Neil Woodford makes a comeback

[Deleted User]

Steve182 said:

ZingPowZing said:

Exactly the same strategy as before.

"When Woodford left Invesco and started his own firm he simply bought the same companies again, taking roughly 20% stakes in many of the same illiquid companies. He bought 30% in these companies at Invesco and 20% of these companies at his own firm. No wonder these stocks went up and no wonder his performance looked so good. Woodford managed £32bn at Invesco and £16bn at his own firm. The sheer weight of money going into the same stocks drove up their prices.

We all now know what happened when the money stopped flowing in and flowed out; the process reversed. When Woodford started selling his stakes, the hype went out of valuations and having Woodford on a shareholder register became Kryptonite to the stock price, compounding the underperformance of the fund."

The Telegraph interview (his first for years) would have been the choice of Woodford himself, and the names of the stocks he dropped into the conversation didn't happen by accident.  There were tears, reportedly. Whether Woodford once more intends to circumvent regulations by listing holdings on the Guernsey Stock Exchange wasn't broached in the interview afaik.

It's always been my understanding that he did change his strategy after leaving Investico and was basically in unchartered territory as far as his experience was concerned? That in addition to the fundamental problem of an OEIC with illiquid assets (never a good mix).

Woodford and his backers fed the perception that Invesco had been "holding him back."  It is said that their unstated goal was to migrate every last investor out of the High Income Fund. Reading between the lines here
https://portfolio-adviser.com/peter-sleep-how-a-passive-manager-spotted-woodford-red-flags-in-2011/
the strategy was of a bully throwing his weight around to realise vital initial growth percentages; using Invesco's existing large holdings in illiquid companies as leverage. 

AlanP_2

I lost on the Equity Income fund. Stuff happens, move on is the basic answer.

The problem to my mind is that many retail invetsors in the fund were invested way above their personal risk level / capacity for loss.

If having 20 - 30 - 40% of your portfolio in 1 fund is going to cause you a serious problem if it it goes downhill fast then think about how, why and where you are investing.

If you only had 3-5% then refer to top line statement.

[Deleted User]

Moving on, I can see this happening again and again in the world of fund investment. 

[Deleted User]

https://uk.finance.yahoo.com/news/billionaire-hargreaves-sell-420-million-172253097.html
  HL hasn't been a great stock to hold since Woodford funds went bad.

talexuser

AlanP_2 said:

The problem to my mind is that many retail invetsors in the fund were invested way above their personal risk level / capacity for loss.

This is the crux of this thread, when newspapers run and run on the "star manager" articles people forget the warnings about markets going down, and get into the mindframe this guy can only go up.

[Deleted User]

talexuser said:

AlanP_2 said:

The problem to my mind is that many retail invetsors in the fund were invested way above their personal risk level / capacity for loss.

This is the crux of this thread, when newspapers run and run on the "star manager" articles people forget the warnings about markets going down, and get into the mindframe this guy can only go up.

I think there is a further danger. The way by which these funds come to market is pretty opaque: no retail investor is going to load into a fund without pre-existing assets. For professional investors putting in the initial investment, and the viability of the newly fledged fund, delivering strong initial growth is vital, and achievable. I would cite True Potential funds as another who delivered this metric.  One method by which this goal is achievable is by doubling down on investments in small companies; overwhelming the rest of the mkt in those shares. Throwing your weight around, in other words. Short term gain, possible long term pain.  

Now Woodford is stepping back into the arena. Many fundholders could end up holding "dirty Woodford" without being aware.

Depending on the outcome of the FCA inquiry (don't hold your breath) I see the problem reoccurring time and again. I'm afraid the next financial crisis will spread from funds. So many corollaries with the CDS contagion.

Moe_The_Bartender

ZingPowZing said:

https://uk.finance.yahoo.com/news/billionaire-hargreaves-sell-420-million-172253097.html
  HL hasn't been a great stock to hold since Woodford funds went bad.

It’s gone down nearly 7% today because Hargreaves has offloaded a lot of his holding. Possibly a good entry point.

[Deleted User]

Moe_The_Bartender said:

ZingPowZing said:

https://uk.finance.yahoo.com/news/billionaire-hargreaves-sell-420-million-172253097.html
  HL hasn't been a great stock to hold since Woodford funds went bad.

It’s gone down nearly 7% today because Hargreaves has offloaded a lot of his holding. Possibly a good entry point.

Anything is possible, Moe, but Hargreaves sold 550m of HL shares a year ago, at a higher price. So the auguries are not great.

aroominyork

Very good analysis of Woodford in The Times by Patrick Hosking https://www.thetimes.co.uk/article/neil-woodford-s-sob-story-is-a-sideshow-the-main-event-is-yet-to-come-jbgq78klb (paywall)

talexuser

The Borisgraph reports the Jersey regulator has taken the "highly unusual"  step of publicly reprimanding Woodford for announcing his intentions without first having a license to operate there. Maybe the authorities see this as a step too far in getting away scot free? Usually the money talks, we'll see how this pans out.