Woodford Concerns

Malthusian

OldMusicGuy wrote: »

Then the head of their research function sold a load of his HL shares just weeks before the fund was gated and HL shares tanked as a result.

The insinuation that there is something dodgy about this relies on the idea that the problems in Woodford's fund and the effect it would have on HL shares if it was suspended weren't public knowledge.

This fails because it was public knowledge. Anyone with shares in HL had the same information that Dampier did. It wasn't a secret that Woodford had problems or that HL had heavily promoted the funds. If HL investors held onto their shares because they thought that Woodford would come good, or were taking a long-term view and expected HL to survive the Woodford scandal, or weren't paying attention, that's not Dampier's problem.

If Woodford had rung Dampier and told him that the fund was going to be suspended next week, that would have made it illegal insider trading (as Dampier would have known 100% that the fund would be gated while the market was pricing in a probability only). But there is no evidence that such a call ever took place. Nor would it have made any sense for Woodford to make such a call.

While HL shares tanked compared to the peak they hit in 2019, they are still at the price they were in early 2018 when everyone still thought Woodford was a genius.

Malthusian

OldMusicGuy wrote: »

Personally I would doubt that but to be fair I don't know. The HL clients that were "unknowingly" invested in Woodford would be those that use the HL MM funds, which are a really, really bad choice because they are so expensive for what they are. Only really uneducated investors would choose those, but we have had people on here that have invested in them.

Really uneducated investors and people who take financial advice from HL and thus haven't made a choice of any kind (other than to go along with the personal recommendation of their HL adviser). HL advisers recommend a ragbag of the HL MM funds for client portfolios.

coyrls

ZingPowZing wrote: »

HL definitely should face some investigation and censure over its behaviour.

There was some interest:
https://citywire.co.uk/investment-trust-insider/news/fca-examines-whether-hargreaves-was-too-slow-to-drop-woodford/a1244166

That was June, when trading in Woodfrord funds was suspended. I'm not sure if that examination is now concluded.

Of the 1/4 million HL customers to be affected, my guess was that most did not consciously choose Woodford, but rather found they were invested in a slice of Woodford buried in the mix of holdings under control of their fund promoted on HL's site (like a sub-prime element). Furthermore, I wondered whether HL adopted the True Potential model of switching funds (inc Woodford's) in and out of their funds according to risk profile - charging transaction fees as they go. If HL have "significant financial holdings" in Woodford funds, it's understandable. Is it definitely the case that this did not happen?

I freely admit that I dislike Hargreaves Lansdown but didn't know that "the head of their research function sold a load of his HL shares just weeks before the fund was gated."

https://en.wikipedia.org/wiki/Category_mistake

a property is ascribed to a thing that could not possibly have that property

bowlhead99

ZingPowZing wrote: »

Of the 1/4 million HL customers to be affected, my guess was that most did not consciously choose Woodford, but rather found they were invested in a slice of Woodford buried in the mix of holdings under control of their fund promoted on HL's site (like a sub-prime element).

Some will have consciously picked Woodford (likely helped towards that decision by positive messaging, but the decision was theirs) and others will have consciously picked an HL- managed multi-manager fund because they did not want to select the asset mix for themselves.

If you pick a multi manager fund you will get exposed to the tastes and preferences of the people doing the investment selection, for better or worse, and you know some of those choices can be poor and investments can go down as well as up etc etc. You can see what they invest in through the 'top 10 holdings' and the annual /semiannual reports showing a fuller list of holdings. HL are not the best multi manager products out there but obviously they will want to promote themselves as being good at it and say that the things in which they invest are good things in which to invest. Their advisors (who are not independent advisors) could only point you to their own products.

I wondered whether HL adopted the True Potential model of switching funds (inc Woodford's) in and out of their funds according to risk profile - charging transaction fees as they go. If HL have "significant financial holdings" in Woodford funds, it's understandable. Is it definitely the case that this did not happen?

. It isn't really understandable that they would keep changing their minds on which of their small number of funds they would like to hold Woodford in and keep passing WEIF from one to the other. It has been in MM Income & Growth for ages, but is not going to suddenly hop out of that one and be picked up by MM Strategic Bond or MM Asia& Emerging Markets.

