Woodford Concerns

itwasntme001

bowlhead99 wrote: »

I guess you could say it was 'far beyond' bad stock picks because the asset mix caused a structural problem, but ultimately the issue was picking the wrong things to buy at the wrong times (including buying illiquid assets within the portfolio while hoping the majority of fund's capital would be available for longer than it was).

Picking bad things full stop, not just at wrong times. And buying illiquid rubbish for a OEIC fund without doing proper risk management. And trying to entice valuers to put a larger value then deserved.


Hoping??!! LOL. Hope is a very dangerous word when it comes to investing

Thrugelmir

itwasntme001 wrote: »

Amazon sold books at first, sold something that was clear to see by everyone despite making any profit. There is difference between a business (amazon) that is growing its market share and investing back into its business and thus showing losses compared to a business (Benevolent) that says it is using AI to create fast and effective drug treatments whilst not actually having anything proven that says the technology is viable.

How does a Company that is losing money reinvest back into the business?

The concept behind Amazon was an online marker place. Given the rudimentary nature of the internet at the time. Was ahead of the game. AI is the new frontier.

itwasntme001

Thrugelmir wrote: »

How does a Company that is losing money reinvest back into the business?

The concept behind Amazon was an online marker place. Given the rudimentary nature of the internet at the time. Was ahead of the game. AI is the new frontier.

A company can raise capital by share or debt issuance. Also can still show balance sheet losses even though they have been funding investment.

The concept of buying things online was not new when Amazon launched. Amazon just executed it a lot better. It entered into a business area that was already proven to be viable.

Using AI by Benevolent to create drugs has not been proven to be viable at all thus far. It has never really been done with success. I think the closest has been IBM Watson Health but this failed and the drug got recalled.

[Deleted User]

It would be interesting to focus on the role of Hargreaves Lansdown in the Woodford Fund fiasco.

A quarter of a million HL customers are invested in Woodford funds. How did that happen?

My suspicion is that HL traded favour on their platform for exposure to Woodford's funds.

The pay-off for HL was that, as long as a Woodford fund was rolled from one of their favoured funds to another (according to the risk profile of the fund) HL accrued brokerage fees on both sides without
lifting a finger.

Pay-off for Woodward was that their diaspora of investors were largely unaware of HL's artificial protection against proper scrutiny of the performance of their fund.

But I'm happy to be corrected by someone at HL or outside who knows better..

Thrugelmir

ZingPowZing wrote: »

My suspicion is that HL traded favour on their platform for exposure to Woodford's funds.

To be included in the 50. The fund manager must agree to a discounted fee rate. From the investors perception seems like a no lose situation.

The disclosure that Jupiter Fund Managers managed to quietly liquidate a £1 billion position in 2017 says a lot.

bowlhead99

ZingPowZing wrote: »

It would be interesting to focus on the role of Hargreaves Lansdown in the Woodford Fund fiasco.

Interesting for you given your distaste for them

A quarter of a million HL customers are invested in Woodford funds. How did that happen?

By them having over 1.1m customers and a quarter of them being interested in Woodford products.

Woodford was one of the most prolific fund managers with 20x return in his time at Invesco and a sector-leading performance for the first couple of years running his own fund house. He was on the shortlist of 'best ideas' for years and offered an exclusive lower-fee share class to HL customers due to them giving him lots of business.

The existence of a low fee share class softened the 'total cost of investing' in a Woodford fund via HL, making their high fees for their standard platform services more bearable (because if the customer went elsewhere, they could get lower platform fees but would no longer get the cheapest fund share class).

So it was in HL's interests to keep highlighting the two Woodford fund offerings to investors and for Woodford to keep offering the discount to obtain such exposure.

My suspicion is that HL traded favour on their platform for exposure to Woodford's funds.

The pay-off for HL was that, as long as a Woodford fund was rolled from one of their favoured funds to another (according to the risk profile of the fund) HL accrued brokerage fees on both sides without lifting a finger.

HL's fee structure doesn't result in them earning 'brokerage fees' when their client investor (or an HL-managed fund) subscribes to an open ended fund such as WEIF, or redeems out of it. They charge an ongoing fee as a percentage basis on asset value under administration. So if an investor exits WEIF and subscribes to something else, or an HL-managed fund exits WEIF and another HL-managed fund subscribes into it, HL are making the same ongoing fee before and after, but not an extra transaction fee in between.

Even if HL were taking some sort of 'brokerage' fee when moving a holding in WEIF from one of their multi-manager funds to another (which wouldn't make sense because transactions in WEIF are not brokered on a stock exchange - subscriptions and redemptions are processed by the manager)
, they have not actually been moving WEIF from one fund to another in that way, as far as I can see.

[Deleted User]

By them having over 1.1m customers and a quarter of them being interested in Woodford products.

Is that even defensible? The classic HL investor - when it comes to investment strategy - couldn't find her couch in the living room:- that's why she pays HL.

HL's fee structure doesn't result in them earning 'brokerage fees' when their client investor (or an HL-managed fund) subscribes to an open ended fund such as WEIF, or redeems out of it. They charge an ongoing fee as a percentage basis on asset value under administration. So if an investor exits WEIF and subscribes to something else, or an HL-managed fund exits WEIF and another HL-managed fund subscribes into it, HL are making the same ongoing fee before and after, but not an extra transaction fee in between.

Even if HL were taking some sort of 'brokerage' fee when moving a holding in WEIF from one of their multi-manager funds to another (which wouldn't make sense because transactions in WEIF are not brokered on a stock exchange - subscriptions and redemptions are processed by the manager)
, they have not actually been moving WEIF from one fund to another in that way, as far as I can see.

Short story, bowlhead is saying HL do not charge a brokerage fee under their aegis when they roll a
holding from one fund to another.
Yet brokerage fees do apply to HL clients.

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.

talexuser

ZingPowZing wrote: »

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.

You think? I think they would rather Woodford was wound up as soon as posible and never mentioned again

aroominyork

Welcome to the site, ZingPow. You'll find the regulars on here don't wait for others to clear up what bowlhead says; they wait for bowlhead to clear up what others say.

[Deleted User]

Welcome to the site, ZingPow. You'll find the regulars on here don't wait for others to clear up what bowlhead says; they wait for bowlhead to clear up what others say.

Of course, looking forward to expert opinion..

Short story, bowlhead is saying HL do not charge a brokerage fee under their aegis when they roll a
holding from one fund to another.

Yet brokerage fees do apply to HL clients.

Good opportunity for anyone connected with Hargreaves Lansdown to clear this up, please.