Woodford Concerns

talexuser

Some interesting HL statistics here:

https://www.yodelar.com/insights/the-scary-trust-of-the-neil-woodford-hargreaves-lansdown-saga?utm_source=hs_email&utm_medium=email&utm_content=78842945&_hsenc=p2ANqtz-_61qOHm7wnywewlMahwxv5q_oJaeeYlXsxoNk5u-X2NXJYvnnUOpWLLsvnpSpITVF-pIW9ZpVOm0bh84xdacy3Enqehw&_hsmi=78842945

talexuser

Article by Richard Evans in the borisgraph today.

Quote:
Neil Woodford “wrote multimillion-pound cheques with no due diligence” and “went a bit mad” when the initial success of his new firm “went to his head”, according to City observers.

After Woodford Investment Management opened for business in 2014, its funds attracted billions of pounds in a short space of time. The manager was forced to invest this money quickly to avoid it sitting unproductively in cash but his new firm lacked the resources to research certain stocks effectively, rivals allege.

“He had all that money to deploy, first for his Equity Income fund and then for his biotech and technology investment trust [ Woodford Patient Capital],” said one. “But buying that kind of stuff isn’t easy – you can’t just throw money at a wall. You need to employ the right scientists but there was no due diligence, even when they were writing huge cheques.”

Another experienced City figure backed up this assessment. “There was no real experience or talent among the other staff, just a few inexperienced analysts,” said the source, who had direct knowledge of Mr Woodford’s business in its early days. “These people lacked the stature to push back at Mr Woodford’s decisions.”

Several of the people Telegraph Money spoke to, who are all experienced money managers, said Mr Woodford’s “lack of humility” made this point all the more important.

“These guys all have big egos,” one said. “He probably had an evangelical belief in what he was doing.”

A second said: “There was hubris here in ignoring adages such as the fact that the market can remain irrational longer than you can remain solvent.” Another said: “I think he wanted a knighthood. He wanted to retire after making Oxford [where his company is based] Britain’s Silicon Valley. It was hubris – I think his intentions were good.”

A fourth added: “When you start your own business you need humility if you are going to avoid mistakes. But his actions do not suggest humility. He held very large stakes in some companies, indicating very high levels of conviction.”

Several of these big bets, such as Provident Financial and Allied Minds, did not come off. Mr Woodford held 21.6pc of Allied Minds and 14.9pc of Provident Financial in his Equity Income fund; the fund also owned more than a fifth of the shares of several other companies.

“The red flag was the size of these stakes,” one source said. “It shows overconfidence. When there is this concentration of ownership you can’t liquidate your holding and you effectively own the whole company.”

Several rivals said Mr Woodford’s undoing was refusing to cut his losses when holdings got into difficulty and instead increasing his stakes. “I think the early success went to his head and he went a bit mad – he started to believe his own hype,” one said. “When it went wrong he panicked and doubled down – he gambled.”

Another agreed. “Some investors want to be proved right and others want to make money,” he said. “The latter sell when a stock falls, which is normally sound risk management. The ones who want to be right will double down – but doubling down is not risk management.”

[Deleted User]

Compo!!!!

It's wonderful to see The Daily Mail and Daily Telegraph campaigning on behalf of their readers.

talexuser

ZingPowZing wrote: »

It's wonderful to see The Daily Mail and Daily Telegraph campaigning on behalf of their readers.

After consistently puffing Woodford to their readers too! :rotfl:

jamei305

Cold fusion delivering more share price news for WPCT holders today:


"Link Fund Solutions Ltd cut the value of the stake in IH Holdings International held by Woodford Patient Capital amid a 'delay in operational progress' at the nuclear energy firm. This has resulted in the trust's NAV being cut by 5.0 pence per share."


But never mind, it's only a delay to operational progress - I'm sure their operations will really get going in the next quarter.:rotfl:

Reaper

I'm sure you will all be shocked and surprised (not) to hear Woodford Patient Capital has slashed the valuation on Industrial Heat by £45m. That's on top of the £30m writedown in August.

It's current value is just £14m and many will feel even that is too much. It also affects Woodford Equity Income

https://citywire.co.uk/funds-insider/news/woodford-investors-suffer-further-blow-as-industrial-heat-slashed/a1289676

jimjames

Was thinking about how all this has happened at Woodford when he had such a successful previous career at Invesco.

I wonder if the move from a large institution where there are significant, standard rules on trading/holdings and process to setting up his own outfit where those processes/rules are whatever he wanted them to be was the final straw.

With a large investment house I suspect the ability to bend the rules to allow investment in whatever he wanted would be seriously limited so he would have been protected from a lack of discipline and going off track.

One of the big dangers of star managers setting up on their own.

Reaper

Yes with hindsight it seems Invesco were reigning him in and preventing him doing whatever he wanted.

He was frustrated with that so set up on his own which meant he could go wild, and did.

talexuser

See

https://forums.moneysavingexpert.com/showpost.php?p=76452182&postcount=1559

I assume these are genuine quotes from other managers with stature and not the journalist making things up (Boris anyone?)

Moe_The_Bartender

Citywire reporting this afternoon:

A consortium of life sciences investors is poised to enter exclusive talks to buy a £500 million portfolio of Woodford Equity Income's unquoted and hard-to-trade healthcare stocks, according to Sky News.

The consortium, led by WG Partners, could enter a period of exclusivity within which to conclude a deal as early as today, with an agreement likely to take a number of weeks to conclude, Sky News reported.

It is not clear how much WG Partners is offering for the portfolio, though its initial bid is understood to have been around 20% below the level at which the Woodford Equity Income fund is valuing them.

The size of the bid and its success will be crucial in determining how much Woodford Equity Income investors receive in distributions once the wind-up process begins.

The first distribution, expected at the end of January, is likely to be the largest, featuring the proceeds of the sale of the fund's larger listed stocks by BlackRock.

The proceeds from the sale of unquoted and hard-to-trade stocks, which is being led by private equity specialist PJT Park Hill, are expected to be distributed after that date.

The portfolio WG Partners is eyeing features a number of the £3 billion fund's unquoted positions, such as Oxford Nanopore, Immunocore and Kymab.

Smaller listed stocks which would be hard to offload in the market are also included. Rutherford Health (RUTH.NXX), whose shares have traded only minimally since listing on the NEX Exchange in February, features in the portfolio, as does 4D Pharma (DDDD), Mereo Biopharma (MPHM), Arix Bioscience (ARIX) and Verseon (VERS).

But it excludes the fund's second-largest unquoted healthcare holding, Benevolent AI, whose value was halved in September in a funding round lead by Singaporean state fund Temasek.



I have no personal interest in Woodford funds but would probably feel a sense of relief if I got 80p in the £ on these investments.