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Woodford Equity Income Fund Suspends Trading

Closed-end funds and OEICs
simoan
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Re: Woodford Equity Income Fund Suspends Trading

#226700

Postby simoan » June 4th, 2019, 9:18 am

BrummieDave wrote:Stockpicking is about selling as well as buying.

Absolutely agree with this. Knowing when to sell investments is what differentiates shrewd portfolio managers from those that just benefit from LTBH dumb luck. BTW I'm not saying this with hindsight given recent events, I long maintained back on TMF that Woodford was the latter. Those fund managers who outperform almost always are those who are best at limiting losses.

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226701

Postby GoSeigen » June 4th, 2019, 9:21 am

OhNoNotimAgain wrote:
GoSeigen wrote:
OhNoNotimAgain wrote:
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.


Right, hopefully you can see the difference now. Why you had to ask Dod I have no idea, as I thought he explained the difference quite clearly.


GS

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Re: Woodford Equity Income Fund Suspends Trading

#226776

Postby DrFfybes » June 4th, 2019, 11:31 am

westmoreland wrote: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.


We have a bit in the fund (about 5% of invested assets). However as 80% is in liquid assets, and only a couple of those have done particularly badly, surely the underlying value shouldn't be too badly hit. Market sentiment might be different, but if I didn't hold any now then I'd be looking closely at buying in if the price is too depressed.

Paul

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Re: Woodford Equity Income Fund Suspends Trading

#226781

Postby Backache » June 4th, 2019, 11:47 am

Must admit I see no virtue in buying into an open ended fund under pressure. As it is currently closed I don't see how you could anyway.
WPCT could be different as it has fallen much further again today.

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Re: Woodford Equity Income Fund Suspends Trading

#226800

Postby mickeypops » June 4th, 2019, 12:34 pm

Woodford Patient Capital IT down 11.5% today. Someone with stronger nerves than me might make a killing..... or not......

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Re: Woodford Equity Income Fund Suspends Trading

#226804

Postby Dod101 » June 4th, 2019, 12:50 pm

simoan wrote:
BrummieDave wrote:Stockpicking is about selling as well as buying.

Absolutely agree with this. Knowing when to sell investments is what differentiates shrewd portfolio managers from those that just benefit from LTBH dumb luck. BTW I'm not saying this with hindsight given recent events, I long maintained back on TMF that Woodford was the latter. Those fund managers who outperform almost always are those who are best at limiting losses.


Absolutely. It comes back to the Sage of Omaha.

Rule 1. Do not lose money.

Rule 2. See Rule 1.

But as we have already agreed that was not Woodford's problem with WEIF. It was simply one of liquidity. When I say 'simply' that it is what it is, a simple fundamental issue. Borrow short and lend long and you are asking for trouble, however rosy things may look.
Dod

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Re: Woodford Equity Income Fund Suspends Trading

#226815

Postby simoan » June 4th, 2019, 1:27 pm

Dod101 wrote:But as we have already agreed that was not Woodford's problem with WEIF. It was simply one of liquidity. When I say 'simply' that it is what it is, a simple fundamental issue. Borrow short and lend long and you are asking for trouble, however rosy things may look.
Dod

No, I don't think it was just a liquidity issue. Sure, that is what has caused him to have to close the doors but if you look at the holdings there are some serious dogs that he held onto like grim death even when the investment thesis changed and he should have sold i.e. RM2 International, Purplebricks, Utilitywise, Kier Group, the list goes on, and that's without the ridiculous decision to "double down" on the total dog that is Provident Financial.

Not only was his stockpicking rubbish, but he was clearly unable to spot when he'd made a mistake, be honest with himself, and sell out of positions. That's the behaviour of either an absolute novice investor, or someone who truly believes he is a master of the universe who can do no wrong. That may have worked big time for him in 2007-08 but it will not work in general. That's what he's now discovering along with his all you can eat humble pie buffet...

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226829

Postby BrummieDave » June 4th, 2019, 1:59 pm

simoan wrote:
Not only was his stockpicking rubbish, but he was clearly unable to spot when he'd made a mistake, be honest with himself, and sell out of positions. That's the behaviour of either an absolute novice investor, or someone who truly believes he is a master of the universe who can do no wrong.



