Woodford Concerns

Midas

The full Muddy Waters report on BUR is available here: http://d.muddywatersresearch.com/content/uploads/2019/08/MW_BUR_08072019.pdf

Astonishing reading. For example, this quote:

' BUR’s governance strictures are laughter-inducing. The CFO is the wife of the founder / CEO. Under the best of circumstances, this should alarm investors; however, with a company that consistently books non-cash accounting profits, it is unforgivable. In a situation so ripe for abuse, the very least the company could do is to have an independent CFO. (The CEO has sold a total of £59.4 million of stock.) BUR has cycled through four prior CFOs or senior finance managers (none of whom stayed for long). The table below shows the turnover at CFO and senior finance functions. These facts beg the question “Is Elizabeth O’Connell the only CFO who can be relied upon to approve the accounts?” '

Reaper

It will be interesting to see how Burfield respond. It looks pretty damming. Invesco don't come out of it well either.

Scarpacci

Also of note, Hargreaves Lansdown has Burford in all three of its "Select" funds.

Moe_The_Bartender

And what's going on with Sabina Estates whose website is inaccessible except for the home page and whose accounts show next to nothing but the big cheese seems to be a long time buddy of Woodford?

https://www.sabinaibiza.com/

poppy10_2

Sabina is a cash shell. Claims to be a property company but doesn't seem to actually build any properties, or do anything really other than raise millions in capital, and distribute hundreds of thousands in salaries and fees to the directors.

Even worse is Safe Harbour, started up a few years ago with a vague business plan to "buy a B2B platform." Has raised tens of millions in capital, mostly from Woodford and Barnett, but still hasn't purchased anything years later so still isn't actually doing anything. In the interim the directors have withdrawn millions in salaries and "advisory fees". It's a publicly listed company on AIM but there have been virtually no transactions in its shares, other than one curious buy order last year that was just enough to raise the share price by 10% (from 120p to 132p), exactly the amount needed to trigger a performance bonus for the directors.

Anything Woodford touches seems to be dodgy.

Reaper

It does look like Woodford's stock picking has been reckless at best. Although he claimed to thoroughly research his picks it's hard to believe.

edgex

Moe_The_Bartender wrote: »

And what's going on with Sabina Estates whose website is inaccessible except for the home page and whose accounts show next to nothing but the big cheese seems to be a long time buddy of Woodford?

https://www.sabinaibiza.com/

Well the non-execs are connected via https://en.wikipedia.org/wiki/Raven_Property_Group
who have developed warehousing in Russia...

but they also both have no current appointments:
Bilton https://beta.companieshouse.gov.uk/officers/PSQJ9RxCy3tL45Eh58W1gChWBHs/appointments
Hirsch https://beta.companieshouse.gov.uk/officers/bTPngwH8XIA5RbuipmbSy-kI998/appointments


Heres Sabina Estates
https://beta.companieshouse.gov.uk/company/09874234/officers

Brian65

Malthusian wrote: »

I can't really see the point of replacing Woodford and getting a new manager to - what, sell all his unlisted crap and buy large-cap equities with the handful of coppers that is left, turning WPCT into just another UK or global investment trust with an image problem and a hideous performance graph? You may as well wind the fund up.

Equally I can't see the point of sacking Woodford and getting a new manager to keep the fund as it is. It's still the same crap, only you have eliminated the rationale behind the fund, which is: Woodford's genius stockpicking + patience = moon. If you believe that WPCT's investments will eventually come good it makes no sense to sack the man who bought them.

And what are you going to pay a new fund manager with given WPCT's "fee free" structure?

It's double or quits at this point.

Well yes. Added to all that is the question of asset valuations. A new manager isn't likely to be happy with the valuations set by Woodfords chums when he dumped the stuff from the income fund into the Investment Trust. A new manager will probably want to 'kitchen sink' the valuations to give himself a chance of showing a profit. But the Trusts borrowing limits are already stretched even on current asset valuations. Then there is the cash calls from the companies held by the trust - stretch borrowing limits further.

Scarpacci

An interesting recap here if you haven't read the whole Muddy Waters case: https://www.bloomberg.com/news/articles/2019-08-07/muddy-waters-latest-short-is-woodford-holding-burford-capital?cmpid=BBD080719_CEU&utm_medium=email&utm_source=newsletter&utm_term=190807&utm_campaign=closeeurope

It sounds like Invesco's Mark Barnett was more involved with Burford than simply buying BUR on the stock exchange.

Reed_Richards

From https://www.ft.com/content/29f4ac20-b8e9-11e9-96bd-8e884d3ea203 :

It [BUR] has also been one of Aim’s strongest performers, with its share price having previously surged more than 1,000 per cent over the past five years.

So if you bought 5 years ago and were able to get out now you would have to settle for just a 500% increase?