Woodford Concerns

bowlhead99

woolly_wombat wrote: »

I'm sorry to have to say this, but that comes across as exceptionally arrogant.
That remark does you no credit bowlhead99.

Well sorry to you too, but I am not always looking for 'credit'.

It was a response to a poster who had paid ten times what Woodford paid to buy into a particular company (seemingly, only evaluating the model and the risks after he made the purchase), and then later sold out, then came onto the thread to rant "How on earth can Woodford be this stupid to hold !!!! like [company name]??"

My response noted that the poster needed to grow up - childhood rants with double punctuation and expletives that need to be censored are not what this forum should encourage.

My response also noted that Woodford would have made profits when selling because he bought at a much lower price (being a value investor), and that Woodford would not hold the MSE poster in high regard for ridiculing Woodford's investment method when the MSE poster is the one failing to make money due to overpaying and only considering the business model after making the investment.

Except I didn't say, "Woodford would not hold the MSE poster in high regard for..." , I said Woodford would write him off as an idiot. Woodford has plenty of experience of being criticised by people who overpay for stocks while calling him stupid, and probably writes lots of them off as idiots.

This is not to say that Woodford is infallible, merely that if he makes a mistake, one does not need to rant "How on earth can Woodford be this stupid to hold !!!! like..." to deflect from one's own mistakes.

2010

Patient fund under pressure at new low.

https://www.theguardian.com/money/2019/jun/10/neil-woodford-fund-patient-capital-trust-equity-income

Johnnyboy11

2010 wrote: »

Patient fund under pressure at new low.

https://www.theguardian.com/money/2019/jun/10/neil-woodford-fund-patient-capital-trust-equity-income

Also a good article in the FT here.

bowlhead99

AnotherJoe wrote: »

.

Hard to catch precisely when it's falling though.

If it's falling in the orientation shown in your cartoon though, it is safer to catch the top than hope to go for the bottom. So 66p is fine and 63p is fine and if it goes to 55 or 50p I might have some more, but I'm not going to try to get too hung up on guessing the exact best point (pun intended) to buy in.

Fair enough it's a punt, my thought, since they arbitrarily updated IH by nearly 4x when it should patently be worth nothing unless they are simply holding it on a Greater Fool basis*

They uprated it to the price people were paying to buy it.
Price of a recent funding round can be a valid valuation technique (one of the only suitable valuation techniques for venture capital where there is no revenue or cash flow).

It is not an investment expected to yield near term results, but one that gets you closer to the research and opportunities which may come out of investigating scientific claims in underexplored fields over the next couple of decades. Other people (greater fools in your parlance) may want to come on board in the future to get similar exposure.

His problem is that a couple of hundred million dollars to put a toe in the water / get a seat at the table is under a couple of a percent as a background project when you have a ten billion fund, but if your fund shrinks, it's a lot bigger percentage.

have they done the same with the other stuff in their portfolio?

No doubt there are other things on which they would, now with hindsight, have preferred to spend less. A large proportion of early stage businesses will fail. Others will give better results than they hoped. On average you hope to make money.

If a package of unlisted stocks are exited for break-even prices after you were given a discount to buy them, that's a profit. If buying an IT on a large discount, you don't actually need to wait for them to exit the portfolio at break even prices, you just need to wait for the market to recognise a greater possibility of them achieving break even prices than it currently has.

AnotherJoe

Retired_Minky wrote: »

Thanks. You sent me down a rabbit hole with your mention of Theranos.

Just read an excellent article on it

https://www.vanityfair.com/news/2016/09/elizabeth-holmes-theranos-exclusive

Also downloading the podcast the dropout and have also added out for blood in Silicon Valley to my watch later play list on YouTube.

All because of your post!

Thanks I hadn't seen that article, the documentary, if its the one I saw, is more up to date. IMO EH still got off scott free, no jail time.
If you like the documentary, one that's even more breathtaking and almost unbelievable is "Enron: The smartest Guys in the room". Well worth the few quid to watch on Amazon or similar. And while I'm on a roll, The Big Short and Margin Call.

itwasntme001

bowlhead99 wrote: »

Grow up. If it is a "flawed business model", why did you buy it?

