Woodford Equity Income Fund Suspends Trading

[AsleepInYorkshire]

And then I read about the amazing risks taken by a "professional" investor who invests what seems to me to be insane amounts in risky companies.

I am detached from most of the detail and information regarding anything Woodford has done in the past. So trying to understand where he was taking this fund is, ultimately, futile. But given he was and is of sound mind it is more than evident that he has shown very little risk aversion. I've said it before and I'll say it again it has a feel of narcissism about it. Which is fine with your own money. None of what I have read suggests alignment with fund protection. The alignment looks more towards the earning of fees and speculation in high risk companies. And, that, it would appear has been at any cost.

AiY

[AsleepInYorkshire]

Kent’s pension advisers criticised over role in Woodford saga
https://www.ft.com/content/445f05cb-709 ... e88ab0add1
Two of the most influential pension scheme advisers have been criticised over their role in run-up to the demise of Neil Woodford’s investment empire. ...
When institutional investors make large allocations to investment managers, these are often structured as so-called segregated mandates: the money is run in the same style as the manager’s main fund but kept in a separate pot. Pension funds usually pay more for this set-up but retain a say in how the fund is managed and, crucially, have greater flexibility over withdrawals, especially in times of stress. Mr Ralfe said it was surprising Kent did not invest through a segregated mandate.

Alternatively Woodford could have insisted this was the only way such an investment could be accepted. In his position he will have been more than aware of the risks associated with not putting this sum into a segregated mandate.

Other institutional investors — such as St James’s Place, Quilter, Omnis and Abu Dhabi Investment Authority — structured their relationship with Woodford IM as segregated mandates, which meant they could reallocate the funds to different managers when they decided to switch.

Eddie Stobart hit by £2m accounting error
https://www.ft.com/content/6cd91d2a-a21 ... 1c6ab5efd1
Woodford Investment Management owns 23 per cent of Eddie Stobart, according to a regulatory disclosure.

AiY

[PinkDalek]

For those of us who don’t have access to the FT via your links, would you be willing to date the articles you reference?

I ask, in particular, as you mention the Eddie Stobart announcement and I’d momentarily assumed that was something I’d missed last week. As it happens, it relates to the Trading Update released on 9 July and has been covered in a number of places.

https://www.londonstockexchange.com/exc ... XASQ1.html

[AsleepInYorkshire]

For those of us who don’t have access to the FT via your links, would you be willing to date the articles you reference?

I ask, in particular, as you mention the Eddie Stobart announcement and I’d momentarily assumed that was something I’d missed last week. As it happens, it relates to the Trading Update released on 9 July and has been covered in a number of places.

https://www.londonstockexchange.com/exc ... XASQ1.html

Oki cockey
Always a pleasure, never chore ...

AiY

[mc2fool]

For those of us who don’t have access to the FT via your links...

The trick is to google for the title of the article and then click on the FT link google throws up.

E.g. Google for Eddie Stobart hit by £2m accounting error. The FT allows access via search engines.

[PinkDalek]

For those of us who don’t have access to the FT via your links...

The trick is to google for the title of the article and then click on the FT link google throws up.

E.g. Google for Eddie Stobart hit by £2m accounting error. The FT allows access via search engines.

I know the trick and mentioned access via the links provided. The point is if someone is looking at it then and there, it would be possible to provide the date quite easily. As AiY has kindly indicated he will do.

[AsleepInYorkshire]

21st July 2019
Here’s how Neil Woodford could bounce back and make investors rich
https://www.fool.co.uk/investing/2019/0 ... tors-rich/
Woodford could just turn this dismal story around.

Speechless in Yorkshire

[EthicsGradient]

The trick is to google for the title of the article and then click on the FT link google throws up.

E.g. Google for Eddie Stobart hit by £2m accounting error. The FT allows access via search engines.

Except when it doesn't. The first time I clicked on the Google result, I got a page "subscribe to read", with none of the article showing at all. Then I closed that window, opened a new one, tried again, and this time it let me in. Who knows how they work out what to allow.

Woodford then needs to clear out all those unquoted biotech stocks and other start-ups, many of which will have to be dumped at fire sale prices. Although, with luck, others could be shifted into his closed-ended vehicle Patient Capital Trust, or even floated.

