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Patient Capital

Closed-end funds and OEICs
paulnumbers
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Patient Capital

#227507

Postby paulnumbers » June 6th, 2019, 3:23 pm

Any views on Woodford Patient Capital Trust? Trading at a 20% - 25% discount to NAV.

Obviously we live in interesting times, and the poor guys head is probably screwed up for a few weeks or months.

Must be pretty tough to go broke buying dollar notes for 75 cents.

simoan
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Re: Patient Capital

#227515

Postby simoan » June 6th, 2019, 3:38 pm

paulnumbers wrote:Any views on Woodford Patient Capital Trust? Trading at a 20% - 25% discount to NAV.

Obviously we live in interesting times, and the poor guys head is probably screwed up for a few weeks or months.

Must be pretty tough to go broke buying dollar notes for 75 cents.

I have no view on the trust itself but I read this morning that Woodford is selling some of the unlisted stuff in the Income OEIC to the Patient Capital Trust to raise cash for the OEIC redemptions. I don't know if that's true, but that kind of related party transaction would make me very wary.

All the best, Si

paulnumbers
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Re: Patient Capital

#227518

Postby paulnumbers » June 6th, 2019, 3:47 pm

simoan wrote:
paulnumbers wrote:Any views on Woodford Patient Capital Trust? Trading at a 20% - 25% discount to NAV.

Obviously we live in interesting times, and the poor guys head is probably screwed up for a few weeks or months.

Must be pretty tough to go broke buying dollar notes for 75 cents.

I have no view on the trust itself but I read this morning that Woodford is selling some of the unlisted stuff in the Income OEIC to the Patient Capital Trust to raise cash for the OEIC redemptions. I don't know if that's true, but that kind of related party transaction would make me very wary.

All the best, Si


Hi Si, I wondered if he would do that, and then thought that obviously he wouldn’t as it’s a massive conflict of interest. Worrying indeed if true.

Alaric
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Re: Patient Capital

#227525

Postby Alaric » June 6th, 2019, 4:24 pm

paulnumbers wrote: obviously he wouldn’t as it’s a massive conflict of interest. Worrying indeed if true.


I don't think there's anything in the various FSA rulebooks preventing it.

I would agree though that it's probably not good news for holders of the Patient Capital IT to get the OEIC's difficult to sell stuff dumped on it. It seems reflected in the price, down another 2.20p to 63.70p. It was launched at 100p.

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Re: Patient Capital

#227537

Postby Alaric » June 6th, 2019, 4:57 pm

Alaric wrote:I don't think there's anything in the various FSA rulebooks preventing it.


As a follow up, here's a description of the process.

https://woodfordfunds.com/words/blog/un ... questions/

The OIEC got shares in the IT in exchange for the unquoted holdings, so if it wanted cash it would have to sell them. That may not have been in the interests of IT shareholders by potentially increasing the discount.

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Re: Patient Capital

#227547

Postby Lootman » June 6th, 2019, 5:18 pm

Alaric wrote:
paulnumbers wrote: obviously he wouldn’t as it’s a massive conflict of interest. Worrying indeed if true.

I don't think there's anything in the various FSA rulebooks preventing it.

I would agree though that it's probably not good news for holders of the Patient Capital IT to get the OEIC's difficult to sell stuff dumped on it. It seems reflected in the price, down another 2.20p to 63.70p. It was launched at 100p.

That's not the half of it. I have seen fund managers participate in IPOs and then, if the issue did well, book them to the institutional accounts and favoured clients. Whereas if it did badly, then dump them into the retail funds where people complain less.

Woodford is wrong to do this but the same kind of games are not unusual at all.

paulnumbers
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Re: Patient Capital

#227554

Postby paulnumbers » June 6th, 2019, 5:42 pm

Alaric wrote:
Alaric wrote:I don't think there's anything in the various FSA rulebooks preventing it.


As a follow up, here's a description of the process.

https://woodfordfunds.com/words/blog/un ... questions/

The OIEC got shares in the IT in exchange for the unquoted holdings, so if it wanted cash it would have to sell them. That may not have been in the interests of IT shareholders by potentially increasing the discount.


Hmmm, must admit I'm struggling to get my head around it (this is my second reply :lol: )

So the IT got hold of unquoted companies, and paid for it with newly issued shares, valued at NAV, even though the OEIC would then have to mark the shares down immediately. Seems like the IT did very nicely out of this arrangement and the OEIC immediately made a loss to NAV, but not to true intrinsic value, if one believes the valuation of the unlisted companies.

Thanks for the link.

