Woodford Concerns

Malthusian

Reed_Richards wrote: »

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

Hands up everyone who bought Burford Capital shares 5 years ago when nobody had heard of it.

5 years ago BUR's trading volumes were in the low tens of thousands.

iglad

talexuser wrote: »

The Telegraph today (behind paywall) discusses the Patient Capital Trust. The manager of BMO Managed Portfolio has held it since launch (obviously at a loss) and has actually topped up since talking to Woodford. He reckoned Oxford Nanopore (DNA kits) will float, Atom bank might be bought out at a premium and Proton Partners (Cancer Treatments) will also float. He also says recent sales had not been at a discount to book value, and Patient Capital is a good investment because Woodford's name is now toxic and undervalued! Still too racy for me though...

Topped up his losses in WPCT 1 year -50-% 3 yr 55% with a discount of 50%

Moe_The_Bartender

poppy10 wrote: »

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 In the interim the directors have withdrawn millions in salaries and "advisory fees".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.

Sabina has now delisted from the Guernsey stock exchange worsening his breach of fund rules. This is one of his investments that really should be written down to nothing as the company doesn’t seem to do anything but pay its directors.

dividendhero

Reaper wrote: »

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.

I wonder if his "research" involved a dart board, some darts and a blindfold?

masonic

dividendhero wrote: »

I wonder if his "research" involved a dart board, some darts and a blindfold?

Not a chance. Studies have time and time again shown such methods achieve better returns than can be achieved by fund managers or indexes.

https://www.marketwatch.com/story/random-darts-beat-hedge-fund-stars-again-2019-06-26
https://www.stockinvestor.com/35446/beating-market-surprise-surprise-monkeys-win/
https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/#51f74706630a
https://www.ft.com/content/abd15744-9793-11e2-b7ef-00144feabdc0

Alistair31

dividendhero wrote: »

I wonder if his "research" involved a dart board, some darts and a blindfold?

And copious amounts of alcohol.

Jonbvn

poppy10 wrote: »

Anything Woodford touches seems to be dodgy.

The total lack of due diligence is staggering such that it is appears to suggest ulterior motivation. What is also staggering is the inaction by the FCA as further questionable deals are revealed on a daily basis.

Malthusian

Jonbvn wrote: »

The total lack of due diligence is staggering such that it is appears to suggest ulterior motivation. What is also staggering is the inaction by the FCA as further questionable deals are revealed on a daily basis.

What action is required by the FCA? Some (few) managers outperform. Some (most) managers underperform. Underperforming is not a crime. It's not even a regulatory breach. Incompetent managers losing people's money is part of an orderly working financial market.

If you don't want to be exposed to the risk of incompetent managers losing your money you invest in predominantly index funds rather than star managers.

If Woodford was doing something dodgy, e.g. getting kickbacks into an offshore account from the scam companies he invests in, that would merit action from the regulators. However there is absolutely no evidence that Woodford is doing anything like that, and more importantly no reason he would want to do that, unless it turns out that he was hundreds of million pounds in gambling debt to the mob.

In the absence of a debt to the mob, Woodford already had enough money to afford his current lifestyle forever when he launched Woodford IM. Which is why he stopped trying to make money for investors and started to indulge in non-existent grandiose concepts like "patient capital".

Woodford being gulled by scam companies because he is halfway to his yacht, lazy, and motivated by a self-righteous desire to "support fledgling British business" rather than make money for his investors, is not dodgy and does not merit action by the FCA. (Other than writing a few "lessons must be learned" reports to occupy some bureaucrats and keep the public happy.) That is just bog-standard, 100% compliant fund manager incompetence.

Alexland

Malthusian wrote: »

What action is required by the FCA? Some (few) managers outperform. Some (most) managers underperform. Underperforming is not a crime. It's not even a regulatory breach. Incompetent managers losing people's money is part of an orderly working financial market.

The FCA do have some requirements on the fund manager such as to demonstrate sophistication in their risk management, notify them when there is a significant change to the fund's risk profile, take reasonable care, etc. If the failure of the Woodford funds was caused by inadequate processes to manage risk there may be liability?

https://www.handbook.fca.org.uk/handbook/COLL/6/12.pdf

Alex

Moe_The_Bartender

I'm absolutely staggered that a fund manager of his experience would throw money into scams like Industrial Heat, Sabina Estates and Safe Harbour. If it were his own money, I wouldn’t care one way or the other but he’s a custodian of other peoples' hard earned brass, many of them unsophisticated investors caught up in the hype surrounding him.

It's all very well him hiding behind his factsheets and caveat emptors but it’s a simple fact that an income fund should not be investing in illiquid stocks of companies that instead of producing any income at all are burning cash and returning time and again to call upon further money promised to them.

His actions go beyond negligence and border on recklessness.