Woodford Concerns
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Hargreaves Lansdown has dropped the Woodford Income Focus fund from its £562 million HL Multi-Manager High Income fund, as withdrawals from Neil Woodford's smaller fund hit £116 million in six days.
https://citywire.co.uk/investment-trust-insider/news/hargreaves-leads-stampede-from-woodford-income-focus/a12395690 -
Johnnyboy11 wrote: »But why take the risk with WPCT? Surely there are other Investment Trusts operating in the early stage space, that have a much better track record than Woodford and whose shares are also trading at a significant discount to NAV?
There are not a huge number of them in the same space, especially in the 20-30% discount range, and you might already have them. I'm not saying you should buy Woodford and ignore other opportunities, merely saying that "unlikely to see a return on IPO valuation in Woodford's lifetime" sounds overly pessimistic.
One issue is fund management team incentivisation given they are a long way from being able to achieve the performance targets necessary for performance he income and if they don't have the WEIF as a huge cash cow in the background. If the Woodford operations don't deliver a decent outcome on WEIF, it may be that in due course some other management group takes over the WPCT mandate and convinces its shareholders that they would be better served with a new fee structure and motivated management team instead of just trying to liquidate the holdings in a fire sale and winding it up.0 -
bowlhead99 wrote: »For example, latest declared NAV is 87p. If we assume like some people here that the fair value is unduly optimistic because there are a couple of obvious duds, perhaps the real number is 75p (picking that number out of nowhere). So it would have to improve by a third to get back to IPO level. If there are some nice quoted or unquoted holdings in the 5-10% of NAV range which double, triple, quadruple etc in the coming years, it's not very difficult to grow by 33% in a relatively short timescale.
As a small scale holder myself I hope you're right but I'm looking at averaging down to limit the damage rather than a glorious future.
It's going to be interesting to see how WPCT holds up in the next downturn after a ten year bull market that's seen most assets and equities in particular lift by multiples, albeit from record lows. The broad biotech space has delivered a near seven fold return since the GFC from what I've read.
Admittedly that may not be entirely relevant wrt WPCT but the market backdrop to Woodford's consistently miserable performance in this trust doesn't bode well for what may yet be tougher times ahead, who knows.
I view WPCT as more of a lottery ticket than as reliable exposure to biotech startup growth.
As always time will tell.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
AnotherJoe wrote: »The trouble with the duds* are, its like looking at someones self styled collection of gold nuggets, and finding that the first chunk you pick up, quite a sizable one, going on for 10%, is iron pyrites. What are the odds the rest are also, and in fact theres little or no gold there?
* not your ordinary "failed company" duds but stonking scams in the Enron and Theranos class.
IMHO there are some interesting businesses which aren't obvious duds, even if some are very pre-revenue or even pre-product .
Yes I know you have a bee in your bonnet about Industrial Heat for example, but that doesn't mean the emperor is wearing no clothes.0 -
They were relatively plentiful in the 'noughties' as first base rates and consumer credit demand rose, and then eventually as the wholesale funding market began drying up and the lenders had to up their rates, eg. a few examples: 5% from Egg in '02; 5.5% Cahoot in '04; 5.8% Nottingham BS '05; 5.3% MBNA in '06; Icesave(!) 5.7% in '07; B'ham Midshires 6.76%, Northern Rock(!) 6.9%, Icesave(!) 7% in '08; lots in the 6-7% range '09 some of which could be locked in to late 2010.
And the exclamation marks tell a story. Before 2007 even FSCS-protected deposits were in theory capital-at-risk products if you held more than £2,000. Up to £35,000 you risked a 10% haircut and above £35,000 you were risking 100% of the excess.
And IceSave depositors were - again in theory - taking the additional risk of relying on the Icelandic compensation scheme in return for a higher interest rate.
Naturally that's not how it turned out in reality. As with Equitable Life, as with defined benefit pensions, and maybe as with London Capital & Finance (watch this space), if enough people choose to believe that something is risk-free then the Government has to spend everyone else's money to make it so.
When Northern Rock and Icesave depositors were bailed out, and the compensation limits went up to 100% of £85,000, making bank deposits effectively risk-free for everyone who wasn't extremely rich and extremely lazy, the quid pro quo was increased capital adequacy requirements, which added to the downward pressure on bank interest rates. (Funding for Lending etc is of course also a big factor.)0 -
As a small scale holder myself I hope you're right but I'm looking at averaging down to limit the damage rather than a glorious future.
How does 'averaging down' limit your damage? On the holding you have, the damage has already been done (albeit unrealised), as what you have can no longer be sold for what you paid.
If you think the value is more than the bid price so there's no point selling right now, that's fine, just wait and ride it out, with your existing holding
The only reason to 'average down' by buying more at current prices would be if you think it has a more glorious future than other opportunities - i.e. you believe you will make (e.g.) 10%, 20%, 30% on a new £1000 invested here more quickly or reliably than if you invested that £1000 somewhere else.
Averaging down generally implies you have more confidence than the market because you think this opportunity should receive your new capital instead of one of the thousands of other opportunities receiving your new capital instead.
If you don't actually have that confidence then perhaps you are just looking to massage your personal performance table by being able to say you're only 10% down on £10000 investment rather than being 20% down on a £5000 investment. Such window dressing to 'limit the damage' by having your loss percentage show as lower, is poor quality investing and a rookie mistake - and you don't seem to be a complete rookie from your other threads ...
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Ok point taken. Poor choice of words as usual.
To increase the chance of seeing a positive investment return in [STRIKE]the[/STRIKE] my future.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
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An interesting snippet about "Link Asset Services". As an Authorised Corporate Director (ACD) they were meant to represent investors. However being appointed by the fund and paid by them it is perhaps unsurprising they failed to ruffle any feathers. And it turns out they have similar past failures.
https://www.standard.co.uk/business/jim-armitage-link-went-missing-on-its-job-to-watch-over-woodford-equity-income-fund-s-behaviour-a4162286.html
PS In case anyone isn't familiar with the mentioned "Guernsey trick" it was to get some unlisted stocks to list themselves on the obscure Guernsey exchange so they no longer counted towards the maximum 10% allowed limit on unlisted stocks.0 -
MaxiRobriguez wrote: »Sounds like a job for Johnnyboy to find them and present them here for discussion.
redux is the one for that job...Straight away I can think of 4 or 5 other less fashionable investment trusts on such discounts that I'd consider before this one, up 30 to 70% in 3 or 5 years, and no doubt there are more to be found.0
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