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Woodford Equity Income Fund Suspends Trading

Closed-end funds and OEICs
AsleepInYorkshire
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Woodford Equity Income Fund Suspends Trading

#226581

Postby AsleepInYorkshire » June 3rd, 2019, 6:16 pm


Spet0789
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Re: Woodford Equity Income Fund Suspends Trading

#226589

Postby Spet0789 » June 3rd, 2019, 7:17 pm

This is massive. Surely Woodford (the firm) is toast now?

Lootman
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Re: Woodford Equity Income Fund Suspends Trading

#226591

Postby Lootman » June 3rd, 2019, 7:19 pm

Spet0789 wrote:This is massive. Surely Woodford (the firm) is toast now?

Maybe he should have called it "Patient Income Fund".

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Re: Woodford Equity Income Fund Suspends Trading

#226596

Postby Spet0789 » June 3rd, 2019, 7:36 pm

Looks like he invested too much of his fund in zero coupon perpetual bonds.

BrummieDave
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Re: Woodford Equity Income Fund Suspends Trading

#226599

Postby BrummieDave » June 3rd, 2019, 7:57 pm

Perhaps HL can now finally take it from their 'Wealth 50 list of our favourite funds' to quote their own website.

Fundsmith famously didn't make the cut, but this did. :roll:

Spet0789
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Re: Woodford Equity Income Fund Suspends Trading

#226602

Postby Spet0789 » June 3rd, 2019, 8:17 pm

BrummieDave wrote:Perhaps HL can now finally take it from their 'Wealth 50 list of our favourite funds' to quote their own website.

Fundsmith famously didn't make the cut, but this did. :roll:


Already done.

xeny
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Re: Woodford Equity Income Fund Suspends Trading

#226605

Postby xeny » June 3rd, 2019, 8:33 pm

Spet0789 wrote:
Already done.


Still listed here:

https://www.hl.co.uk/funds/help-choosin ... /wealth-50

monabri
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Re: Woodford Equity Income Fund Suspends Trading

#226606

Postby monabri » June 3rd, 2019, 8:39 pm

"When you buy a Wealth 50 fund you can be confident it's passed rigorous tests.

We look for:
A distinguished career - we analyse the manager's entire career, so we know their strengths.
A fantastic track record - a fund manager needs a history of good performance across different market conditions.
A robust process - we meet managers a number of times to get a deep understanding of how they invest, and at least once a year when they're on the list."

And then we get the coin out!

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Re: Woodford Equity Income Fund Suspends Trading

#226613

Postby Spet0789 » June 3rd, 2019, 9:00 pm

xeny wrote:
Spet0789 wrote:
Already done.


Still listed here:

https://www.hl.co.uk/funds/help-choosin ... /wealth-50


I don’t see it, although a different Woodford fund is still there.

westmoreland
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Re: Woodford Equity Income Fund Suspends Trading

#226616

Postby westmoreland » June 3rd, 2019, 9:17 pm

10% of my portfolio is in WEIF (or should i say when i bought it, it must have diminished to a lesser %age since).

i did sell about 2% a few weeks back, just as part of cleaning up one of my older ISAS. to say i'm shocked is an understatement! looks like they couldn't sell the illiquid investments quick enough to meet redemptions.

the fund seems to have been in a negative feedback loop. redemptions putting pressure on share prices that it holds a very high % in, causing further redemptions etc.

i wonder how bad the impact will be on the unit price? i've obviously now lost confidence and will be selling when i can.

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Re: Woodford Equity Income Fund Suspends Trading

#226617

Postby Laughton » June 3rd, 2019, 9:30 pm

Be interesting to see what effect this has on the other "Woodford" funds.

I wouldn't be surprised to see sales increase over all of them in the coming days.

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Re: Woodford Equity Income Fund Suspends Trading

#226621

Postby westmoreland » June 3rd, 2019, 9:36 pm

Laughton wrote:Be interesting to see what effect this has on the other "Woodford" funds.

I wouldn't be surprised to see sales increase over all of them in the coming days.


there may be price pressure (if and when duplicate WEIF holdings are sold) on the income focus fund, but that portfolio is constituted by liquid, quoted companies.

the patient capital trust is a permanent capital vehicle, so will be unaffected by the WEIF suspension, but the share price will probably fall, as if duplicate WEIF unquoted holdings are sold at below market expectations there will be a knock on impact on WPCT.

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Re: Woodford Equity Income Fund Suspends Trading

#226650

Postby xeny » June 4th, 2019, 5:46 am

For me it was listed as one of 7 funds in the UK Growth section, described as:

"Neil Woodford invests in companies that have been overlooked by other investors while taking into account his views on the broader UK economy. He’s not afraid to back his views with conviction and often invests large amounts in one sector or company. This style of investing requires patience and increases risk."

