Neil Woodford makes a comeback

Prism

masonic said:

Prism said:

masonic said:

Prism said:

The only investing mistake he made was putting illiquid stocks in the main income fund and it sounds like he won't be doing the again. The bigger marketing mistake was continuing to charge a fee when the fund was locked and now not sounding very sorry for the mess. Saying that, some people will access any new proposition on whether they thing he can make them money and that will dictate future success with this new fund idea.

Do you not think believing Industrial Heat was a credible investment was a serious investing mistake?

Industrial heat in the income fund yes definitely a mistake. Industrial heat in the patient capital trust no. Most of these risky startup's will probably go nowhere but there is a chance that a select few will rocket. That is the premise of that kind of investment trust. Whether Woodford was any good at this kind of investment is another matter but good or not doesn't make it a mistake in my opinion. Anyone who bought the trust had full capability to make their own mind up, like any trust, if they thought Woodford could cut it as an early startup VCT style investor. I didn't know, and therefore didn't invest. Industrial Heat as an investment was likely to fail but that doesn't make it a mistake to try.

Industrial Heat was so obviously a sham to anyone with even a fundamental understanding of the science. It should not have passed even the most rudimentary due diligence. It was one of Woodford's biggest investments in the trust. This is far worse than, say, Alexander Darwall's major investment in Wirecard, because in theory Wirecard could have been telling the truth about their accounts. Industrial Heat's claims could not have been truthful, even in theory, yet Woodford backed them even after it was established the experiments could not be reproduced.

So it was a poor investment decision. A VCT which basically this was in all but name is allowed to take punts on lots of these experimental ideas that go nowhere. It doesn't make it wrong if a few of the ideas come off. The managers of Scottish Mortgage may have to write down a large loss in Ant Group down to the Chinese government's decision. There are commentators on that situation that would say something similar, that anyone with a understanding of financial risks could see that coming a mile off. However if trusts like this don't take these risks (with full visibility of course) then who will?

As I said, I didn't invest in this trust because I didn't understand pretty much what any of the companies were doing and didn't see much evidence that Woodford did either but it still doesn't mean he did anything wrong.

masonic

Prism said:

masonic said:

Prism said:

masonic said:

Prism said:

The only investing mistake he made was putting illiquid stocks in the main income fund and it sounds like he won't be doing the again. The bigger marketing mistake was continuing to charge a fee when the fund was locked and now not sounding very sorry for the mess. Saying that, some people will access any new proposition on whether they thing he can make them money and that will dictate future success with this new fund idea.

Do you not think believing Industrial Heat was a credible investment was a serious investing mistake?

Industrial heat in the income fund yes definitely a mistake. Industrial heat in the patient capital trust no. Most of these risky startup's will probably go nowhere but there is a chance that a select few will rocket. That is the premise of that kind of investment trust. Whether Woodford was any good at this kind of investment is another matter but good or not doesn't make it a mistake in my opinion. Anyone who bought the trust had full capability to make their own mind up, like any trust, if they thought Woodford could cut it as an early startup VCT style investor. I didn't know, and therefore didn't invest. Industrial Heat as an investment was likely to fail but that doesn't make it a mistake to try.

Industrial Heat was so obviously a sham to anyone with even a fundamental understanding of the science. It should not have passed even the most rudimentary due diligence. It was one of Woodford's biggest investments in the trust. This is far worse than, say, Alexander Darwall's major investment in Wirecard, because in theory Wirecard could have been telling the truth about their accounts. Industrial Heat's claims could not have been truthful, even in theory, yet Woodford backed them even after it was established the experiments could not be reproduced.

So it was a poor investment decision. A VCT which basically this was in all but name is allowed to take punts on lots of these experimental ideas that go nowhere. It doesn't make it wrong if a few of the ideas come off. The managers of Scottish Mortgage may have to write down a large loss in Ant Group down to the Chinese government's decision. There are commentators one that situation that would say something similar, that anyone with a understanding of financial risks could see that coming a mile off. However if trusts like this don't take these risks (with full visibility of course) then who will?

As I said, I didn't invest in this trust because I didn't understand pretty much what any of the companies were doing and didn't see much evidence that Woodford did either but it still doesn't mean he did anything wrong.

It's the sort of "poor investment decision" that should prompt family members to question whether he still has capacity to manage his financial affairs. I've received more convincing investment propositions by email from a Nigerian Prince. I cannot see how it could be labelled other than an investing mistake. Had he evaluated it and concluded (as the rest of the world had) that they had most likely not discovered something that required the laws of physics to be re-written, given nobody else was able to reproduce the work, but he didn't want to rule it out completely, then perhaps a small punt in it could be defended. However, Woodford made it one of the biggest positions in the fund. Which is not how competent fund managers invest in a punt.

