finally had to admit Woodford's fund was sh*te, his own credibility and career was over. It must have been very tempting to cling on and keep the party going for as long as possible in the hope that Woodford would finally come good, and sell his own/wife's shares before the collapse.

Brian65

bowlhead you obviously know more about finance than I do, and possibly more than anyone else on this forum. But you can't know everything, and if what you don't know happens to be a serious negative you could make the same mistake with Woodford that I made with Marconi.

AnotherJoe

Brian65 wrote: »

He didn't need contacts for the stuff he was investing in at Invesco because the information he needed was easy to access in the public domain. Quite different to what he invested in later, where has was blinded by fake science, they could tell him anything, and he wouldn't have the contacts who could verify what others were telling him.

This is the contact he needed for IH advice

A_T

Brian65 wrote: »

Sometimes a little knowlege can be a bad thing. Because your limited knowlege might only be a positive where you miss the negative like I did. I bought into Marconi at about 20p because I knew they owned technology vital to BT. What I did not forsee was the banks being allowed to over rule the shareholders and force them out with a derisory 1/2p per share. It only cost me about 1% of my portfolio directly, but cost me a lot more by frightening me away from equities so I was late to the party when they recovered.
Now I'm nearly all in cheap S&P500/World index tracker ETFs.

So you didn't get it wrong as such it was someone else's fault? I think you're right to stick to index trackers.

bowlhead99

A_T wrote: »

So you didn't get it wrong as such it was someone else's fault? I think you're right to stick to index trackers.

That seems overly harsh, I can't see that is blaming anyone else for his lack of foresight.

He is pointing out the problem famously described by Donald Rumsfeld as the "unknown unknowns" - the things we don't know that we don't know.

He thought he knew what he did and didn't know about Marconi's prospects but didn't realise he should have known more about the capital or financing structure and the reliance on debt and the power of lenders or bond holders.

You are right that it may of course be best for him to stick to index trackers which are relatively easy to understand and lower risk than individual companies, which is presumably why he does do that now. But I don't see him 'blaming others' for his own misplaced enthusiasm.

Brian65

AnotherJoe wrote: »

This is the contact he needed for IH advice

I got the impression Woodford's Foul-Mouthed Arrogant Bullying attitude was part of the problem. If someone like the modest mild mannered Buffet was missing something I would feel like helping him by telling him. But I wouldn't feel like helping people like Woodford, so I might just say nothing.