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Suspension of Woodford fund

Closed-end funds and OEICs
onthemove
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Suspension of Woodford fund

#226644

Postby onthemove » June 3rd, 2019, 11:57 pm

JoyofBrex8889 wrote:Oh dear. He called that one wrong.


Not the only one it would seem...

https://www.bbc.co.uk/news/business-48506032
Top stock-picker Neil Woodford suspends flagship fund... Mr Woodford's firm, Woodford Investment Management, is also the biggest investor in Kier Group, the construction and services group which on Monday warned on profits, sending its shares crashing 41%. It is understood that the fall in Kier's share price is not connected to the decision to suspend trading in the Woodford Equity Income fund.

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Re: Suspension of Woodford fund

#226646

Postby Pendrainllwyn » June 4th, 2019, 12:36 am

The suspension of Woodford's fund is a reminder of one of the benefits of closed end funds. Not sure why the BBC describe him as a "Top stock-picker".

Pendrainllwyn

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Re: Suspension of Woodford fund

#226647

Postby Alaric » June 4th, 2019, 12:40 am

Pendrainllwyn wrote:The suspension of Woodford's fund is a reminder of one of the benefits of closed end funds.


Isn't the IT in some danger of "acquiring" all the unquoted stuff that the OEIC can no longer hold as it contracts?

Is the OEIC still paying dividends on income units?

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Re: Suspension of Woodford fund

#226705

Postby JoyofBrex8889 » June 4th, 2019, 9:30 am

Poorold Mr Woodford, he is having just terrible luck at present. He has made life unnecessarily difficult for himself with unquoted investments in an open ended fund.

WPCT buying into the ridiculous cold fusion firm was an indicator that something in the Woodford selection & filter process had gone amiss.

The asset swap in hindsight looks like an act of desperation to achieve liquidity.

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Re: Suspension of Woodford fund

#226714

Postby jackdaww » June 4th, 2019, 9:48 am

i notice that the SP of several of woodford's holdings are dropping daily .

perhaps he is having to sell ??

eg

burford
stobart
newriverretail

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Re: Suspension of Woodford fund

#226746

Postby Alaric » June 4th, 2019, 10:38 am

jackdaww wrote:i notice that the SP of several of woodford's holdings are dropping daily .

perhaps he is having to sell ??


That can be inferred from the announcements that the fund has been hit by a wave of redemptions.

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Re: Suspension of Woodford fund

#226748

Postby Dod101 » June 4th, 2019, 10:39 am

jackdaww wrote:i notice that the SP of several of woodford's holdings are dropping daily .

perhaps he is having to sell ??

eg

burford
stobart
newriverretail


Interesting. There is speculation on the Imperial Brands' thread that at least some of its drop may be because Woodford is having to sell his big quoted blue chips because he cannot sell the private stuff. I have not followed the others. Maybe a good opportunity to buy?

Dod

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Re: Suspension of Woodford fund

#226749

Postby johnhemming » June 4th, 2019, 10:42 am

One would presume that the suspension enables him to stop distressed selling. The reputational damage comes from the suspension so his best strategy is to manage value most effectively now (which means no distressed selling).

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Re: Suspension of Woodford fund

#226754

Postby paulnumbers » June 4th, 2019, 10:47 am

How are the private holdings valued in a fund like this?

I'd be tempted to buy into this fund if it were all invested in standard equities, but I worry that there would be a temptation to overvalue the private investments and hence you'd be paying over the odd's.

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Re: Suspension of Woodford fund

#226802

Postby Luniversal » June 4th, 2019, 12:41 pm

Pendrainllwyn wrote:The suspension of Woodford's fund is a reminder of one of the benefits of closed end funds. Not sure why the BBC describe him as a "Top stock-picker".

Pendrainllwyn


Another benefit, in theory, is that an authorised investment trust is a publicly listed company with an independent board. It can dismiss a fund manager and otherwise stick up for the rights of shareholders. OEIC unitholders are not in nearly so strong a position.

We shall see if Patient Capital's directors step up to the plate in this crisis of confidence.