I think your views equally apply to his old mate Mark Burnett in his running of EDIN and PLI.

At both a macro level and individual stock-picking level his decisions have been poor, yet he is sticking obstinately to a failing approach, awaiting a time when this may or may not come good. That is not good active management in my book, and simply increasing the dividend year on year whilst the capital value falls feels to me like paying the fund manager to give me my money back.

simoan
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Re: Woodford Equity Income Fund Suspends Trading

#226832

Postby simoan » June 4th, 2019, 2:07 pm

BrummieDave wrote:I think your views equally apply to his old mate Mark Burnett in his running of EDIN and PLI.

At both a macro level and individual stock-picking level his decisions have been poor, yet he is sticking obstinately to a failing approach, awaiting a time when this may or may not come good. That is not good active management in my book, and simply increasing the dividend year on year whilst the capital value falls feels to me like paying the fund manager to give me my money back.

Well, I only hold two stocks in common with the Woodford fund and I doubled up my position in Burford this morning. My old nan used to tell me never to look a gift horse in the mouth. Thanks Neil! Enjoy your pie, mate! :-)

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226837

Postby jackdaww » June 4th, 2019, 2:22 pm

simoan wrote:
BrummieDave wrote:I think your views equally apply to his old mate Mark Burnett in his running of EDIN and PLI.

At both a macro level and individual stock-picking level his decisions have been poor, yet he is sticking obstinately to a failing approach, awaiting a time when this may or may not come good. That is not good active management in my book, and simply increasing the dividend year on year whilst the capital value falls feels to me like paying the fund manager to give me my money back.

Well, I only hold two stocks in common with the Woodford fund and I doubled up my position in Burford this morning. My old nan used to tell me never to look a gift horse in the mouth. Thanks Neil! Enjoy your pie, mate! :-)

All the best, Si


============================

i posted about burford on the other thread that's running.

i am encouraged to add too !

would be interested in your view on stobart and new river retail .

thanks.

simoan
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Re: Woodford Equity Income Fund Suspends Trading

#226843

Postby simoan » June 4th, 2019, 2:43 pm

jackdaww wrote:
i posted about burford on the other thread that's running.

i am encouraged to add too !

would be interested in your view on stobart and new river retail .

thanks.

IMHO Stobart (both STOB and ESL) are totally uninvestable. I have no interest in asset/yield type investments, especially REITs that lease retail properties.

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226846

Postby jackdaww » June 4th, 2019, 2:48 pm

simoan wrote:
jackdaww wrote:
i posted about burford on the other thread that's running.

i am encouraged to add too !

would be interested in your view on stobart and new river retail .

thanks.

IMHO Stobart (both STOB and ESL) are totally uninvestable. I have no interest in asset/yield type investments, especially REITs that lease retail properties.

All the best, Si


================

good , many thanks.

:)

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Re: Woodford Equity Income Fund Suspends Trading

#226854

Postby simoan » June 4th, 2019, 3:09 pm

jackdaww wrote:
simoan wrote:
jackdaww wrote:
i posted about burford on the other thread that's running.

i am encouraged to add too !

would be interested in your view on stobart and new river retail .

thanks.

IMHO Stobart (both STOB and ESL) are totally uninvestable. I have no interest in asset/yield type investments, especially REITs that lease retail properties.

All the best, Si


================

good , many thanks.

:)

I'm not sure why you asked? Just because Woodford got unlucky aiming his darts at a copy of the FT shares section, doesn't mean we all have to. I can see New River may have some admirers, particularly for the 10% yield but that kind of very high yield is a huge red flag to me. As for the Stobart companies it's pretty clear Woodford doesn't much care for looking at balance sheets and cashflow statements. I assume he expects the ESL dividend to be maintained by a sprinkling of pixie dust...

