Woodford Equity Income Fund Suspends Trading

[peka]

I decided a long time ago that I would never invest in any of Woodford's funds when I read that his Patient Capital Investment Trust and his Equity Income Fund both have large holdings in a firm called Industrial Heat:

https://citywire.co.uk/investment-trust ... t/a1157456

Industrial Heat claims to be developing cold fusion, but any competent physicist could have told Woodford that the probability of that ever being successful is very close to zero because it is against all our current knowledge of physics. It really made me question his judgement.

According to the above article: 'Link Fund Solutions, the trust’s appointed alternative investment fund managers, dramatically upgraded the value of Industrial Heat by 357% to $112.9 million (£85.2 million)'. As Industrial Heat is an unquoted firm and has, in my opinion, zero probability of ever making a profit, I don't understand on what basis they did that.

Link Fund Solutions are the Woodford Patient Capital investment trust’s appointed alternative investment fund managers, so they cannot be considered to be an independent party. Increasing the valuation of Industrial Heat has the effect of increasing the management fees paid to Woodford by the Equity Income Fund and increasing the Net Asset Value and therefore the share price of the Woodford Patient Capital investment trust. I leave readers to draw their own conclusions.

Here is an article about Woodford's recent actions with the holdings of Industrial Heat and other unquoted companies in his Equity Income Fund:

https://citywire.co.uk/funds-insider/ne ... s/a1229488

Here are some articles which explain why I believe the probability that cold fusion will work is vanishingly close to zero:

https://en.wikipedia.org/wiki/Energy_Catalyzer

https://scienceblogs.com/startswithaban ... -of-why-we

https://www.popularmechanics.com/scienc ... ming-whom/

https://scienceblogs.com/startswithaban ... ossible-is

[PhaseThree]

[quote="Snorvey"]Yes but....well. it's total cobblers isn't It?[/quote]

Err no, It's reproducable scientific reality. Whether its any more than a curiosity is still to be determined.

[quote="Alaric"]
There's a discipline known as "quantum chemistry". That uses the mathematics of quantum mechanics in conjunction with more conventional chemistry. Do "Industrial Heat" have any experts on this on board?

Either way, 9% of the IT is a lot of money to put into a controversial technology.[/quote]

It is extremely difficult to find out anything about "Industrial Heat" beyond the fact that they are investing in multiple LENR developments. I would be a lot happier if more information was available, particularly the level of the scientific expertise available at both Industrial Heat and WPCT.

I agree 9% is too high, even for Patient Capital. WPCT represents around 1% of my portfolio, so Industrial Heat represents slightly less than 0.1% so not a killer if it all comes to naught.

[PhaseThree]

[quote="peka"]

Industrial Heat claims to be developing cold fusion, but any competent physicist could have told Woodford that the probability of that ever being successful is very close to zero because it is against all our current knowledge of physics. It really made me question his judgement.
[/quote]

Please read the article I linked above. Industrial Heat are not working on cold fusion they are looking at Low Energy Nuclear Reactions. Fusion has a very specific meaning in physics and is not what is seen in any of these reactions. Despite this the press continue to report Woodford suport for"Cold Fusion" as fact, I'm beginning to think this is deliberate rather than just typically poor scientific reporting.

[Alaric]

Industrial Heat are not working on cold fusion they are looking at Low Energy Nuclear Reactions. Fusion has a very specific meaning in physics and is not what is seen in any of these reactions. Despite this the press continue to report Woodford suport for"Cold Fusion" as fact, I'm beginning to think this is deliberate rather than just typically poor scientific reporting.

I think "cold fusion" would be a lay term for "low energy nuclear reactions".

The more general question is to whether a widely marketed and thus mainstream Investment Trust should be financing what seem to be exotic and perhaps dead end research projects.

[peka]

Here's a quote from the following Wikipedia article about cold fusion:

https://en.wikipedia.org/wiki/Cold_fusion

'A small community of researchers continues to investigate cold fusion,[6][11] now often preferring the designation low-energy nuclear reactions (LENR) or condensed matter nuclear science (CMNS).[12][13][14][15] Since articles about cold fusion are rarely published in peer-reviewed mainstream scientific journals anymore, they do not attract the level of scrutiny expected for mainstream scientific publications.[16]'

[Pendrainllwyn]

Link Fund Solutions are the Woodford Patient Capital investment trust’s appointed alternative investment fund managers, so they cannot be considered to be an independent party. Increasing the valuation of Industrial Heat has the effect of increasing the management fees paid to Woodford by the Equity Income Fund and increasing the Net Asset Value and therefore the share price of the Woodford Patient Capital investment trust. I leave readers to draw their own conclusions.