JoyofBrex8889
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Re: Patient Capital

#228640

Postby JoyofBrex8889 » June 11th, 2019, 11:27 am

So in the wake of Woodfords well publicised issues I have been all over WPCT to check out if the carrion has any good pickings. It’s at a wide discount to NAV.

It’s very difficult to find anything I want to own in the trusts top holdings. There is Oxford Nanopore, where frankly I don’t understand the product. And Benevolent AI where I don’t grok the customer for the product. Then there is Industrial Heat, which is implausible and seems likely to result in total loss, so that’s 5% of NAV to discount right there...

The only company i know in the trust I want to own is Reneuron. So I decided to buy that instead.

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Re: Patient Capital

#228646

Postby peka » June 11th, 2019, 11:51 am

A few days ago, the Woodford Funds website said the exposure of the Woodford Patient Capital Trust to Industrial Heat on 30 April 2019 was 9.02%. The same web page said the cold fusion device being developed by Industrial Heat "cannot be explained by the known laws of physics".

On the basis of that evidence, I suggest that the declared Net Asset Value of Patient Capital Trust needs to be reduced by at least 9% to have any relationship with the real one.

Dod101
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Re: Patient Capital

#228667

Postby Dod101 » June 11th, 2019, 12:20 pm

One surely significant question was raised I think it was in Saturday's FT. How can Woodford decide to sell his unwanted, unquoted stuff to Patient Capital Trust without the Director's approval? Otherwise the conflict of interest is just too much. I have no idea what mandate Woodford was given by the Patient Capital trust but it is obvious that he is being allowed to do what he likes. Both Luni and I supported ITs rather than the OEIC arrangements on another thread because ITs have a Board of Directors who are overseeing the manager, or at least that is the theory.

The whole thing stinks and I am glad to have no part in it.

Dod

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Re: Patient Capital

#228668

Postby Alaric » June 11th, 2019, 12:24 pm

Dod101 wrote: How can Woodford decide to sell his unwanted, unquoted stuff to Patient Capital Trust without the Director's approval? Otherwise the conflict of interest is just too much.


Does this help?
https://woodfordfunds.com/words/blog/un ... questions/

JoyofBrex8889
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Re: Patient Capital

#228677

Postby JoyofBrex8889 » June 11th, 2019, 12:46 pm

peka wrote:A few days ago, the Woodford Funds website said the exposure of the Woodford Patient Capital Trust to Industrial Heat on 30 April 2019 was 9.02%. The same web page said the cold fusion device being developed by Industrial Heat "cannot be explained by the known laws of physics".

On the basis of that evidence, I suggest that the declared Net Asset Value of Patient Capital Trust needs to be reduced by at least 9% to have any relationship with the real one.


Exactly: I have a scientific background and try to keep an open mind. Cold fusion would be interesting if replicable. But even if the claimed anomalies in the lab are ultimately reproducible (I highly doubt it!) the distance to a working saleable end product still seems vast. And I am certainly not going to bet my own money on it.

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Re: Patient Capital

#228679

Postby richfool » June 11th, 2019, 12:54 pm

Dod101 wrote:One surely significant question was raised I think it was in Saturday's FT. How can Woodford decide to sell his unwanted, unquoted stuff to Patient Capital Trust without the Director's approval? Otherwise the conflict of interest is just too much. I have no idea what mandate Woodford was given by the Patient Capital trust but it is obvious that he is being allowed to do what he likes. Both Luni and I supported ITs rather than the OEIC arrangements on another thread because ITs have a Board of Directors who are overseeing the manager, or at least that is the theory.

The whole thing stinks and I am glad to have no part in it.

Dod

That does stink. Presumably by holding the unquoted stuff in the (IT) trust, he won't be forced to sell to meet disposals, which would be the case for holdings within the fund. But he is of course adding risk to the trust (if not hiding risk there).

If he wanted to run a fund or trust focusing on new start up technology, then why didn't he come out and say so in the first place and give it an appropriate name, objectives and risk rating? He is misleading "patient" investors, many of who probably followed the master from Invesco Perpetual.

Can the Directors of the trust not see the Wood for the trees?!

Disc: I do not hold any Woodford products and will not do so.

Dod101
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Re: Patient Capital

#228682

Postby Dod101 » June 11th, 2019, 1:13 pm

Alaric wrote:
Dod101 wrote: How can Woodford decide to sell his unwanted, unquoted stuff to Patient Capital Trust without the Director's approval? Otherwise the conflict of interest is just too much.


Does this help?
https://woodfordfunds.com/words/blog/un ... questions/


Not really because apart from anything else, it is dated 6 march 2019, well before the current problems surfaced. I have no personal interest in this basically because I would not trust Woodford.

