Woodford Concerns

Brian65

As WPCT NAV gets written down its leverage increases. As it does when Woodford makes the cash calls he has committed to. Must be close to its 20% leverage ceiling agreed with its lenders?

AnotherJoe

iglad wrote: »

No it will not be wound up, they'll appoint another company to run the fund.

That won't help, it's still a pile of poo whoever is holding it and enough would still want to sell out as soon as they could that the liquidity problem would be back where it was (because much of the illiquid* stuff is fundamentally unsellable at any price), and so it would need to be gated again. Someone used the phrase "death spiral" elsewhere.
Ps and as said, as the fund size decreases it gets more expensive to run, plus when it consists of only ordinary FTSE shares (if they wrote the junk off and sold the rest at any price) and is run by someone no one has ever heard of, there's no reason to hold it over dozens of other similar funds that are cheaper to run and so will have better performance. Yet more power to the death spiral. This fund needs to be taken round the back of the woodshed, and it will be.

* it's not just "normal" illiquid assets like property, that can be sold, and do have value, but takes time. It's unsellable because it's worthless.

itwasntme001

Woodford and his funds are finished. It will be liquidated to salvage whatever they can. Any guesses what the final recovery will be assuming par when the fund froze? 50%?

bowlhead99

itwasntme001 wrote: »

Woodford and his funds are finished. It will be liquidated to salvage whatever they can. Any guesses what the final recovery will be assuming par when the fund froze? 50%?

It's currently about three or four percent below the level it was at when gated. If you assume 20% of the remaining NAV is unlisted/illiquid and dumped for £100 total in a disorderly fire sale over the next six months (which some would say is pessimistic but AnotherJoe would say is optimistic), you are left with 75%+.

The way that would turn into only 50% is if there is a massive negative market event causing the the remaining 75% of value to lose a third of its value and he is a forced seller at that market low because people don't want to wait on his sinking ship for a recovery.

dividendhero

itwasntme001 wrote: »

Woodford and his funds are finished. It will be liquidated to salvage whatever they can. Any guesses what the final recovery will be assuming par when the fund froze? 50%?

As I understand it, Woodford is selling unlisted [STRIKE]junk[/STRIKE] unloved shares and buying ftse 100. That implies Woodford believe the fund has a future

masonic

dividendhero wrote: »

As I understand it, Woodford is selling unlisted [STRIKE]junk[/STRIKE] unloved shares and buying ftse 100. That implies Woodford believe the fund has a future

I'm not sure it implies anything. Although the fund is suspended, he must continue to manage it in line with the objectives and investment policy. One of those objectives is "to provide a reasonable level of income together with capital growth" (stop laughing ) and that wouldn't be achieved by holding cash for the duration of the suspension, until the fund is reopened or put into wind-down.

Johnnyboy11

WPCT can be had for 48p today, that's a 52p loss in its 4 years of trading. Factor in say a further 10p loss for inflaton, make it a 62p loss. Adjust for the depreciation of the GBP over that period of say 20%, making it an 82% loss. Then finally adjust for the NAV discount of 37%, resulting in WPCT shareholders actually owing the UK's star fund manager around 20% of their initial investment. He'll be at your door any day now, with the bailiffs, demanding that you settle up...

Leon_W

WPCT will go lower.

Another problem now for WPCT is that it can't hold over 10% of unquoted stocks and last night the Guernsey's stock exchange (cough cough !) de-listed the gruesome twosome. Benevolent AI (a crock) and the alchemistic Industrial Heat (an even bigger crock) .

The "listings". and I use the term loosely, were basically fabricated to inflate the NAV of both. Now that they are no longer listed this puts the fund over the 10% threshold for unquoted's. In my view neither Industrial Heat or Benevolent AI are worth much at all, if anything.

It really is like watching a car crash in slow motion.

masonic

Leon_W wrote: »

Another problem now for WPCT is that it can't hold over 10% of unquoted stocks and last night the Guernsey's stock exchange (cough cough !) de-listed the gruesome twosome. Benevolent AI (a crock) and the alchemistic Industrial Heat (an even bigger crock) .

I think you are getting confused. WPCT has no such limit on holding unquoted stocks. Perhaps you are thinking of WEIF.

AnotherJoe

dividendhero wrote: »

As I understand it, Woodford is selling unlisted [STRIKE]junk[/STRIKE] unloved shares and buying ftse 100. That implies Woodford believe the fund has a future

He has to get rid of the illiquid "investments*" because of rules. That's how he got into this mess in the first place. And he's got to buy something that produces income. Which FTSE 100 fits the bill. So it implies nothing except that's what he has to do.

* Trouble is much of it is unsellable at any price because he bought rubbish. He might as well have bought car parking spaces or vineyards.