Woodford Group Action

AlanP_2

bostonerimus said:

Thrugelmir said:

bostonerimus said:

I always thought Woodford was an outlier and so would never have given him any of my money. He's guilty of hubris and stupidity. The "criminal" behaviour was by the media who hyped him relentlessly and H&L who recommended his fund

And Link? 

I read that three quarters of Woodford Equity investors bought it through H&L because of his previous success and also because it was on H&L's "Wealth 50" list. This is an example of hubris and complacency and probably of a few too many steak dinners and drinks between "chaps".  Woodford is a great example of what can go wrong in narrow active funds.

I totally agree but that doesn't constitute a basis for compensation and is just the opposite side of the coin to Terry Smith and Fundsmith (speaking as someone who lost a few quid on Woodford).

bostonerimus

AlanP_2 said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

I always thought Woodford was an outlier and so would never have given him any of my money. He's guilty of hubris and stupidity. The "criminal" behaviour was by the media who hyped him relentlessly and H&L who recommended his fund

And Link? 

I read that three quarters of Woodford Equity investors bought it through H&L because of his previous success and also because it was on H&L's "Wealth 50" list. This is an example of hubris and complacency and probably of a few too many steak dinners and drinks between "chaps".  Woodford is a great example of what can go wrong in narrow active funds.

I totally agree but that doesn't constitute a basis for compensation and is just the opposite side of the coin to Terry Smith and Fundsmith (speaking as someone who lost a few quid on Woodford).

If there was some collusion between Woodford and H&L to "talk up" his fund then there might be a case, but it will be difficult to prove and while it feels wrong I'm not sure how illegal it would be. But there's no case just based on Woodford losing money because people should do their due diligence and it was easy to see that Woodford was taking lots of chances. For me LT, Fundsmith etc are the same as Woodford because I look at the style of the fund first rather than the stocks it owns. So the small number of stocks and the size of the fee mean that I would never consider them. The closest fund to it that I own is the Vanguard Wellesley managed fund that has 63 stocks, but over 1000 government and investment grade corporate bonds...I basically use it for my bond allocation.

dunstonh

If there was some collusion between Woodford and H&L to "talk up" his fund then there might be a case, but it will be difficult to prove and while it feels wrong I'm not sure how illegal it would be.

HL did not provide advice on the vast majority of these cases.   They had a marketing list of funds.      HL promoted it but promotions are not financial advice.

For me LT, Fundsmith etc are the same as Woodford because I look at the style of the fund first rather than the stocks it owns. So the small number of stocks and the size of the fee mean that I would never consider them.

Which is a shame as those types of funds make excellent satellite funds to the core UK equity holding (Although neither of those is my preferred satellite fund).   However, those funds are not the same as Woodford as they do not hold anywhere near the same levels of illiquid assets.

Moe_The_Bartender

Which is a shame as those types of funds make excellent satellite funds to the core UK equity holding (Although neither of those is my preferred satellite fund).   However, those funds are not the same as Woodford as they do not hold anywhere near the same levels of illiquid assets.

They don’t hold any illiquid assets do they? Fundsmith certainly doesn’t. LT has very small stakes in football clubs but nothing to worry about.

[Deleted User]

talexuser said:

£2 billion compared to what? 188,000 new clients, a record,  £7.7 billion of new business, also a record, revenue great upward trend, operating profit great upward trend, and the founder making millions from selling his shares? share prices go up and down, in the short term don't tell the whole story. 

Well it's like this, talexuser.
Since its high just before the Woodford gating, Hargreaves Lansdown's share price has gone down 25%.
At the same time, Admiral and StJamesPlace have risen 33%.
That makes no odds to me as I don't have shares in any, and it won't make much difference to the "balanced portfolio" brigade, but if you own a quarter of the shares in HL, that's quite a big swing.

talexuser

Agreed but 25% swing is not something really extraordinary in a single share over the long term graph. I wish they would have some retribution over their lamentable pumping of Woodford but an extra 66 million of clear profits from 19 to 20 does not tell us that many people paid much attention. Sad.

bostonerimus

dunstonh said:

If there was some collusion between Woodford and H&L to "talk up" his fund then there might be a case, but it will be difficult to prove and while it feels wrong I'm not sure how illegal it would be.

HL did not provide advice on the vast majority of these cases.   They had a marketing list of funds.      HL promoted it but promotions are not financial advice.