I think we disagree on whether a fund manager should have a basic understanding of the companies in which they invest. I think at the very least, some basic research should be done, and advice from someone knowledgeable about the sector should be obtained, such that someone has an understanding of the investment before money is handed over. I would characterise it as a mistake not to do so, and that is why I can only view this as an investment mistake.

Moe_The_Bartender

Prism said:

aroominyork said:

Prism said:

The only investing mistake he made was putting illiquid stocks in the main income fund and it sounds like he won't be doing the again.

I don't agree. He also focused on biotech where there is no evidence he was an expert and it seems he plans to carry on doing so. According to The Times he "will focus on companies that will develop into the “the likes of Immunocore, Kymab, Synairgen, Nanopore”." 

In the same article he is quoted saying "I don’t think I’m qualified to do anything else." Well, Neil, there are lots of govt apprenticeships around. Maybe you should start afresh.

A mistake implies he did something wrong rather than simply not being good at something. Starting an investment trust and investing in stuff he didn't know much about might be considered the later. We will never likely know how right or wrong he was now but thats because he wasn't given long enough to prove it.

Nobody likely knew if the Baillie Gifford team were any good at identifying value in unlisted companies in the first few years either? When I invested in Chrysalis I waited for a year as the managers at Merian had little experience in private equity. In fact one of their holdings has already folded within 2 years of the initial investment and that is to be entirely normal. I wouldn't be surprised if more than half of the holdings collapse or never make it to IPO.

If you’re worried about the possibility of half the holdings collapsing, why are you invested in private equity? I hold CHRY and it is doing very well for me. I bought it because I like its holdings and at least two of the will go to IPO in the next 12 months.

it was at a discount of 11% when I bought it but now stands at a premium of 30% at which point I would normally be thinking of selling and waiting for a lower re-entry point. In this case, I think that the next NAV declaration will close the gap significantly. It’s a long term hold for me.

[Deleted User]

EU regulations capped to 10% unlisted holdings in funds like Woodford. Listing companies on the Guernsey stock market to get round that inconvenient rule was an imaginative, enterprising gambit, albeit contrary to the spirit of consumer protection behind the legislation.

And now that we are to be free from the shackles of Brussels bureaucracy and having the head of the FCA (on whose watch the Woodford fiasco unfolded) placed Governor of The Bank Of England, perhaps fund investors can look forward to exciting times.

As Peter Hargreaves said before the referendum:  "I’m firmly convinced, that day – hopefully – we decide to leave, that little bit of insecurity, that little bit of unknown will be an absolute fillip to everyone."

Prism

Moe_The_Bartender said:

Prism said:

aroominyork said:

Prism said:

The only investing mistake he made was putting illiquid stocks in the main income fund and it sounds like he won't be doing the again.

I don't agree. He also focused on biotech where there is no evidence he was an expert and it seems he plans to carry on doing so. According to The Times he "will focus on companies that will develop into the “the likes of Immunocore, Kymab, Synairgen, Nanopore”." 

In the same article he is quoted saying "I don’t think I’m qualified to do anything else." Well, Neil, there are lots of govt apprenticeships around. Maybe you should start afresh.

A mistake implies he did something wrong rather than simply not being good at something. Starting an investment trust and investing in stuff he didn't know much about might be considered the later. We will never likely know how right or wrong he was now but thats because he wasn't given long enough to prove it.

Nobody likely knew if the Baillie Gifford team were any good at identifying value in unlisted companies in the first few years either? When I invested in Chrysalis I waited for a year as the managers at Merian had little experience in private equity. In fact one of their holdings has already folded within 2 years of the initial investment and that is to be entirely normal. I wouldn't be surprised if more than half of the holdings collapse or never make it to IPO.

If you’re worried about the possibility of half the holdings collapsing, why are you invested in private equity? I hold CHRY and it is doing very well for me. I bought it because I like its holdings and at least two of the will go to IPO in the next 12 months.

it was at a discount of 11% when I bought it but now stands at a premium of 30% at which point I would normally be thinking of selling and waiting for a lower re-entry point. In this case, I think that the next NAV declaration will close the gap significantly. It’s a long term hold for me.

I am not worried in the slightest but that is simply the world of private equity and VCT where only about a third of the companies make all of the returns. Chrysalis being late stage probably evens that split out a bit but its still likely that around half of the investments will be a disappointment and hopefully the ones that are a success will do very well.

