Woodford Concerns

masonic

fun4everyone wrote: »

Some clarity around the complete scam that is the valuations of unquoted equities in weif/wpct

https://citywire.co.uk/funds-insider/news/link-feels-heat-over-valuation-of-woodfords-unquoted-stocks/a1242137

Didn't Woodford invest quite heavily in Prothena? That went from $6 to $75 before collapsing back to $10. That's traded on the NASDAQ. I have a work colleague who is into such shares. Believe me the market valuations of traded companies are massively inflated and deflated on little more than rumour - I can think of one example where the share price was decimated because someone threatened to challenge a patent, for example. It's the nature of the beast, and very entertaining for me to observe when it isn't my money at risk.

I wouldn't be surprised if the mere fact a company had Woodford's backing would lead to its valuation blowing up, and the mere fact a company now exists within a Woodford fund could lead to it crashing. So I'm not at all surprised that valuations of unquoted companies are all over the place.

bowlhead99

fun4everyone wrote: »

Some clarity around the complete scam that is the valuations of unquoted equities in weif/wpct

The link took me to a registration wall.

Before I sign up, is it really offering 'clarity around the complete scam that is the valuations' or is it just an observation that the value has been increased on two business because valuations of unquoted businesses may be subject to change when there is some sort of trigger event to reassess (eg change in actively levels, new funding round, etc)?

fun4everyone

masonic wrote: »

Didn't Woodford invest quite heavily in Prothena? That went from $6 to $75 before collapsing back to $10.

You know I think he was actually in them from the beginning. IE the company it span out of (Elan?) - he had them from Invesco.

Problem was he bought so much more later that they, a speculative non dividend paying drug company listed on NASDAQ, became a top 5 holding in a £10bn UK "equity income fund" - ridiculous. They were also the top weighting in WPCT at roughly 20%. A hedge fund published a long paper on why they were doomed to failure and their drug was going to do nothing. It made complete sense and was based in fact and logical reasoning. Prothena's chief science officer then resigned. WIM published a blog on how they were confident in everything to do with Prothena. The hedge fund were absolutely bang on the money and Prothena collapsed. WIM were complete mugs who did no research/ignored the facts.

cogito

Brian65 wrote: »

So what other funds are HL recommending in their 'Wealth 50' that they have concerns about?

None, AFAIK. Why?

masonic

fun4everyone wrote: »

Problem was he bought so much more later that they, a speculative non dividend paying drug company listed on NASDAQ, became a top 5 holding in a £10bn UK "equity income fund" - ridiculous. They were also the top weighting in WPCT at roughly 20%. A hedge fund published a long paper on why they were doomed to failure and their drug was going to do nothing. It made complete sense and was based in fact and logical reasoning. Prothena's chief science officer then resigned. WIM published a blog on how they were confident in everything to do with Prothena. The hedge fund were absolutely bang on the money and Prothena collapsed. WIM were complete mugs who did no research/ignored the facts.

Not a particularly surprising outcome, even without looking into the specific circumstances around this drug. About 70% of drugs fail during Phase II and a major cause of attrition is lack of efficacy (about 35%). That rate is mirrored within the autoimmune disease area. Just 1 in 10 drugs made it from Phase I to approval based on data from 2006-2015, and the odds of getting a drug through clinical development seem to be getting longer. That of course includes data from across the industry. Some companies will take much bigger risks in progressing compounds into the clinic than others.

So investing 20% of your fund in effectively a single clinical asset, seems very brave, to put it mildly.

AnotherJoe

StellaN wrote: »

I really feel at this stage we shouldn't make personal attacks on NW, I don't think the forum is the right place for that. As well as calling him a 'fool' you also made these quotes in other posts 'At least the results show clearly he is completely incompetent' and 'Its more about just simply being a very bad fund manager'.

Whatever our feelings in the current situation, NW has been a fund manager for a very long time and has made many people quite a lot of money (myself included). I don't hold any of his new funds mainly because of his change in investment style and, I do feel, for those people that are now trapped in the suspended WEI fund. However, I still feel this is not the place for personal attacks especially with such quotes 'he is is such a fool', 'a very bad fund manager' and 'he is completely incompetent'!

All three of those comments can actually be backed up with facts.

1. He bought into a company based on impossible technology from a twice convicted fraudster.
2. In the U.K. equity sector his fund is 91st out of 91 according to no less than HL, and in the area of listed funds he's had several major purchases lose the majority of the investment due to mismanagement which he failed to spot.
3. His company broke the liquidity rules multiple times, used dubious devices to evade the liquidity rules and got himself into a precarious position whereby he was extremely vulnerable to downturns causing a vicious spiral

dividendhero

masonic wrote: »

So investing 20% of your fund in effectively a single clinical asset, seems very brave, to put it mildly.

Doubly so when Woodford has no expertise in either venture capital or life science

dividendhero

AnotherJoe wrote: »

[/B]

All three of those comments can actually be backed up with facts.

1. He bought into a company based on impossible technology from a twice convicted fraudster.
2. In the U.K. equity sector his fund is 91st out of 91 according to no less than HL, and in the area of listed funds he's had several major purchases lose the majority of the investment due to mismanagement which he failed to spot.
3. His company broke the liquidity rules multiple times, used dubious devices to evade the liquidity rules and got himself into a precarious position whereby he was extremely vulnerable to downturns causing a vicious spiral

Adding to that list of ineptitude, the board of Patient Capital consisted of people working for the companies the fund invested in

Jonbvn

dividendhero wrote: »

Adding to that list of ineptitude, the board of Patient Capital consisted of people working for the companies the fund invested in

If I was a lawyer, I think there are quite good grounds to build a legal case. I guess the FCA might be wary of doing that, since the fund would tank.

Brian65

cogito wrote: »

None, AFAIK. Why?

If punters knew what other funds HL have concerns about that they are still plugging in their Wealth 50, they might be able to get their money out before it goes down?