And the assertion that they would be doing this just so they could keep 'charging transaction fees as they go' seems a little strange. If they decided they would churn their portfolio and transfer it from one of their funds to another, the fact that it's Woodford doesn't really make a difference. If they exited Woodford and bought something else, or exited something else and bought something else, presumably the transaction-based charges imposed by HL (if indeed such charges exist when they reregister a holding), would be the same (and included within the relevant fee disclosure).

OldMusicGuy

Malthusian wrote: »

Really uneducated investors and people who take financial advice from HL and thus haven't made a choice of any kind (other than to go along with the personal recommendation of their HL adviser). HL advisers recommend a ragbag of the HL MM funds for client portfolios.

That would be me then, as I took financial advice from HL :rotfl:. However, as previously discussed, this was about 5/6 years ago and the HL MM funds were not recommended to me by the HL FA. I think this may have changed based on recent posts from some of the IFAs on here, and that the HL MM funds are more frequently recommended by HL FAs.

However, the percentage of HL clients taking financial advice from HL is, I would imagine, pretty low. Where I used to work HL provided our group SIPP and I was the only one of my colleagues that took financial advice from HL. Several said "I just pick a few funds from the Wealth 100 list and then I can't go wrong". That probably sums up the average HL client's investment approach.

Thrugelmir

ZingPowZing wrote: »

Of the 1/4 million HL customers to be affected, my guess was that most did not consciously choose Woodford, but rather found they were invested in a slice of Woodford buried in the mix of holdings under control of their fund promoted on HL's site (like a sub-prime element).

Woodford had a long standing reputation built over many years at Perpetual. Much as Vanguard are now idolised in some quarters. (Even though the late Jack Bogle expressed reservations that trackers weren't suitable vehicles for every investment market).

talexuser

I'm positive I read one report soon after the gating that Mark Dampier was retiring, assuming it was a damage limitation exercise. Then no more, and as far as I know he is still working as "research director" till the end of the year?

https://www.hl.co.uk/news/mark-dampier

https://portfolio-adviser.com/mark-dampier-rakes-in-6m-as-woodford-investors-suffer/

https://www.ft.com/content/7f25713e-890a-11e9-97ea-05ac2431f453

bowlhead99

talexuser wrote: »

I'm positive I read one report soon after the gating that Mark Dampier was retiring, assuming it was a damage limitation exercise. Then no more, and as far as I know he is still working as "research director" till the end of the year?

The spin was that he and his wife's share sales were part of his plans to eventually retire 'at some point' after the end of the year. So, he was 'to retire' which a number of media outlets picked up on. The comment that the linked FT article got from him was that he had no 'immediate' plan to retire.

If I had a boatload of shares in my employer built up over a couple of decades working for them, and was in my early 60s, and hadn't sold any shares on the open market for 8-9 years, since when the price has risen strongly, and was inevitably going to retire at some point in the future, I would probably be looking to sell some - at some point that I wasn't in a close period pending results announcements etc.

Sailtheworld

Thrugelmir wrote: »

Woodford had a long standing reputation built over many years at Perpetual. Much as Vanguard are now idolised in some quarters. (Even though the late Jack Bogle expressed reservations that trackers weren't suitable vehicles for every investment market).

Neil Woodford is a real person and people don't want to admit they didn't go much further than noting his 'star manager' name on the fund before investing. He's receiving a lot of anger but it's just projected anger.

Trackers are completely different. If you buy a FTSE100 tracker and it tracks the FTSE100 downhill the only person you can really blame is yourself. The Daily Mail can't print photos of the FTSE100 SUNBATHING in a £25m mansion whilst drinking CHAMPAGNE!

It's just a massive blame game.

Thrugelmir

Sailtheworld wrote: »

Trackers are completely different. If you buy a FTSE100 tracker and it tracks the FTSE100 downhill the only person you can really blame is yourself. The Daily Mail can't print photos of the FTSE100 SUNBATHING in a £25m mansion whilst drinking CHAMPAGNE!

Irrespective of the funds actual performance. Woodford was not operating the fund in line with the published mandate. Even the best people can be overcome with belief in their own abilities. Normally people strike it lucky with one idea/concept. Repeating it again is the real challenge.