Neil Woodford makes a comeback

aroominyork

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.

If I set up a business doing something which I proved not to be good at, and it all ended in tears, I would say I made a mistake.

I am not making moral judgments about Woodford - eg that he knew he would probably fail but figured he could get rich along the way - I am saying he did something for which he did not have the necessary expertise. Hence, he made a mistake.

Prism

aroominyork 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.

If I set up a business doing something which I proved not to be good at, and it all ended in tears, I would say I made a mistake.

I am not making moral judgments about Woodford - eg that he knew he would probably fail but figured he could get rich along the way - I am saying he did something for which he did not have the necessary expertise. Hence, he made a mistake.

Maybe its just a wording thing. Anyway I don't think that this all fell apart because he ended up being not very good at small company investing. It fell apart because he put the wrong stuff in an open ended fund - probably down to trying to get his fund onto the pension platforms. That was his mistake - more of a technical one than an investing one.

[Deleted User]

https://portfolio-adviser.com/peter-sleep-how-a-passive-manager-spotted-woodford-red-flags-in-2011/

eastmidsaver

was quite surprised to read about this. this fund was not as advertised..... ie "To provide a reasonable level of income together with capital growth. This will be achieved by investing primarily in UK listed companies."    Before I started investing in this fund I had no prior investing experience whatsoever, and was got sold on it by the marketing material.  Whilst not happy to have lost money, at least I have learnt something from this.   I agree with what many are saying that he should not be able to open a fund until at least the FCA report back their findings. I am also wondering if anybody is looking at joining the class actions that are due to take place on it,  and if they feel it is worthwhile joining it ?

Thrugelmir

masonic said:

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.

Wasn't just Woodford though that invested. Was one of many.  Venture capitalists back many horses. With low expectations of the majority.  Out of 20. One star performer will make up for all the disappointment.  

masonic

Thrugelmir said:

masonic said:

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.

Wasn't just Woodford though that invested. Was one of many.  Venture capitalists back many horses. With low expectations of the majority.  Out of 20. One star performer will make up for all the disappointment.  

Industrial Heat was a lame horse, though, and all of the veterinary community knew it.

Fund managers should be avoiding the most egregious examples of sham companies out there, otherwise they are not providing any advantage over random selection, possibly a disadvantage if they back such a dodgy company with such conviction.

It's not just the fact it featured in the portfolio, but that it was such a large position. If it was, as you suggest, one of 20 or more equally weighted highly-speculative positions, then that would not have been so bad, but it made up somewhere in the region of 10% of the fund (based on it's purported valuation at the time) and was 5th in the top 10 holdings (with the top holding at 20%), so there was little diversification.

It all suggests his confidence far exceeded his competence, and his recent comments suggest nothing has changed.

Alexland

masonic said:

It all suggests his confidence far exceeded his competence, and his recent comments suggest nothing has changed.

Maybe he should try this questionaire?

https://www.nhs.uk/live-well/healthy-body/gambling-addiction/

• Do you bet more than you can afford to lose?
  
• Do you need to gamble with larger amounts of money to get the same feeling?
  
• Have you tried to win back money you have lost (chasing losses)?
• Have you borrowed money or sold anything to get money to gamble?
• Have you wondered whether you have a problem with gambling?
• Has your gambling caused you any health problems, including feelings of stress or anxiety?
• Have other people criticised your betting or told you that you had a gambling problem (regardless of whether or not you thought it was true)?
• Has your gambling caused any financial problems for you or your household? (or vast numbers of investors...)
• Have you ever felt guilty about the way you gamble or what happens when you gamble? (not really...)
  

Score 0 for each time you answer "never"
Score 1 for each time you answer "sometimes"
Score 2 for each time you answer "most of the time"

Score 3 for each time you answer "almost always"

If your total score is 8 or higher, you may be a problem gambler.

MaxiRobriguez

Personally I think he should be in jail, not starting up another fund.

It's one thing "underperforming", it's another thing entirely roping in investors who believed they were investing in a large cap equity income fund, only for the fund to go bankrupt because the manager invested in frontier companies on the sly because it was more entertaining to do so and gave a sense of masculinity and bravado when (if!) it comes off.

If similar things (take investment, lie about what you're doing) happened in another industry and the sums were much less, then no doubt those people would end up in jail.

Prism

MaxiRobriguez said:

Personally I think he should be in jail, not starting up another fund.

It's one thing "underperforming", it's another thing entirely roping in investors who believed they were investing in a large cap equity income fund, only for the fund to go bankrupt because the manager invested in frontier companies on the sly because it was more entertaining to do so and gave a sense of masculinity and bravado when (if!) it comes off.

If similar things (take investment, lie about what you're doing) happened in another industry and the sums were much less, then no doubt those people would end up in jail.

A bit dramatic. This was the most transparent fund I have even seen which was to some degree part of its downfall. The entire holding list was kept up to date monthly for anyone to see and look into. There was little suggestion that this was purely a large cap fund as it was invested in plenty of FTSE 250 stocks in addition to the small caps which it shouldn't have been invested in. This liquidity issue was reported on time and time again for anyone that cared to look.

Anyone that invested in this fund and claims that they didn't know what it was invested in has only themselves to blame. Stick to index funds maybe.

MaxiRobriguez

Prism said:

MaxiRobriguez said:

Personally I think he should be in jail, not starting up another fund.

It's one thing "underperforming", it's another thing entirely roping in investors who believed they were investing in a large cap equity income fund, only for the fund to go bankrupt because the manager invested in frontier companies on the sly because it was more entertaining to do so and gave a sense of masculinity and bravado when (if!) it comes off.

If similar things (take investment, lie about what you're doing) happened in another industry and the sums were much less, then no doubt those people would end up in jail.

A bit dramatic. This was the most transparent fund I have even seen which was to some degree part of its downfall. The entire holding list was kept up to date monthly for anyone to see and look into. There was little suggestion that this was purely a large cap fund as it was invested in plenty of FTSE 250 stocks in addition to the small caps which it shouldn't have been invested in. This liquidity issue was reported on time and time again for anyone that cared to look.

Anyone that invested in this fund and claims that they didn't know what it was invested in has only themselves to blame. Stick to index funds maybe.

Not everyone is as smart as people on this forum. Many retail "investors" were roped into his fund but didn't have the capability to assess the underlying portfolio holdings.

He could have frozen the management payments whilst the funds was in complete disarray but he chose to kept extracting that wealth from a failed fund.

The guy is a crook. There should have been regulatory lessons learned from this episode.