Woodford Concerns

AnotherJoe

MaxiRobriguez wrote: »

I thought the NAV couldn't (accurately) be estimated, which is why we were avoiding it in the first place?

Let's face it, very few people even the experts are going to struggle to accurately calculate the true NAV given the complex mix of illiquid investments, niche companies, selling pressure brought on by Equity Income needs, potential grey-area investing in associates companies, lack of board oversight yada yada yada.

The path of least resistance is down I'd agree in the short term. That doesn't necessarily mean that opportunistic investors cannot consider prices to buy in at, if they're feeling particularly ballsy.

It can be better estimated than the self interested "we'll have our mates at Link value it (and look at their history )" current NAV.


eg start by writing off IH, BAI, Keir down to half what it is now which is close to nothing, halve all the rest of the non public and even thats being generous I reckon, and I think it comes to about 35p a share.

There's a lot of anchoring going on with respect to the last NAV which has as much credibility as an LC&F directors guarantee.

MaxiRobriguez

AnotherJoe wrote: »

It can be better estimated than the self interested "we'll have our mates at Link value it (and look at their history )" current NAV..

Of course, I don't disagree that the actual NAV is lower than what is reported.

I've not seen any convincing argument which can hone in on a specific figure yet though. People buying at 55 are taking a punt. So will the people at 45, 35 etc.

AnotherJoe

MaxiRobriguez wrote: »

Of course, I don't disagree that the actual NAV is lower than what is reported.

I've not seen any convincing argument which can hone in on a specific figure yet though. People buying at 55 are taking a punt. So will the people at 45, 35 etc.

See the Motley Fool article i linked to earlier that has a link to an estimate with something behind it other than Mr Woodfords "lets jack up the price of Defies Physics Inc by 382% this month"


Looks like todays Greater Fool thinks low to mid 50's is the "worth taking a punt on" price but I am going with an earlier poster who reckoned it would be sold for pennies on the pound.I dont think most buying understand IH (or BAI which is looking quite dodgy as well)

short_butt_sweet

AnotherJoe wrote: »

Keir

you're not the first to misspell/mistype this, so here's a handy guide ...

keir:


kier:

fun4everyone

The FCA have opened an investigation into the Woodford Equity Income Fund suspension

https://citywire.co.uk/funds-insider/news/fca-launches-probe-into-woodford-equity-income-suspension/a1241446?re=65578&ea=509216

A little detail on the actual breaches of regulations they are investigating in the article.

masonic

AnotherJoe wrote: »

Good points but The difference between the two articles is that the "buy more" one is just opinion along the lines of "it's gone down so it's worth a punt" , the "don't touch with a barge pole" article actually has numbers to back up with the NAV is a fantasy. Seems much more persuasive to me,

If I understand the article you posted correctly, the train of logic (and the numbers) used to back up the opinion is that:
- WPCT holds IP Group, which makes up 2.5% of the fund
- IP Group had valued a few unquoted companies (5 examples used to determine the trend) for their IPO and these subsequently fell to 45% of their IPO price after listing
- Therefore WPCT should be valued on a similar basis
- WPCT is therefore approaching "a more realistic level of true NAV".

The word tenuous certainly springs to mind and I'm far from persuaded this guy's valuation is any more persuasive than those who say it is cheap or those who say it needs to fall much further to represent true NAV.

So like most drivel published by the Motley Fools, both stories offer nothing of value, beyond giving them an opportunity to plug their share tipping service.

Herbalus

masonic wrote: »

So like most drivel published by the Motley Fools, both stories offer nothing of value, beyond giving them an opportunity to plug their share tipping service.

Whenever I read anything by Motley Fool, I am less likely to join their share tipping service. Makes me wonder why they write such vacuous opinion pieces.

AnotherJoe

masonic wrote: »

So like most drivel published by the Motley Fools, both stories offer nothing of value, beyond giving them an opportunity to plug their share tipping service.

I'd say that drivel has more science behind it than Woodford used to value in the first place :rotfl:

bowlhead99

masonic wrote: »

[etc]
So like most drivel published by the Motley Fools, both stories offer nothing of value, beyond giving them an opportunity to plug their share tipping service.

I would tend to agree with that.

I know there is an inherent distrust by certain vocal members here about the valuation process, with the opinion that certain investments should be valued at nothing because the investors' money is being used to finance scientific research or research facilities which may take decades to get a proper payback, if ever, rather than buying a business that will have profitable revenue next week.

Clearly, not all investments should be pre revenue, but it's not intolerable that some will be. It's like building a portfolio of mining or oil companies, some should be making revenues but others might just be having you finance their search for the good stuff and hope it pays off, at which point other people or banks will step in to help you take it forward.

One blogger wrote in the context of the IH saga, if there is one percent chance of finding something worth a trillion dollars in the next couple of decades, you and your co-investors could have 99 attempts at that and spend ten billion between you on each attempt and still turn a profit if it pays off. So spending $50m or $200m out of your fund for a crack at it, might not be so ridiculous, even if it is a binary result after the waiting is up.

One of the features of a closed ended vehicle that doesn't have a fixed holding period timescale, and has a patient manager, is that they can buy something and keep it for a decade or two. Potentially obtaining new opportunities directly from it or using the information flow you receive via that investment's networks to keep yourself in the frame for other future opportunities in the same industry or a related field. You don't actually need to flip it and sell to 'a greater fool' within the next five years, because you don't need to exit in five years.

By contrast an institutional-backed VC fund or buyout fund is usually a limited-life investment partnership ; it can't be a permanent capital vehicle because it has investors who will expect their capital commitments returned in the next five or ten years, which means trying to engineer an exit to keep them happy if you don't teach a natural/ optional exit point during the target period.

Although 'trying to engineer an early exit' could be very costly for the WEIF, it's not necessarily something that needs to happen in WPCT, due to its more permanent capital structure. Inevitably there may be some of that happening if Woodford sees merit in exiting as a clean break to a strategic buyer who wants to also take WPCT's position as a condition of their buying the WEIF slice. There can be a conflict of interest in such cases, obviously. I expect he'll take advice how best to play it out.

masonic

AnotherJoe wrote: »

I'd say that drivel has more science behind it than Woodford used to value in the first place :rotfl:

Certainly more science behind it than one of the companies he bought.