For me LT, Fundsmith etc are the same as Woodford because I look at the style of the fund first rather than the stocks it owns. So the small number of stocks and the size of the fee mean that I would never consider them.

Which is a shame as those types of funds make excellent satellite funds to the core UK equity holding (Although neither of those is my preferred satellite fund).   However, those funds are not the same as Woodford as they do not hold anywhere near the same levels of illiquid assets.

H&L was in a very powerful position and while it might not have directly said "buy Woodford" to any individual, they bent over backwards to say how fantastic it was. I'm sure that the distinction between promotion and advice is a valid one legally, but it might not be so clear cut or relevant to the people who bought Woodford because if H&L's promotion. Still I don't think they deserve any compensation and just need to put it down as a learning experience - that "financial experts" are often idiots.

Yes I'm not saying people should not own Fundsmith or LT, just that I wouldn't and that they should go in with their eyes open. ie don't invest just because of "League Tables" or return or previous performance. You have to understand how that return is generated and what they charge you to take part.

[Deleted User]

Deleted_User said:

ZingPowZing said:

Since its high just before the Woodford gating, Hargreaves Lansdown's share price has gone down 25%.
At the same time, Admiral and StJamesPlace have risen 33%.

AJ Bell shares are more comparable to HL, 

Why? The two I mentioned are companies of the same magnitude as HL and all three are constituents of the FTSE100.
AJ Bell is worth a quarter of these companies.
You don't think HL make all their money from stockbroking fees, do you?

Thrugelmir

talexuser said:

Agreed but 25% swing is not something really extraordinary in a single share over the long term graph. I wish they would have some retribution over their lamentable pumping of Woodford but an extra 66 million of clear profits from 19 to 20 does not tell us that many people paid much attention. Sad.

When £300 million of stock gets offloaded into the market. Will take time to be digested. The stock price has progressively ticked upwards since the £15.35p a share placing. 

underground99

ZingPowZing said:

Deleted_User said:

ZingPowZing said:

Since its high just before the Woodford gating, Hargreaves Lansdown's share price has gone down 25%.
At the same time, Admiral and StJamesPlace have risen 33%.

AJ Bell shares are more comparable to HL, 

Why? The two I mentioned are companies of the same magnitude as HL and all three are constituents of the FTSE100.
AJ Bell is worth a quarter of these companies.
You don't think HL make all their money from stockbroking fees, do you?

I agree with Feral that it's more sensible to compare AJ Bell shares with HL shares when you are looking at whether the share price is going up or down over a period.  They are literally in the same line of business - offering the same types of third-party investments on their investment platform, doing pensions and ISA admin and brokerage services with a bit of 'in house fund' management on the side.  If you're trying to see whether a company has been a good performer from a P&L or balance sheet point of view or just a share price point of view, it makes sense for your comparables to be in the same line of business and affected by the same issues - far more important than if they are the same market cap.

Admiral group is an insurer. St James's place is an advisory and fund management business.  They are quite far removed from the core of what HL do, so the fact that Admiral went up and HL went down is not something you can put a lot of weight on - their share prices are not supposed to behave the same, just because they happen to be in the same stockmarket index. 

In HL's last annual report (year to last June), they did 550m of turnover, of which about 4% (under £25m) was initial adviser charges, ongoing adviser fees and renewal commissions.  The other 96% was the same sort of stuff that AJ Bell do - platform fees, interest earned on client money, fees on brokerage transactions, and some fund management income (~11%).   So judging HL against another corporate and retail investment platform / administration house like AJ Bell is a sensible thing to judge them against. What's in Admiral's P&L ? £2.4bn of UK premiums written, £0.6bn of international car insurance premiums written, £0.2bn of comparison website income, £0.1bn of investment income.  It's a different business entirely to what HL and AJB are doing.    

So, if you're going to say 'since Woodford debacle, HL went down and these rivals went up', you should be comparing like with like, and then you can say that HL is moving in a different direction than these other comparable businesses, perhaps due to the Woodford effect being strong at HL. Comparing them to an insurance business just because the insurance business is in the FTSE100 instead of the FTSE250, doesn't give you an insight. Shell and Lloyds and Tesco and Astrazeneca are also in the FTSE100 but you wouldn't compare them to HL and see that they moved differently and conclude that it must be the Woodford effect.