Woodford Concerns

Brian65

Good points made. I think it all depends on whether you believe the asset valuations. Those who do are buying. Those who don't are selling.

Malthusian

to_jackie_too wrote: »

A lot of people seem be under the misapprehension that a share price goes down because people are selling, and rises because people are buying. Despite the fact (with certain exceptions as already mentioned) that the number of shares bought always equals the number of shares sold.

If every morning I bake 100 cakes, and yesterday I sold them all for £1 each by 4pm, and they were so tasty that tomorrow I've got 200 people queuing outside my door, by the end of the day I will have sold exactly as many cakes as yesterday, 100. Doesn't mean demand wasn't higher.

If I take advantage by raising the price to £2 then maybe 100 people will drift away and I'll then only have 100 people queuing and they'll all get one cake. Demand was still higher, because more people wanted a cake if they could get it for the same price and people were willing to spend more money on the same amount of cakes. Demand is measured in £s, not people.

The people who mill around outside the door of stock exchanges can never be counted, but nonetheless it is a fact that when share prices rise there are usually more people clamouring to buy, and when they fall there are usually more people clamouring to sell. Not all of them will actually buy or sell because the fact that there are so many of them hollering means they will not get the price they wanted to buy or sell at.

You are right that it's not necessary for prices to rise and fall - two people trading shares between themselves can set the price if they like - but it's still an important part of how liquid stockmarkets work.

If the price of WPCT was set by a communist politburo at its 2018 level then literally every single investor would want to get out and nobody would want to get in. Naturally we don't have communism on the stock exchange so a price equilibrium is swiftly reached where equal number of investors want to get in and out. When more people want to get out of an investment if they could get the price it is at now, the price falls. And falls until enough of those sellers throw their hands up and decide to hold on that the remainder matches the number of newly interested buyers.

It's a slight oversimplification to talk about prices falling because everyone wants to get out rather than in (without qualifying that it's assuming they could get the old price) but it's not far from the truth.

Brian65 wrote:

Good points made. I think it all depends on whether you believe the asset valuations. Those who do are buying. Those who don't are selling.

I think at this stage of the game, the only person who believes the NAV is Neil Woodford. And probably not even him. Woodford's career is over so Bogle's adage "It is very difficult to get a man to understand something when his salary depends on not understanding it" no longer applies.

Those buying into WPCT will say that they know the NAV is hallucinogenic, but they don't think it's as bad as the current discount implies.

Or they are hoping to sell to a Greater Fool.

jaybeetoo

WPCT - bargain or falling knife?

https://www.moneyobserver.com/woodford-patient-capital-bargain-or-falling-knife

Brian65

So Woodford chucks another £10million into the lossmaking Atom Bank. Don't know where the money has come from as WPCT is already leveraged 17%?
I suppose its inevitable with the start ups he invests in that some will need more funding before they come good. Lets hope some start paying off before that happens.

ColdIron

The pain continues

• Neil Woodford's flagship Woodford Equity Income fund is likely to remain suspended until early December, administrator Link Fund Solutions has said.

https://citywire.co.uk/funds-insider/news/woodford-fund-freeze-extended-to-december/a1254274

aroominyork

Also, on the day Morningstar reports that the WPCT Board is considering ditching Woodford and taking on another manager (and possibly changing the Trust's name...) the share price fell another 4%. So on the buy-side, it's now at about a 35% discount to NAV. On the downside, we have little idea what the real NAV actually is.

Jonah01

Hi,

OP here. Just a thought I'd update the thread with what I decided to do.

Ended up going for a vanguard life strategy 60.

I came to the conclusion that I'll never be knowledgeable enough to build my own portfolio that beats something that tracks the markets.

Moe_The_Bartender

And Woody sold £1m of his shares in WPCT three weeks ago without disclosing it to the board. That’s a real vote of confidence.

iglad

Are you sure as Fundsmith wipes the floor with it over 10.5, 3 and 1 year.

iglad

He's out the door, taking his money, let someone take over steady the ship and he's still wins as he has plenty of shares, he cannot lose.