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  • FIRST POST
    • Jonah01
    • By Jonah01 23rd May 19, 9:12 AM
    • 231Posts
    • 60Thanks
    Jonah01
    Woodford Concerns
    • #1
    • 23rd May 19, 9:12 AM
    Woodford Concerns 23rd May 19 at 9:12 AM
    Hi guys,

    Like most people invested in the Woodford Equity income it is very depressing and worrying.

    I have around 50k invested and have obviously lost on this due to his poor performance recently.

    I don't need access to the money so am happy to hold and wait until Brexit is done and for the UK to pick up.


    My concern and my main question to the people in the know here is can funds completely tank. By this I mean is it possibly that an investor could lose all of the money they have invested in fund? Can the fund go bust?

    I am thinking of getting out due to this concern.

    Thanks
Page 30
    • AnotherJoe
    • By AnotherJoe 13th Jun 19, 1:01 PM
    • 15,967 Posts
    • 19,173 Thanks
    AnotherJoe
    I think 'little chance of seeing a return on IPO valuation in his lifetime' is unduly harsh.

    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.

    Of course, venture investments can go very wrong and the strategy accepts that some will inevitably turn out to be built on sand. And a problem with a largely unquoted portfolio is that we don't really have the ability ourselves to assign fair values to what it holds, as we are not close to the businesses, and most of us aren't valuation experts even if we were . Still, (although I'm biased as a holder), if they do get the fund NAV back up to 1, when you can buy it in the market at circa 60p today, that would be 67% upside - despite the portfolio 'only' improving in NAV by 33% in my example.
    Originally posted by bowlhead99
    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.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • ColdIron
    • By ColdIron 13th Jun 19, 1:01 PM
    • 5,442 Posts
    • 7,470 Thanks
    ColdIron
    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/a1239569
    • bowlhead99
    • By bowlhead99 13th Jun 19, 1:07 PM
    • 9,359 Posts
    • 17,019 Thanks
    bowlhead99
    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?
    Originally posted by Johnnyboy11
    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.
    • JohnRo
    • By JohnRo 13th Jun 19, 1:14 PM
    • 2,794 Posts
    • 2,639 Thanks
    JohnRo
    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.
    Originally posted by bowlhead99
    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.' - WB
    • bowlhead99
    • By bowlhead99 13th Jun 19, 1:15 PM
    • 9,359 Posts
    • 17,019 Thanks
    bowlhead99
    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.
    Originally posted by AnotherJoe
    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.
    • Malthusian
    • By Malthusian 13th Jun 19, 1:21 PM
    • 6,767 Posts
    • 10,963 Thanks
    Malthusian
    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.
    Originally posted by seacaitch
    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.)
    • bowlhead99
    • By bowlhead99 13th Jun 19, 1:39 PM
    • 9,359 Posts
    • 17,019 Thanks
    bowlhead99
    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.
    Originally posted by JohnRo
    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 ...

    • JohnRo
    • By JohnRo 13th Jun 19, 1:44 PM
    • 2,794 Posts
    • 2,639 Thanks
    JohnRo
    Ok point taken. Poor choice of words as usual.

    To increase the chance of seeing a positive investment return in the my future.
    Last edited by JohnRo; 13-06-2019 at 2:23 PM.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • OldMusicGuy
    • By OldMusicGuy 13th Jun 19, 2:18 PM
    • 1,080 Posts
    • 2,262 Thanks
    OldMusicGuy
    Woodford is still insisting that he will be proved right eventually.
    Originally posted by cogito
    To slightly misquote John Maynard Keynes, we're all dead eventually.
    • Reaper
    • By Reaper 13th Jun 19, 2:20 PM
    • 6,687 Posts
    • 5,043 Thanks
    Reaper
    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.
    • Johnnyboy11
    • By Johnnyboy11 13th Jun 19, 2:26 PM
    • 204 Posts
    • 131 Thanks
    Johnnyboy11
    Sounds like a job for Johnnyboy to find them and present them here for discussion.
    Originally posted by MaxiRobriguez

    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.
    Originally posted by redux
    • arnoldy
    • By arnoldy 13th Jun 19, 5:05 PM
    • 88 Posts
    • 113 Thanks
    arnoldy
    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/a1239569
    Originally posted by ColdIron


    Yes shameful. Hargreaves have sold out of a fund they relentlessly pushed on the poverty 50 list to small investors - further compounding losses for the direct small investor.