I am also a holder and I am up over 150% since I bought in last year - i plan on it being long term

Reaper

Prism said:

A VCT which basically this was in all but name is allowed to take punts on lots of these experimental ideas that go nowhere. It doesn't make it wrong if a few of the ideas come off.

I'm afraid it was much worse than that. Rossi, the guy behind the technology, is a serial fraudster. It never had a chance of working. It takes only a few minutes to discover this, yet Woodword's team claimed they did thorough due diligence on their stock picks. Clearly not, which casts doubt on the quality of all their work.

Thrugelmir

ZingPowZing said:

Part of Woodford Funds’ success was his lofty reputation, so when he let it be known that he was investing in a small company, the price would rise. Full public disclosure of all investments helped, until the charm reversed.

That's a totally flawed and ill informed comment on the world of investing in start up's. 

Thrugelmir

masonic said:

Prism said:

masonic said:

Prism said:

The only investing mistake he made was putting illiquid stocks in the main income fund and it sounds like he won't be doing the again. The bigger marketing mistake was continuing to charge a fee when the fund was locked and now not sounding very sorry for the mess. Saying that, some people will access any new proposition on whether they thing he can make them money and that will dictate future success with this new fund idea.

Do you not think believing Industrial Heat was a credible investment was a serious investing mistake?

Industrial heat in the income fund yes definitely a mistake. Industrial heat in the patient capital trust no. Most of these risky startup's will probably go nowhere but there is a chance that a select few will rocket. That is the premise of that kind of investment trust. Whether Woodford was any good at this kind of investment is another matter but good or not doesn't make it a mistake in my opinion. Anyone who bought the trust had full capability to make their own mind up, like any trust, if they thought Woodford could cut it as an early startup VCT style investor. I didn't know, and therefore didn't invest. Industrial Heat as an investment was likely to fail but that doesn't make it a mistake to try.

This is far worse than, say, Alexander Darwall's major investment in Wirecard, because in theory Wirecard could have been telling the truth about their accounts.

The German regulators failed to address concerns that were raised as early as 2008. Nor did the company auditors actually confirm the physical existence of cash balances held by overseas subsidiaries. Similar accounting tricks brought about the downfall of Maxwell Publishing some decades ago. 

[Deleted User]

Thrugelmir said:

ZingPowZing said:

Part of Woodford Funds’ success was his lofty reputation, so when he let it be known that he was investing in a small company, the price would rise. Full public disclosure of all investments helped, until the charm reversed.

That's a totally flawed and ill informed comment on the world of investing in start up's. 

Actually, it’s a comment by a senior portfolio manager, Peter Sleep.
”Woodford had massive holdings of listed companies, 20% or 30% that would take ages to sell. They may appear to be liquid companies but when you’ve got 30%, they’re anything but liquid.•
Sleep attributes a lot of Woodford’s success to the sheer weight of money he had invested in some of the small and mid-cap companies he backed during his career. “When you buy 30% of a company, you’re going to push the share price up, and then when you start to sell it, you’re going to take a lot of air out of the stock price,” says Sleep.

masonic

Thrugelmir said:

masonic said:

Prism said:

masonic said:

Prism said:

The only investing mistake he made was putting illiquid stocks in the main income fund and it sounds like he won't be doing the again. The bigger marketing mistake was continuing to charge a fee when the fund was locked and now not sounding very sorry for the mess. Saying that, some people will access any new proposition on whether they thing he can make them money and that will dictate future success with this new fund idea.

Do you not think believing Industrial Heat was a credible investment was a serious investing mistake?

Industrial heat in the income fund yes definitely a mistake. Industrial heat in the patient capital trust no. Most of these risky startup's will probably go nowhere but there is a chance that a select few will rocket. That is the premise of that kind of investment trust. Whether Woodford was any good at this kind of investment is another matter but good or not doesn't make it a mistake in my opinion. Anyone who bought the trust had full capability to make their own mind up, like any trust, if they thought Woodford could cut it as an early startup VCT style investor. I didn't know, and therefore didn't invest. Industrial Heat as an investment was likely to fail but that doesn't make it a mistake to try.

This is far worse than, say, Alexander Darwall's major investment in Wirecard, because in theory Wirecard could have been telling the truth about their accounts.

The German regulators failed to address concerns that were raised as early as 2008. Nor did the company auditors actually confirm the physical existence of cash balances held by overseas subsidiaries. Similar accounting tricks brought about the downfall of Maxwell Publishing some decades ago. 

Yes, indeed, I wasn't implying there were not warning signs there to be read, just that the accounts did not overtly defy the laws of mathematics like Industrial Heat's invention defied the laws of physics.