Here is an article about Woodford's recent actions with the holdings of Industrial Heat and other unquoted companies in his Equity Income Fund:

https://citywire.co.uk/funds-insider/ne ... s/a1229488

Not a single share has been traded in 18 months since listing. A listing in name only. Looks like some people are asleep at the wheel here. Surely there should be other requirements such as a minimum trading volume requirement (e.g., more than x% of the shares should be traded over a given period) and a free float requirement (e.g., one investor cannot own more than X% of the listed shares) for the fund to be able to classify this holding as listed. What stops the "market" value of these shares being manipulated? One small buy-order arranged quietly could send the price up significantly. It also raises questions of Guernsey's International Stock Exchange. What were they thinking? Other than wanting to pocket listing fees that is. I wonder who has been picking up the listing fees, the fund's investors or Woodford Investment Management? I hope the latter. Fortunately I have never been involved with any of their funds.

Pendrainllwyn

[Alaric]

A better link

https://citywire.co.uk/investment-trust ... s/a1229488

[Pendrainllwyn]

Thank you.

[XFool]

Industrial Heat claims to be developing cold fusion, but any competent physicist could have told Woodford that the probability of that ever being successful is very close to zero because it is against all our current knowledge of physics. It really made me question his judgement.

Please read the article I linked above. Industrial Heat are not working on cold fusion they are looking at Low Energy Nuclear Reactions. Fusion has a very specific meaning in physics and is not what is seen in any of these reactions. Despite this the press continue to report Woodford suport for"Cold Fusion" as fact, I'm beginning to think this is deliberate rather than just typically poor scientific reporting.

"typically poor scientific reporting."?

Curious then that Woodford's own site uses the term "Cold Fusion" in the description of Industrial Heat.

https://woodfordfunds.com/words/blog/in ... -to-speed/

"Industrial Heat has built a platform of new energy technologies focused on harnessing hitherto poorly understood or neglected energy science, including cold fusion."

[XFool]

Yes but....well. it's total cobblers isn't It?

Err no, It's reproducable scientific reality. Whether its any more than a curiosity is still to be determined.

"reproducible"? So why hasn't it been successfully "reproduced" over three decades? Or, more to the point, produced?

It is extremely difficult to find out anything about "Industrial Heat" beyond the fact that they are investing in multiple LENR developments.

It is extremely difficult - so far I have found it impossible - to even discover a website for Industrial Heat LLC. If anyone knows differently, could they post a link. It would at least be 'interesting' (or something!) to have a gander.

I think the generally accepted view is that Cold Fusion, which refuses to die, is a form of pathological science.

https://en.wikipedia.org/wiki/Cold_fusion

If you look up anything on the subject, same with LENR, you end up looking at loads of blog sites where people spend their time either claiming contested 'successful demonstrations', explaining failed demonstrations as due to omission of the special secret sauce needed to make it work, dreaming up ever more complicated 'explanations' of how it might work, or simply slagging each other off.

It reminds me of this, courtesy of a TMF poster: http://dispatchesfromthefuture.com

I see that idea too is now apparently undergoing resurrection! Like the living dead, these things never actually die.

[Alaric]

Curious then that Woodford's own site uses the term "Cold Fusion" in the description of Industrial Heat.

For it to be commercially viable, which is presumably the point of Woodford's investment on behalf of shareholders, whatever technique or process used has to be reproducible, something that appears elusive in the experiments so far.

[simoan]

Crikey... and Dod accused me of going off at a tangent further up this thread Now we're onto discussions about nuclear reactions. Flipping 'eck!

All the best, Si

[jonesa1]

Crikey... and Dod accused me of going off at a tangent further up this thread Now we're onto discussions about nuclear reactions. Flipping 'eck!

