Woodford Concerns

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  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    itwasntme001 wrote: »
    If they mark down prices due to Woodford selling the stocks off in the near future, then it is due to the amount he holds vs the liquidity/volume in the shares traded daily.

    Large lines of stock will get placed off book. As not to disrupt the market too much. Some of the holdings represent a significant % of the issued share cap
  • itwasntme001
    itwasntme001 Posts: 1,145 Forumite
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    Thrugelmir wrote: »
    Large lines of stock will get placed off book. As not to disrupt the market too much. Some of the holdings represent a significant % of the issued share cap


    Agree which is why i said earlier Woodford is toxic!! He may have bought a lot of crappy companies but his main problem was buying large stakes in companies relative to shares outstanding. That maybe impossible to do given his strategy but then why use open ended funds if you are going to do that?? Crazy and foolish.
  • dividendhero
    dividendhero Posts: 2,417 Forumite
    itwasntme001 wrote: »
    That maybe impossible to do given his strategy

    Not sure he had a strategy, it seemed to be a case of winging it. Everything from him having a bash at being an active investor (NSF/PFG) through to early stage startups suggested he was either desperate or bored with conventional UK income fund management.

    I guess at least he didn't invest in airport car parks, fine wine, crypto currencies or ostrich farms :D
  • fun4everyone
    fun4everyone Posts: 2,339 Forumite
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    AnotherJoe wrote: »
    My position is that IH is a clear pointer to the quality of the research into the others, hence my scepticism of them.

    This is imo the way to arrive at the correct answer for the investments NW runs.

    Back in 2016 he invested loads into Northwest Bio who were basically a scam. Not only that it was clear with even basic research they were a bit of a scam. Of course he lost investors money. It was clear a lack of any real research going on and they were just lobbing money at anything and everything. A clear message for anyone paying attention. I found it funny that he called the trust "Patient Capital" when he showed absolutely 0 patience in using the money he raised.
  • talexuser
    talexuser Posts: 3,499 Forumite
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    fun4everyone wrote: »
    in using the money he raised.

    This could have been the problem. So much money flowed in from the launch hype it was too much for a conventional income fund to handle and not end up an only slightly above average closet tracker.

    Problem is I remember the articles from Perpetual days when his funds grew to a billion, can he keep up the performance?, 2 billion, surely he can't now keep up performance, 5 billion, surely now etc , 10 billion it's now virtually impossible etc etc. Yet he never imploded there so some oversight must have been missing on his own.
  • Reaper
    Reaper Posts: 7,280 Forumite
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    Thrugelmir wrote: »
    Broking houses will know that WPCT needs to liquidate holdings and will mark down prices accordingly. Buyers market. There's no sentiment.
    No WPCT doesn't need to liquidate anything. That's the beauty of a closed end fund.

    However Woodford Equity Income is an open ended fund so does need to, and since there is overlap in their investments it is driving the price of WPCT down too.

    Personally I plan to wait until Equity Income allows selling, wait for the bulk of that to occur, then see if I think WPCT is worth buying or whether I have missed the boat (quite likely as the market prices ahead based on expectations).
  • fun4everyone
    fun4everyone Posts: 2,339 Forumite
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    edited 15 June 2019 at 3:56PM
    No WPCT doesn't need to liquidate anything. That's the beauty of a closed end fund.


    WPCT has a large bank loan which IIRC has to be repaid in Jan 2020 (I think its £150m? Can't remember the specifics). Woodford is also on the hook for more funding to the likes of Proton Partners, which he signed up to and which they have now called in.

    Everything does have a fair price though, and there must be some value in the portfolio and a chance of good success with some of the companies. At the moment though the NAV is imo a scam, the bank loan has to be repaid and god knows what else will happen.
  • talexuser
    talexuser Posts: 3,499 Forumite
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    Telegraph today making a meal of dilution as if it's never been heard of before, or the fact a fund can charge an exit fee if it feels it need it. Woodford may charge 1% to leave when it reopens, a charge that apparently is "punishing".

    However what caught my eye is the exit charges that HL charge to people who may want to leave now having lost faith in their recommendations. The article twice states that "of the 44 top platforms that offer ISAs only around a third have exit fees and "the majority of fund shops absorb the cost of transfers themselves. But Emma Wall of HL (the new Dampier?) claims "in common with the majority of platforms we charge exit fees". Can both be true?
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    fun4everyone wrote: »
    At the moment though the NAV is imo a scam, the bank loan has to be repaid and god knows what else will happen.

    Generally the way such a finance facility on an investment trust is 'repaid' is by signing up to a new facility for nea new term, either from the same provider or a new one after shopping around for rates. The next deal might ultimately be with one provider or a syndicate.

    Having a finance facility in place is part of the long term strategy of the IT and has been designed-in to the structure. It would only be 'repaid' without replacement if they run out of investment opportunities or just generally see no future need to have it for liquidity within the portfolio.

    The question will be, is someone willing to offer £150m of lending if the gross asset value is say £500m instead of £1000m (if for example the current valuation is a 'scam' like you think it is). At £800m, £600m, £400m, they would still find people offering funding, just at higher cost. Whereas at £200m of largely unquoted assets you may be right to suggest that there may not be any lenders without outrageous rates or needing convertible loan interests etc so they would have to try to repay. I have put my money where my mouth is in saying that won't happen. But we shall see.
  • talexuser
    talexuser Posts: 3,499 Forumite
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    Another Woodford story today, Council pension schemes invested in Patient Capital.

    The £14.3bn West Yorkshire Pension Fund has £3.5mil in PC, Derbyshire’s pension £5bn scheme has 5m shares of PC and the £2.4bn Dyfed Pension Fund has £2.4mil in PC.

    I know these are just ~0.1% of the fund and know nothing about being a pension trustee, but am still surprised a pension spreads risk so widely.
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