Woodford Concerns

AnotherJoe

Ah, had i known they did a UK small cap I would have compared to that. Seriously. For the following reason.

As you've pointed out, they have an established UK small cap that apparently is doing very well, good history, plus they now have a new (mostly UK) small cap which most would agree is full of companies in trouble and worse.

Why therefore would you not invest in the fund with the established small cap whose NAV you can be pretty confident about? Why would you not sell WPCT and buy Schroder?

itwasntme001

Why on earth would you buy a fund (WPCT) when it's holdings were decided by a fund manager (Woodford) who has been given so much attention recently at how bad his stock picking was with WEIF, many of which do not make sense whatsoever to have been bought in the first place???


This is not rocket science people. And certainly not cold fusion

jimjames

itwasntme001 wrote: »

Why on earth would you buy a fund (WPCT) when it's holdings were decided by a fund manager (Woodford) who has been given so much attention recently at how bad his stock picking was with WEIF, many of which do not make sense whatsoever to have been bought in the first place???

Maybe you think that the 50% discount to (declared) NAV means that there is a good opportunity for revaluation when the new manager takes over and the situation isn't as bad as it seems.

I bought PE trusts in 2009 at rock bottom when the discount was sky high, when sentiment turned the price jumped with a nice profit.

itwasntme001

jimjames wrote: »

Maybe you think that the 50% discount to (declared) NAV means that there is a good opportunity for revaluation when the new manager takes over and the situation isn't as bad as it seems.

I bought PE trusts in 2009 at rock bottom when the discount was sky high, when sentiment turned the price jumped with a nice profit.

I am not sure about the details of your PE funds, but given it was back in 2009, chances are you bought something that had GENUINELY a large discount to NAV because the crisis would have thrown off a lot of the closed-ended funds particularly where the assets were relatively more illiquid.


With WPCT we are at all time highs in the stock market with no crisis and if you do some research into some of the companies in the fund, many are simply valued way too high meaning the NAV discount is not really much (or not as much) of a discount.

Thrugelmir

jimjames wrote: »

I bought PE trusts in 2009 at rock bottom when the discount was sky high, when sentiment turned the price jumped with a nice profit.

I bought F&C Enterprise trust (now morphed into ICG Enterprise Trust) when it launched in 1981...........

Not the greatest of investments. Though the return has been positive.

bowlhead99

itwasntme001 wrote: »

With WPCT we are at all time highs in the stock market with no crisis and if you do some research into some of the companies in the fund, many are simply valued way too high meaning the NAV discount is not really much (or not as much) of a discount.

As there's limited information in this thread - to save us doing the 'some research' that would be necessary, please can you tell us more of the detail about the correct values for the 'way too high' overvalued companies?

You mention there are 'many' of them that are 'simply valued way too high', so other than the 4p in Industrial Heat, perhaps you could list, say, the ten next most overvalued based on your analysis of the current condition and business plans of those businesses, and your knowledge of what they are currently valued at, within the 63.5p declared NAV ?

AnotherJoe

My approach is more basic - they* are valuing something at tens of millions of pounds when it's clearly literally valueless, indeed even worse they were duped.
Therefore, why would you have any confidence that the rest is worth anything? Maybe they've been "duped" into believing what the companies have said about the efficacy of their treatments ? Then BenAI** and their promises/projections/fairy tales.
And as confirmation of that and it's not just a one-off aberration, there have been many previous recent examples of financial ineptitude - putting money into Sphere just three months before it collapsed, huge sums of money potentially due to Rutherford (which unfortunately might not be profitable though you'd think there's some value in it if even it collapses. And many many overnight halvings and more of valuations. And an outstanding loan of, IIRC, £117m - where's the money coming from to service that ?

*Link
** A company that doesn't have a "moat" to protect it, it is quite possible a better option could come about and make it worthless overnight.

itwasntme001

bowlhead99 wrote: »

As there's limited information in this thread - to save us doing the 'some research' that would be necessary, please can you tell us more of the detail about the correct values for the 'way too high' overvalued companies?

You mention there are 'many' of them that are 'simply valued way too high', so other than the 4p in Industrial Heat, perhaps you could list, say, the ten next most overvalued based on your analysis of the current condition and business plans of those businesses, and your knowledge of what they are currently valued at, within the 63.5p declared NAV ?

Lets take the top holding - Benevolent - which makes up 10% of the trust. Loss making AI-pharma/biotech company that is loss making to date. Nothing proven in terms of technology that helps anyone. Nothing as far as i can see on how it plans to become profitable, how the technology will be monetized, what the competition is, what margins will be, how much more funding it requires. I have not seen any information on this on their website.


So the question is not why do i think it is valued below the NAV that is being reported - because any valuation (whether explicit or implicit based on for example decisions whether to buy or sell) is going to be subjective to some extent (yours and mine). But instead why is it valued at $2bn in the first place? When i can buy so many other companies that people can understand and place some sort of safety of margin on. With Benevolent, you have no idea if it will even be profitable, no provable product, no moat, no nada.


Here is a short article written by a medical chemist (so someone who is presumably an expert pharma), who basically says no amount of AI will bring about the key understanding we need about disease processes, cell biology etc that is needed to develop more effective drugs that Benevolent claims to have the ability to do.


https://blogs.sciencemag.org/pipeline/archives/2018/04/23/benevolentai-worth-two-billion

itwasntme001

And just to prove my point in the above post, the valuation is in fact $1bn now and not $2bn (last year). It just goes to show that valuations for these types of companies have a very significant room for error given it just is so subjective. Until i can see some sort of provable technology exists that can be monetized, i value this company at zero.

dividendhero

Thrugelmir wrote: »

I bought F&C Enterprise trust (now morphed into ICG Enterprise Trust) when it launched in 1981...........

Not the greatest of investments. Though the return has been positive.

IIRC ICGT has cositently beaten the FTSE100 for years ??