This morning, neither of the two funds from yesterday are there.

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Re: Woodford Equity Income Fund Suspends Trading

#226653

Postby Dod101 » June 4th, 2019, 6:54 am

So Woodford backed his conviction by buying a load of unquoted and therefore illiquid investments in his open ended OEIC, so making the classic and elementary mistake of borrowing short and lending long, or at least the same thing in investment terms; providing liquidity to holders of his fund but deliberately depriving himself of the means to fulfil that liquidity. That is either arrogance or stupidity.

You can do that with a closed end fund like an investment trust but not with an OEIC.

Who would trust him again?. Terry Smith must be allowing himself a wry smile.

Dod

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Re: Woodford Equity Income Fund Suspends Trading

#226674

Postby OhNoNotimAgain » June 4th, 2019, 8:18 am

Dod101 wrote:So Woodford backed his conviction by buying a load of unquoted and therefore illiquid investments in his open ended OEIC, so making the classic and elementary mistake of borrowing short and lending long, or at least the same thing in investment terms; providing liquidity to holders of his fund but deliberately depriving himself of the means to fulfil that liquidity. That is either arrogance or stupidity.

You can do that with a closed end fund like an investment trust but not with an OEIC.

Who would trust him again?. Terry Smith must be allowing himself a wry smile.

Dod


And the difference between Woodford and Smith is...?

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Re: Woodford Equity Income Fund Suspends Trading

#226678

Postby simoan » June 4th, 2019, 8:27 am

OhNoNotimAgain wrote:And the difference between Woodford and Smith is...?

To be honest, Terry Smith fell foul of this same of combination of hubris and illiquidity with the FEET trust to a certain extent. However, there's no problem whatsoever with liquidity in the main Fundsmith Equity fund given the size of the companies it holds and the liquidity of the markets they are listed on. However, I sometimes worry that it is over concentrated with too few holdings.

FWIW I've always felt Woodford was a bit of an idiot who made the right call once. Even a stopped clock and all that...

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226684

Postby GoSeigen » June 4th, 2019, 8:41 am

OhNoNotimAgain wrote:
Dod101 wrote:So Woodford backed his conviction by buying a load of unquoted and therefore illiquid investments in his open ended OEIC
Dod


And the difference between Woodford and Smith is...?


Just remind us, what proportion of Smith funds is invested in unquoted assets? [Woodford was c20%.]


GS

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Re: Woodford Equity Income Fund Suspends Trading

#226686

Postby Lootman » June 4th, 2019, 8:43 am

OhNoNotimAgain wrote:
Dod101 wrote:So Woodford backed his conviction by buying a load of unquoted and therefore illiquid investments in his open ended OEIC, so making the classic and elementary mistake of borrowing short and lending long, or at least the same thing in investment terms; providing liquidity to holders of his fund but deliberately depriving himself of the means to fulfil that liquidity. That is either arrogance or stupidity.

You can do that with a closed end fund like an investment trust but not with an OEIC.

Who would trust him again?. Terry Smith must be allowing himself a wry smile.

And the difference between Woodford and Smith is...?

It is what Dod said. Smith was smart enough to structure his less liquid funds as closed ended, meaning that fund redemptions don't force the sale of the underlying holdings. Woodford was too much in love with the open-ended concept. Sectors like private equities and emerging markets are more suited to a closed structure.

Also Woodford historically has always had a focus on higher dividends, whereas managers like Smith and Train are not so constrained.

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Re: Woodford Equity Income Fund Suspends Trading

#226693

Postby OhNoNotimAgain » June 4th, 2019, 9:07 am

GoSeigen wrote:
OhNoNotimAgain wrote:
Dod101 wrote:So Woodford backed his conviction by buying a load of unquoted and therefore illiquid investments in his open ended OEIC
Dod


And the difference between Woodford and Smith is...?


Just remind us, what proportion of Smith funds is invested in unquoted assets? [Woodford was c20%.]


GS


Woodford is the latest in a long line of active managers who think they can beat the market by doing something clever. His trick was unlisted stocks.
Smith's angle is to buy growth very expensively. His portfolio's valuation metrics are twice that of the market. He is paying through the nose for growth. History tells us that always ends badly.

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Re: Woodford Equity Income Fund Suspends Trading

#226695

Postby BrummieDave » June 4th, 2019, 9:11 am

Across his funds Neil Woodford is the largest single investor in Kier (down from a high of over 1,440p to 150p) and Purplebricks (down from a high of over 500p to 107p).

Although he didn't buy at those market highs, he bought into Purp at the beginning and owns 30% of the company, he certainly didn't take the opportunity to sell having generated an exceptional return. Stockpicking is about selling as well as buying.


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