More like a discussion about fantasy science not producing nuclear reactions and someone having been dumb enough to invest in it. There was I thinking that cold fusion had been consigned to the same dustbin as flat earth theory.

[PhaseThree]

Last months "Nature" published a paper (https://www.nature.com/articles/s41586-019-1256-6) discussing the Google/MIT/Lawrence Berkeley National Laboratory collaberation into Cold Fusion with the following abstract.

"Revisiting the cold case of cold fusion
The 1989 claim of ‘cold fusion’ was publicly heralded as the future of clean energy generation. However, subsequent failures to reproduce the effect heightened scepticism of this claim in the academic community, and effectively led to the disqualification of the subject from further study. Motivated by the possibility that such judgement might have been premature, we embarked on a multi-institution programme to re-evaluate cold fusion to a high standard of scientific rigour. Here we describe our efforts, which have yet to yield any evidence of such an effect. Nonetheless, a by-product of our investigations has been to provide new insights into highly hydrided metals and low-energy nuclear reactions, and we contend that there remains much interesting science to be done in this underexplored parameter space."

So no signs of cold fusion but still some interesting stuff to look at in the LENR area. But I agree this is not somethng that an investment trust should be putting money into at this stage.

[AsleepInYorkshire]

City watchdog 'missed Neil Woodford fund warning signs'
https://www.bbc.co.uk/news/business-48552660

He also highlighted the role of Link Fund Solutions, the supervisor to the Woodford Equity Income Fund, which had been appointed by Mr Woodford himself.

https://www.bbc.co.uk/news/topics/c5qvn ... l-woodford

AiY

[OhNoNotimAgain]

I love the quote from Gerry Grimstone:

"Never invest in a fund named after the manager"

[Howard]

I love the quote from Gerry Grimstone:

"Never invest in a fund named after the manager"

So should I regret my eight years investing in Fundsmith? Only up about 300%.

If his fund price halved in the next week his investors couldn't complain too much. It would probably take something pretty serious to destroy half the value of his portfolio.

regards

Howard

[peka]

I've just noticed that this page on the Woodford Funds web site about their so-called 'investment' in the Industrial Heat company:

https://woodfordfunds.com/funds/holding ... rial-heat/

says: "the theory of cold fusion cannot be explained by the known laws of physics".

The same web page says that the Woodford Funds exposure on 30 April 2019 to Industrial Heat, a company whose sole product "cannot be explained by the known laws of physics" and which has never made a profit nor paid a dividend, was 9.02% in the Patient Capital investment trust and 2.59% in the Equity Income fund!

I suppose the name of the Patient Capital investment trust might warn its shareholders to have some patience for it to produce a return on its investments. However, are they prepared to wait for an infinite amount of time, because that is how long it might take to produce a return? And it is outrageous that an investment in such a company should be held by an equity income fund.

[richfool]

I've just noticed that this page on the Woodford Funds web site about their so-called 'investment' in the Industrial Heat company:

https://woodfordfunds.com/funds/holding ... rial-heat/

says: "the theory of cold fusion cannot be explained by the known laws of physics".

The same web page says that the Woodford Funds exposure on 30 April 2019 to Industrial Heat, a company whose sole product "cannot be explained by the known laws of physics" and which has never made a profit nor paid a dividend, was 9.02% in the Patient Capital investment trust and 2.59% in the Equity Income fund!

I suppose the name of the Patient Capital investment trust might warn its shareholders to have some patience for it to produce a return on its investments. However, are they prepared to wait for an infinite amount of time, because that is how long it might take to produce a return? And it is outrageous that an investment in such a company should be held by an equity income fund.

I have always been somewhat sceptical of following the latest trends or famous names. I remember Anthony Bolton coming a cropper on a new China fund he launched years back and I have always avoided Woodford, partly because so many sang his praises (not least TMF).

I don't know what rating was given on the KID for Woodford's Patient Capital trust, but it ought to have been a 6+.

Perhaps he should have given it a name like the "Walk on Water" fund, and included words like Enterprise or Risque, and emphasised Unlisted Equities, as it sounds more like some sort of venture capital fund.

[StOmer]

I don't know what rating was given on the KID for Woodford's Patient Capital trust, but it ought to have been a 6+.

Last time I looked WPCT was rated 4 which I thought told me all I needed to know about KID's and their usefulness.