As Dod101 said, a propos the lamentable renaming of British Empire Trust, it is a bad omen for an IT to adopt the name of its manager, e.g. 'AVI Global Trust'. It implies an unhealthily indulgent attitude on the board's part. Such changes should be subject to a GM vote-- not sprung on the owners as British Empire's was.

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Re: Suspension of Woodford fund

#226806

Postby jackdaww » June 4th, 2019, 12:52 pm

Dod101 wrote:
jackdaww wrote:i notice that the SP of several of woodford's holdings are dropping daily .

perhaps he is having to sell ??

eg

burford
stobart
newriverretail


Interesting. There is speculation on the Imperial Brands' thread that at least some of its drop may be because Woodford is having to sell his big quoted blue chips because he cannot sell the private stuff. I have not followed the others. Maybe a good opportunity to buy?

Dod


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

yes

i certainly fancy burford , which now must be on a p/e around 12 , and ive not heard any bad news about them .

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Re: Suspension of Woodford fund

#226807

Postby Dod101 » June 4th, 2019, 12:58 pm

Thanks Luni. Of course there are ITs which are self managed, such as Caledonia, Scottish Investment Trust and RIT, but they tend to be the exception rather than the rule. If they are not self managed then I feel strongly that they should take an overtly independent stance.

Interesting though, I wonder if anyone has knowledge of the background to ITs and why they were apparently very early outsourcers?

Dod

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Re: Suspension of Woodford fund

#226811

Postby supremetwo » June 4th, 2019, 1:08 pm

johnhemming wrote:One would presume that the suspension enables him to stop distressed selling. The reputational damage comes from the suspension so his best strategy is to manage value most effectively now (which means no distressed selling).

£250 million attempted withdrawal by Kent County Council appears to have triggered this.

https://www.independent.co.uk/news/busi ... 43076.html

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Re: Suspension of Woodford fund

#226817

Postby JoyofBrex8889 » June 4th, 2019, 1:29 pm

Luniversal wrote:
Pendrainllwyn wrote:The suspension of Woodford's fund is a reminder of one of the benefits of closed end funds. Not sure why the BBC describe him as a "Top stock-picker".

Pendrainllwyn


Another benefit, in theory, is that an authorised investment trust is a publicly listed company with an independent board. It can dismiss a fund manager and otherwise stick up for the rights of shareholders. OEIC unitholders are not in nearly so strong a position.

We shall see if Patient Capital's directors step up to the plate in this crisis of confidence.

As Dod101 said, a propos the lamentable renaming of British Empire Trust, it is a bad omen for an IT to adopt the name of its manager, e.g. 'AVI Global Trust'. It implies an unhealthily indulgent attitude on the board's part. Such changes should be subject to a GM vote-- not sprung on the owners as British Empire's was.



Yep. Foreign and Colonial IT, ione of the oldest and most respected ITs going) got renamed to BMO something something, and since the renaming has been disappointing. I sold in disgust. Wokester renaming is a strong sell signal in my experience.

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Re: Suspension of Woodford fund

#226822

Postby Lootman » June 4th, 2019, 1:41 pm

Luniversal wrote:
Pendrainllwyn wrote:The suspension of Woodford's fund is a reminder of one of the benefits of closed end funds. Not sure why the BBC describe him as a "Top stock-picker".

As Dod101 said, a propos the lamentable renaming of British Empire Trust, it is a bad omen for an IT to adopt the name of its manager, e.g. 'AVI Global Trust'. It implies an unhealthily indulgent attitude on the board's part. Such changes should be subject to a GM vote-- not sprung on the owners as British Empire's was.

Yes, I sold (what is now) AVI as soon as I heard about the renaming. Not an infallible guide to misadventure, of course, but it's been a long time since British Empire shot out any lights anyway.

Fortunately I was never a fan of Woodford so avoided his denouement. Still have a lot of time for Train and, since he is less of a yield hog, I sleep well.