    But I'm not surprised. The game plan now is to expunge Woodford from the HL Corporate memory. Soon he will be the "Fund Manager Whose Name Cannot be Mentioned" in HL Head Office.



    Any documents appertaining to the Fund-Manager-Whose-Name-Cannot-be-Mentioned will be kept in the restricted section of the HL archives.


    But HL rehabilitation into civilised Society will be a long and difficult process, after this latest demonstration of their behaviours -almost simultaneously selling to clients and getting out before themselves before their direct clients.
    • dividendhero
    • By dividendhero 13th Jun 19, 5:14 PM
    • 2,145 Posts
    • 3,920 Thanks
    dividendhero
    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/a1239569
    Originally posted by ColdIron
    HL seems to have had moved from "Back Woodford" to "Sack Woodford". Me thinks the HL MM funds were starting to see redemptions and this will serve as a firebreak to stem this.

    As for Woodford Income Focus, it looks like a dead man walking - only a question of time before it's gated
    • EdGasketTheSecond
    • By EdGasketTheSecond 13th Jun 19, 5:17 PM
    • 1,255 Posts
    • 643 Thanks
    EdGasketTheSecond
    Article in Shares magazine today re. Patient Capital. Here's a quote:
    "Kieran Drake, a research
    analyst at Winterflood, estimates
    that 74% of Patient Capital’s
    portfolio by value at the end of
    April was also held in the Equity
    Income fund.
    He believes that as Woodford
    restructures the Equity Income
    fund portfolio and exits all the
    illiquid holdings, valuations in
    the Patient Capital portfolio
    could fall and hurt its net asset
    value (NAV)."
    • arnoldy
    • By arnoldy 13th Jun 19, 5:21 PM
    • 88 Posts
    • 113 Thanks
    arnoldy
    [QUOTE=dividendhero;75922012]Me thinks the HL MM funds were starting to see redemptions and this will serve as a firebreak to stem this.



    DDH yes I think you are dead right. If nothing else this sordid afair has shone the light on Woodhord, Link Solutions and Hargreaves Landsdown (including their MM funds with mediocre performance and astonishing high - and layered - charges)
    • talexuser
    • By talexuser 13th Jun 19, 7:17 PM
    • 2,803 Posts
    • 2,190 Thanks
    talexuser
    My quote of the week from HL about Focus Income :

    "removing the fund from the Wealth 50 list of our favourite funds, as we no longer had conviction in the fund."

    That's a good way of describing it. Presumably since Dampier left?

    https://www.amazon.co.uk/Effective-Investing-simple-wealth-investing/dp/0857194674
    • redux
    • By redux 13th Jun 19, 7:43 PM
    • 19,782 Posts
    • 27,534 Thanks
    redux
    https://portfolio-adviser.com/hargreaves-red-faced-as-clients-receive-out-of-date-woodford-marketing/
    • redux
    • By redux 13th Jun 19, 8:35 PM
    • 19,782 Posts
    • 27,534 Thanks
    redux
    redux is the one for that job...
    Originally posted by Johnnyboy11
    I was thinking of a handful of small investment trusts in other sectors, not specifically private equity.

    Private equity trusts have also been doing well for the last few years. Some are across many kinds of business (insurance brokers, digital publishers, allsorts), rather than just speculative technological startups. 3i might be one to look at for people particularly interested in that area, and with staff who might know more than Woodford, but it's been doing so well the shares are at quite a premium at the moment. (This isn't investment advice.)
    Last edited by redux; 13-06-2019 at 8:40 PM.
    • Jonbvn
    • By Jonbvn 14th Jun 19, 7:35 AM
    • 5,380 Posts
    • 5,660 Thanks
    Jonbvn
    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/a1239569
    Originally posted by ColdIron
    Around 25% down in a bull market tells you everything you need to know.
    In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot
    • Jonbvn
    • By Jonbvn 14th Jun 19, 7:42 AM
    • 5,380 Posts
    • 5,660 Thanks
    Jonbvn
    It is pure madness that HL continue to send out this marketing (junk mail) via post. Does anyone even read it? However, our rabbits would like to thank HL for keeping them warm
    In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot
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