Gee, thanks, Harvey, dump the crap into the investment trust, and all is well, eh? Apart from for those of us who unwisely bought the IT, and now see it being used as a rubbish bin by a man who invested in a free energy scam. I wish I had sold the moment I heard of what that company was really doing; or that I'd paid more attention to what Woodford thought of as 'patient investment'.

[widowandorphan3]

What a Godawful, hideous mess this is.

If you have skin in the WEIF game, my sympathies. If you don't, be grateful for a bullet swerved. Truth is, he'll have to try and sell nearly everything. For the quoted stuff, painful and may not get the prices he'd like, but still doable over time.

But the unquoted stuff... well anyone in the market for them might reasonably think of a number and halve it, given they know WEIF is a forced seller. There may well be some would be/could be winners in there that other folk desire, but in truth I don't have the knowledge about the companies or the industries they operate in.

What I do know is that selling when you have to is a weak negotiating position, from the off. A friend inherited a nice London property a while back, and arranged a sale and price; about 3 days before closing, his buyer tried to haircut him 10% (maybe £150k) - he told them to do one; what he knew and they apparently didn't was that he didn't *need* to sell it. He sold it to someone else for the same dosh shortly after, after the original buyer had wasted £££s on surveys and lawyers.

But I digress.

The current WEIF value is £0.96, around 4% less than when it started 5 years ago. Easy to forget that in its first year, it did around +22%, only marginally behind Mr Smith (+24%), a performance that doubtless sucked in more cash. But back then, WEIF was chock full of 'baccy, Unilever type stuff. It seems to have slowly transformed into at least in part a private equity fund, but many investors didn't notice (and I suspect may not have been minded to notice as they thought it was a 'buy and forget' fund, or they were widows and orphans).

I suspect it will not reopen for many months, and when it does, it will have to be wound up. Where its final price will end up, who knows? The contrarian in me agrees with NW that UK stocks are historically undervalued, but historically we didn't have Brexit to factor in which enormously complicates matters (though a few years down the road may well be seen as massive buying opp).

In time thus, WEIF's holdings may come good, but time is something Woodford doesn't have.

WaO

[Alaric]

I suspect it will not reopen for many months, and if it does, it will have to be wound up.

The great unknown, presumably, is how many sellers there would be if they were able to place orders for sale? If it were a much smaller fund, an amalgamation with another fund might be possible. Isn't it just too big for that?

You can see the problem. Manage the unquoted down to 10% or less. But if they then reopen, should 50% leave that pushes the unquoted back to around 20% and they would have to suspend again.

[widowandorphan3]

You can see the problem. Manage the unquoted down to 10% or less. But if they then reopen, should 50% leave that pushes the unquoted back to around 20% and they would have to suspend again.

Yup - a hideous mess, from which it is hard to see a positive outcome for all concerned.

What's really weird is that WEIF has existed for its short life in benign stockmarket conditions, Brexit aside (and even that's a complex story as we know, as so many FTSE100 cos. have benefited from the pound's fall), during which most investors have prospered.

WaO

[richfool]

The best thing Woodford could do (now) is to sell all his illiquids and half his ordinary stocks, and keep most of that as cash ready to meet redemptions when he re-opens the fund and put any balance into a couple of global and UK ETF's which are easily saleable.

[Alaric]

The best thing Woodford could do (now) is to sell all his illiquids and half his ordinary stocks

His problem is that apart from dumping them on the Patient Capital Trust, who will buy in the quantities he needs to sell? It's believed that's what is happening, but it's likely to take time.

[scotia]

The best thing Woodford could do (now) is to sell all his illiquids and half his ordinary stocks, and keep most of that as cash ready to meet redemptions when he re-opens the fund and put any balance into a couple of global and UK ETF's which are easily saleable.

This is not a simple task. See the letter from the FCA to the parliamentary select committee:-
https://www.parliament.uk/documents/com ... 180619.pdf
I quote a relevant part - the liquidity profile in the Woodford Fund at 30 April 2019
Bucket 1 (1-7 days to liquidate) 8%
Bucket 2 (8-30 days to liquidate) 29%
Bucket 3 (20-180 days to liquidate) 32%
Bucket 4 (180-360+ days to liquidate) 33%

If we count the stocks in Buckets 1 and 2 as "ordinary" stocks, then they only amount to 37% - and even if ALL of these are sold, I think that it is unlikely that they will satisfy the redemption demands. Its going to be a long haul.