Dod

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Re: Patient Capital

#228689

Postby Bouleversee » June 11th, 2019, 1:30 pm

Alaric wrote:
Dod101 wrote: How can Woodford decide to sell his unwanted, unquoted stuff to Patient Capital Trust without the Director's approval? Otherwise the conflict of interest is just too much.


Does this help?
https://woodfordfunds.com/words/blog/un ... questions/


Worth reading the questions and answers following the statement, including: "This transaction was under discussion for almost eighteen months before being implemented in late February. From that perspective, we would argue that Neil has not been, and will not be, a forced seller of anything." (Really? ) and " We do not disclose the specific amounts invested in the Woodford funds by staff or senior management. But I can confirm that many are invested in the funds, often substantially so. For example, all of Neil’s personal wealth is invested in the Woodford business and in the Woodford funds, including his pension. He has no other investments other than the house that he lives in. " (Not much diversification - or sense - there). I feel his pain, especially as I have an investment in his Patient Capital IT which is showing a loss of over 40% and another loss (by association) in Horizon Discovery which PCT is/was invested in but has now been partly or possibly totally sold recently.

Difficult to know what to do at this stage. I see that PCT is up 7.8% today and is at a discount of 28.26% to NAV acc. to the HL website. If I had any sense I would have sold when the story first broke but it's a bit late now and the fact that they have recovered a bit today suggests that it might be worth holding on but who knows?

The only thing I do now know is that when people like Woodford and Luke Johnson can get it so wrong, I shouldn't beat myself up about my own losses and that investing in equities is just as much a gamble as betting on the gee-gees and that I wish I had stuck to property or even cash which requires minimal time and effort. I had been planning to transfer all my shares to ITs but this episode gives me pause for thought.

As regards richfool's comments, to which my attention has just been drawn, surely Patient Capital was an appropriate name for the IT and I thought it had made clear that it was to be invested in new companies which might do very well in the future. Not needing additional income or access to capital at the moment and being interested in anything which would advance medical treatment (e.g. genetic engineering) I was happy to invest in the hope of future growth whilst supporting such developments, accepting that it would probably benefit my heirs rather than myself. I would not, however, have thought such companies were appropriate holdings for an income fund.

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Re: Patient Capital

#228698

Postby OLTB » June 11th, 2019, 2:34 pm

I had an email through from HL earlier today which stated that their top stock traded this morning was WPCT with 79.74% buying and 20.26% selling.

It's not an IT I hold, although some people are clearly positive on it's future/want to make a quick buck (potentially) and of course HL take their trading fee either way. WPCT is up 6.27% as I type.

Cheers, OLTB.

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Re: Patient Capital

#228704

Postby Bouleversee » June 11th, 2019, 2:59 pm

It was never intended for people who wanted to make a fast buck. It was up over 14% when I first looked this morning so i suppose some have taken the opportunity to get out.

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Re: Patient Capital

#228707

Postby peka » June 11th, 2019, 3:06 pm

Bouleversee wote:

"Difficult to know what to do at this stage. I see that PCT is up 7.8% today and is at a discount of 28.26% to NAV acc. to the HL website. If I had any sense I would have sold when the story first broke but it's a bit late now and the fact that they have recovered a bit today suggests that it might be worth holding on but who knows?"

The problem is that the discount of 28% to NAV is meaningless because the published Net Asset Value is probably nothing like the true NAV. For example, 9% of the published NAV is in the cold fusion company Industrial Heat, which in my opinion most probably has a true value of zero because cold fusion cannot be explained by our current knowledge of physics (as was admitted on Woodford's own web site).

If I were you, I would sell all your WPCT shares today and take advantage of the recovery in its share price, which I suspect will only be a temporary one.

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Re: Patient Capital

#228715

Postby richfool » June 11th, 2019, 3:16 pm

He certainly doesn't seem to have diversified his own situation, if he has no other investments than his own fund/trust and his house.

Accepted that I haven't read his investment objectives, because I had no interest in investing in his trust or fund, and whilst I take the point that the word "patient" suggests a long (slow) wait, I personally would see "patient" as also inferring (a degree of) slow and "cautious" and not risky or frontier type investments.

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Re: Patient Capital

#228716

Postby paulnumbers » June 11th, 2019, 3:20 pm

>for example, all of Neil’s personal wealth is invested in the Woodford business and in the Woodford funds, including his pension

This is not akin to Buffett and Munger, where investors fortunes move in lockstep with managements. The Woodford business makes money when investors do not (except in the case of Patient Capital it seems)


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