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226891

Postby simoan » June 4th, 2019, 4:33 pm

simoan wrote:Well, I only hold two stocks in common with the Woodford fund and I doubled up my position in Burford this morning. My old nan used to tell me never to look a gift horse in the mouth. Thanks Neil! Enjoy your pie, mate! :-)

All the best, Si

Well, that was fun... someone started dumping Watkin Jones (WJG) about 3pm this afternoon (WJG is the other holding I have in common with Woodford). Lots of AT trades so probably him reducing further. It was difficult to get filled but managed to get a top-up at 202.5p. Thanks again, Neil, the gift that keeps giving.

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226894

Postby westmoreland » June 4th, 2019, 4:50 pm

DrFfybes wrote:
westmoreland wrote: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.


We have a bit in the fund (about 5% of invested assets). However as 80% is in liquid assets, and only a couple of those have done particularly badly, surely the underlying value shouldn't be too badly hit. Market sentiment might be different, but if I didn't hold any now then I'd be looking closely at buying in if the price is too depressed.

Paul


personally, i think some of the holdings in the fund are very undervalued. however, there are some that i would not touch. the AA, kier spring to mind for a start.

the companies that WEIF has significant (20 ish %) are down by 5-10% today. important to note that woodford's redemption issues do not affect the companies operationally, and sifting through the portfolio i believe there are some bargains. in my view, new river is a very well managed REIT, and you can now get an 11%+ yield, which i believe is sustainable.

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Re: Woodford Equity Income Fund Suspends Trading

#226896

Postby Dod101 » June 4th, 2019, 4:53 pm

Simoan has changed the discussion somewhat, not that I disagree with what he is saying because poor stockpicking was presumably the cause of the redemptions in the first place, but the reason for the fund to suspend trading was the lack of liquidity, something I would have thought that Woodford would have learned to guard against in his first week in the job.

Dod

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Re: Woodford Equity Income Fund Suspends Trading

#226903

Postby buffetlunch » June 4th, 2019, 5:14 pm

Clearly something has gone wrong operationally at Woodford. One of the reasons I did not invest with him was my doubts about the quality of support he had at the new firm. At Invesco he would have been challenged on his calls I am not so sure this is the case at his own firm.

I take no pleasure in his demise as I made a great deal of money when he took over the Edinburgh Investment Trust.

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Re: Woodford Equity Income Fund Suspends Trading

#226904

Postby simoan » June 4th, 2019, 5:16 pm

Dod101 wrote:Simoan has changed the discussion somewhat, not that I disagree with what he is saying because poor stockpicking was presumably the cause of the redemptions in the first place, but the reason for the fund to suspend trading was the lack of liquidity, something I would have thought that Woodford would have learned to guard against in his first week in the job.

Dod

Sorry, I didn't intend to change the discussion, but you don't get the liquidity problem without the performance of the fund being so poor. The two are intrinsically linked. What I find quite ironic is that he cemented his reputation by not investing in the UK banks in the run up to the financial crisis of 2007-08, which was of course in no small measure caused by a lack of liquidity in the securities held by the investment banks. It's a shame he couldn't see the same problem in his own fund.

I feel sorry for anyone that invested in the fund and is now locked in. I don't feel sorry for Neil Woodford, as you say, he should know better.

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#226907

Postby Alaric » June 4th, 2019, 5:19 pm

Dod101 wrote: but the reason for the fund to suspend trading was the lack of liquidity,



Isn't it slightly more subtle than that? The fund can get lots of liquidity by selling its holdings in FTSE100 shares and very possibly has been, given the recent performance of Imperial Brands as noted elsewhere. The problem is that liquidating FTSE 100 shares and paying out the proceeds to redeeming investors would increase the proportion of assets in the residual fund which is held in unquoted assets. There's a restriction on what percent can be held in unquoted. These cannot be realised as rapidly, if at all, as the blue chips. I could imagine getting a decent price for large holdings in quoted small companies can be a problem as well.

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Re: Woodford Equity Income Fund Suspends Trading

#226909

Postby Dod101 » June 4th, 2019, 5:23 pm

Thanks, simoan, I agree.

Could this actually be the end for Woodford? Who is going to trust him again? Serves him right of course.

Dod


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