PS I have quoted the bucket "days" numbers as per the Treasury document. They seem somewhat contradictory. I suspect typing errors. Amati wrote a document quoting these liquidity numbers from the FCA document, but they adjusted the "days" to be
Bucket 1 (1-7 days)
Bucket 2 (8-30 days)
Bucket 3 (31-180 days)
Bucket 4 (181-365+days)
which makes more sense - but doesn't alter the problem that Woodford has!

[AsleepInYorkshire]

30th July 2019
Analysts take aim at Woodford over late disclosure of WPCT sell down
https://www.professionaladviser.com/pro ... -sell-down
Neil Woodford has been criticised by investment trust analysts for the late disclosure of the sale of a majority of his stake in Woodford Patient Capital Trust (WPCT), with a trio of brokers speculating the portfolio could be wound up.
...
Charles Cade, analyst at Numis Securities, said he was "surprised that Neil Woodford needed to sell WPCT shares to generate liquidity of £1m" considering his management company, WIM had paid its shareholders dividends amounting to £36.5m last year.

AiY

[scotia]

On the Hargreaves Lansdown Site - a report on 29th July that the Woodford Equity Income Fund will have its suspension extended until December.
https://www.hl.co.uk/news/articles/wood ... l-december

[widowandorphan3]

So with the Burford fun and games today, it seems that 6% of the fund has dropped by 54% in one day (on top of 20% yesterday), which is one heck of a thing. Hopefully he's been flogging it all off before now at £15 or so, rather than £5.13 where it closed today.

The WEIF listed SP is off 4% to 89p, presumably because of this, in part. If my cash was locked into this wretched mess I would be driven to rage, so if you do, my sympathies.

You've got to imagine NW is laughing by now at the 'if it rains it pours' of all this' - Burford was supposed to be one of the (few) bright spots in the overall carnage of the thing, but it's now gone very dark.

WaO

[stooz]

And guess which one of us has funds with him. I'm new to all this investing game and played safe on the advise here to stick to the professionals. I opted to buy an off the shelf pick from Hargreaves Lansdowne which spreads across lots of funds - Woodford being one (about 2% I think)

Will I be next in line for a missold fund (PPI round 2) The HL site does specify they check and double check their choices. Im a bit cross to say the least. I have believed the rhetoric of a large firm. I get it shares go up and down - but not the whole bloody fund going bust.

[monabri]

It does seem to be everything he ( Woodford) touches. You might almost think that his shareholdings are being targeted one by one...the only luck he seems to be getting is "bad"...oh, and a management fee.

[tikunetih]

I'm new to all this investing game and played safe on the advise here to stick to the professionals. I opted to buy an off the shelf pick from Hargreaves Lansdowne which spreads across lots of funds - Woodford being one (about 2% I think)

To be fair, I don't think anyone around here would have suggested buying an expensive HL own-brand multi-manager funds and held on HL's own expensive platform...

Just the opposite, in fact; more likely one cohort might have suggested a portfolio comprising a bunch of traditional ITs, while another cohort might have suggested a portfolio comprising a bunch of index-tracking ETFs or OEICs, while others (including me) would have suggested an all-in-one fund selected from a range such as Vanguard LifeStrategy or HSBC Global Strategy and chosen so as to be appropriate to your risk tolerance, and held on the lowest cost reputable broker platform you could find...

The driver for the above suggestions would be expectations for long term performance, driven in large part by reducing costs (very significantly in some cases) - one of the few things you as an investor can control.

As I understand it, unlike direct holders of WEIF, you're not locked into your HL multi-manager fund and are free to trade out (or in if so inclined!). And trading out is exactly what I personally would do: shifting firstly into an appropriate all-in-one fund; and then very likely transferring the account to a cheaper place (probably IWeb if an ISA or unwrapped account, and perhaps AJBell or A.N.O. if a SIPP account).

Not that you were asking of course!