Woodford Concerns

george4064

HL have been quick to remove it from their [strike]Wealth 50[/strike] entire website!


https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/lf-woodford-equity-income-accumulation

dunstonh

quirkydeptless wrote: »

https://www.hl.co.uk/news/articles/woodford-equity-income-all-dealing-suspended-following-redemption-concerns

Woodford Income Focus has also been removed from the Wealth 50, but is still trading.

Income focus is the lower risk version of the fund without the illiquid assets. There is no reason to suspend it as the assets can be traded with only settlement being the delay.

Is it likely that the issues with the fund discussed here will impact his other funds?

The issue is the high holding off illiquid assets in the Woodford Income fund. If other funds hold high ratios of illiquid assets then it can happen to them. Most funds do not hold high levels of illiquid assets.

I have the LF WF Income Focus.

That is the lower risk version and does not have illiquid assets. So, it should not be suspended for the same reason.

However, expect people to be selling out of any fund he is attached to. If the volumes of sales are a high and there are not the buyers, then the underlying assets will go down which in turn brings the unit price down.

elona

This may be a daft question but is the taint likely to affect the perception of Invesco? I do know he is no longer anything to do with them.

User6565

I considered this fund in the last few years but avoided it largely because of advice from this forum and city wire. I was quite interested in the discussion about impact for HL. When I first started I was one of the stereotypicall multi manager customers until I realised what crap value it was and got out. It’ll be interesting to see how they justify the inclusion in the wealth 50 but also the potential losses in their multi manager funds.

dunstonh

elona wrote: »

This may be a daft question but is the taint likely to affect the perception of Invesco? I do know he is no longer anything to do with them.

No. Invesco had more controls and restrictions on him. When he set up his own firm, it effectively let him off the lead. He was also known for being more defensive when he was at Invesco. Whereas the Woodford income fund was higher risk than his Invesco funds.

elona

Thanks Dunstonh. That is what I thought.

I worry that niave investors panic and cause a run on Invesco as they remember the association?

Robert_McGeddon

Dealing suspended. Article here.

Reaper

Although it's all doom and gloom there might be an opportunity for brave investors soon.

I believe the liquidity problems were being addressed by selling all the unquoted stocks and taking a holding in his Patient Capital fund instead. As that is closed-ended selling is no longer a problem. I'm not sure how far that process has got.

Many of his bets have been hit by Brexit fears, but if there is any sign of that being resolved in the near future (in a non-disastrous way!) then confidence in those stocks such as house builders may return.

He is a high conviction contrarian investor. So it all depends whether you think his strategy will come right in the end or whether you think he has picked too many turkeys recently to trust.

His Patient Capital is another interesting one. I sold out a while back but being closed-end the share price reacts very much to sentiment. It is down 12% today at the time of writing presumably due to his name being associated with it, even though nothing has changed. If it falls further for reasons of sentiment rather than performance I might be tempted to get back in.

jaybeetoo

“FundExpert’s head of research Sam Lees, however, says that Hargreaves Lansdown shoulders some “blame”. He says: “They over-promoted the fund and kept recommending it when there was no objectively good reason to do so. Now the reason it is removed from their Wealth 50 is because ‘the fund can’t be traded’ - is that it?”

https://www.moneyobserver.com/news/woodford-gets-boot-hargreaves-lansdown-wealth-50

MK62

Malthusian wrote: »

Your confusion between a Ponzi scheme (Madoff's was the same) and Woodford's collapsed fund is understandable, despite other forum members jumping down your throat, because both involve supposed financial geniuses whose funds then collapse like a house of cards.

To be fair, Woodford Equity Income hasn't actually collapsed (at least not yet anyway).....it's been suspended for 28 days, after which the situation will be reviewed.

Fair enough, it's not good, but at this point investors shouldn't panic - for those in Woodford Equity Income there is nothing you can do in any case at the moment.

The bottom line is the fund did/does not have enough cash to meet redemptions, so either has to sell what liquid assets it does have, and fall (further) past the 10% limit of illiquid/unlisted investment, or else look to sell those illiquid assets at firesale prices - neither is good for remaining investors, so it's been suspended while Woodford realigns the fund over a period of time - how long is unknown at this point, but personally I'd be surprised if it was only 28 days (unless perhaps exit penalties are allowed in this fund)

The hammering WPCT has taken this morning is symptomatic of the further loss of confidence in Mr Woodford, and while no doubt some of the flak he is taking is justified, some of it is probably a little over the top tbh.....
We'll have to wait and see on his Income Focus fund - it's probably a bit optimistic to say there won't be any fallout from this, but it depends on the level of outflows really.......