Ridiculing others after you decided to sell because you personally didn't like the risk/reward is just being petty. If Woodford is selling at the current price of a pound or so, having bought pre-IPO at less than half that, he's making money. I expect he doesn't much care that you didn't make money because you decided to pay ten times his purchase price even though you didn't like the risk. He would write you off as an idiot.

Except there is a big difference between Woodfund, who manages hundred of millions for people, many who rely on the money to fund their living expenses, and me, who has no such responsibility and is merely just a retail investor like the rest of us on this board.


It is people like me who actually do need to say the things i have said to voice our opinion on someone who has until now enjoyed the public limelight and the money that this draws and given the responsibility to manage. Yet he is the one who has failed the many thousands of people. Sure he probably wont read my comments, but others might and others have even said similar things about him on this board for good reason.


He may have made a profit still, but that's not the point. He should never have invested in such a company given its risk especially for an "income" fund. If it is not meant to be an income fund, why even call it that??? As for me - yes i admit i was an idiot for buying PB but most retail investor are. But at least i sold for pretty much no damage. So overall it was just a cheap lesson learnt. He is the one managing other people's money. NOT ME!!!


So again - why on earth did he buy and also still hold onto PB at its highs, when it was clearly overvalued at its high (at least to me - someone who is just an investor-wannabe)???!!!

itwasntme001

Woodford should just have called his fund "invest at your own risk because this fund is just full of VERY high risk punts".

redux

itwasntme001 wrote: »

Woodford should just have called his fund "invest at your own risk because this fund is just full of VERY high risk punts".

The launches were each preceded by a prospectus and there are key information documents, both types of which are still available online, and some people may have even read them.

If you're alluding to Patient Capital, investors arguably already knew this, or should have done. As for the Income funds, who knows, there may be some reviews and potential disputes about to happen.

Audaxer

Latest update from HL on how this affects their MM funds:
https://www.hl.co.uk/news/articles/hl-multi-manager-funds-how-does-the-woodford-suspension-affect-your-investment

bowlhead99

itwasntme001 wrote: »

He may have made a profit still, but that's not the point. He should never have invested in such a company given its risk especially for an "income" fund. If it is not meant to be an income fund, why even call it that???

He has doubled his money by making an investment in an unquoted pre-IPO company and waiting for it to IPO. It was known that a proportion of his investments would be unquoted and thus higher risk.

While he ultimately aims to deliver income as well as capital growth, at a given point in time some of the portfolio will be giving income of 6%, some 3%, some 0% with an expectation or hope of being an engine of growth or income in the future. So the fact that something doesn't currently have a high yield should not necessarily be a barrier to buying it.

So again - why on earth did he buy and also still hold onto PB at its highs,

As you note, he held as the company peaked and fell back. However, as a major shareholder - even after you have served your lock-up period - it can be difficult to sell a meaningful slice of a relatively small company without causing a downtick in its value. Presumably he still felt there was potential for the longer term. As it turns out, the overseas expansion didn't go very well. Some calls, you just don't win.

when it was clearly overvalued at its high (at least to me - someone who is just an investor-wannabe)???!!!

At least he didn't buy it at its high when he perceived it to be overvalued, as you seem to have done?

Woodford should just have called his fund "invest at your own risk because this fund is just full of VERY high risk punts".

It does seem to have been higher risk than people expected. Unsophisticated investors do not expect to encounter gating restrictions, though this risk had been clear for some time to more savvy investors (IFAs reporting on here that their investment due diligence people had taken it off the list).

Still, 'invest at your own risk', together with 'use specialist funds only as a part of your portfolio' is pretty standard. The folks putting their life savings in the fund when they need the money back this summer (and with a widely-held fund, it will be easy for media to find such people to provide soundbites, because they will not be shy in coming forward) are doing it wrong.

While I may come across as having blunt answers here, I do have sympathy with those people whose personal situation has been upset by the reductions in value or the gating, because it is easy to make mistakes when you don't know what you are doing.