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Re: Suspension of Woodford fund

#226828

Postby Pendrainllwyn » June 4th, 2019, 1:52 pm

Luniversal wrote:As Dod101 said, a propos the lamentable renaming of British Empire Trust, it is a bad omen for an IT to adopt the name of its manager, e.g. 'AVI Global Trust'. It implies an unhealthily indulgent attitude on the board's part. Such changes should be subject to a GM vote-- not sprung on the owners as British Empire's was.
As a British Empire Trust holder (I can't get my head around AVI Global Trust yet) I acknowledge this well made point. Unfortunately I rather like the fund.
JoyofBrex8889 wrote:Wokester renaming is a strong sell signal in my experience.
Yes, I have anecdotally noticed that with Equities (a change of financial year end I have also learned to be deeply suspicious of) if not Investment Trusts. I am for now perhaps naiively thinking a mere name change will make no difference this time!

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Re: Suspension of Woodford fund

#226840

Postby BusyBumbleBee » June 4th, 2019, 2:39 pm

supremetwo wrote:£250 million attempted withdrawal by Kent County Council appears to have triggered this.

It this had been an IT and not an OEIC knowledge of such a substantial holding would be in the public domain and it would have raised concerns as we know that Councils only look for a temporary home for their cash.

The Council Tax payers of Kent have take quite a loss here and I suspect one or two heads will roll therein.

I have never invested in an OEIC and never will but I am invested in New River (a REIT) and this fiasco has caused some grief to that SP.

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Re: Suspension of Woodford fund

#226885

Postby SalvorHardin » June 4th, 2019, 4:21 pm

JoyofBrex8889 wrote:Yep. Foreign and Colonial IT, ione of the oldest and most respected ITs going) got renamed to BMO something something, and since the renaming has been disappointing. I sold in disgust. Wokester renaming is a strong sell signal in my experience.

It's now F&C Investment Trust. IMHO a name change is a negative sign. That said I've called it F&C since the year dot so I'm not too bothered about this change, especially as they left BMO out of the name.

Woodford's fund has provided us with yet another example of why many of us prefer investment trusts to open-ended funds, as they can get caught in a situation similar to a bank run when lots of investors rush for the exit. In contrast when investment trust shares are dumped onto the market the managers do not become forced sellers.

There might be some fire sale bargains for those prepared to put a bit of effort in - the market makers aren't going to offer top prices to buy the fund's large blocks of shares in smaller companies where there is an element of a forced sale.

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Re: Suspension of Woodford fund

#226889

Postby JoyofBrex8889 » June 4th, 2019, 4:27 pm

SalvorHardin wrote:
JoyofBrex8889 wrote:Yep. Foreign and Colonial IT, ione of the oldest and most respected ITs going) got renamed to BMO something something, and since the renaming has been disappointing. I sold in disgust. Wokester renaming is a strong sell signal in my experience.

It's now F&C Investment Trust. IMHO a name change is a negative sign. That said I've called it F&C since the year dot so I'm not too bothered about this change, especially as they left BMO out of the name.

Woodford's fund has provided us with yet another example of why many of us prefer investment trusts to open-ended funds, as they can get caught in a situation similar to a bank run when lots of investors rush for the exit. In contrast when investment trust shares are dumped onto the market the managers do not become forced sellers.

There might be some fire sale bargains for those prepared to put a bit of effort in - the market makers aren't going to offer top prices to buy the fund's large blocks of shares in smaller companies where there is an element of a forced sale.



https://en.wikipedia.org/wiki/BMO_Globa ... _Companies

This is the one I was thinking of.

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Re: Suspension of Woodford fund

#226908

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

BusyBumbleBee wrote:It this had been an IT and not an OEIC knowledge of such a substantial holding would be in the public domain and it would have raised concerns as we know that Councils only look for a temporary home for their cash.

The Council Tax payers of Kent have take quite a loss here and I suspect one or two heads will roll therein.


Isn't that likely to have been their Pension Fund?

According to
https://www.lgpsmember.org/ats/about-gov.php
The LGPS in England and Wales is administered locally through 90 local pension funds.


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