Woodford Patient Capital Share Discussion Threads

[topvest] 02/5/2017 20:47

rambutan2 - agreed. I like Woodford but think he's messed up big style here. By the way these shares hit a "death cross" chart signal within the last 5 days. I quite like the golden cross and death cross chart signals.

"On a stock chart, the Death cross occurs when the 50-day MA falls below the 200-day MA. As the name implies, a Death Cross is associated with sharp downward price"

[alphapig] 02/5/2017 09:36

Christ and St Peter sold out at 92p, enoughs enough.

[rambutan2] 02/5/2017 04:58

Well I was also surprised at Woodford having gone into gearing at this stage in the fund's life. Much of his portfolio is still quite early stage. IMHO he sold down the more liquid stuff too rapidly and so lacks easily accessible funds for follow on investments in current unquoted holdings. Never mind new opportunities emerging from his platform investments and contacts. Perhaps he assumed he'd easily be able to do a fund raising, but this was given a thumbs down last year, and i think that ship has now sailed for the forseeable future. And it's not just that much of the port is in fairly illiquid stuff, but that he has very large positions in the listed stuff, so in reality is pretty much locked in except in rosy scenerios. Add in a very heavy weighting towards one sector, which happens to be the most volatile, biotech.

To be clear, I am an admirer of Mr Woodford and have followed what he's bought into with interest. But i think he will need a good dose of luck to avoid having some dark days with WPCT.

[p1nkfish] 01/5/2017 23:40

Already has a $1.78Bn overall valuation approx according to below. Largest AI European company applying AI to scientific innovation.

One of top 5 in the world.

[p1nkfish] 01/5/2017 23:28

Patient I can be but I like my fund managers boring and not too promotional or distracted.

Rock star fund managers - not healthy.

If the below comes good it's a Unicorn alone. Some very useful capabilities under the radar. My beef is Woodfords mug has been on too much material for the new income fund. Not a good sign in my book.

[dr biotech] 01/5/2017 22:43

So it's a buy at 50p. Well which trusts wouldn't you buy at half their current price? Thanks for the CAPS. Makes it look like the EXPRESS who readers are so THICK they need help reading.

[topvest] 01/5/2017 13:56

Dr. Biotech - just because you do not agree with my post, doesn't mean its stupid. Its my contrarian view. Most of the investments are already highly valued given they are loss making and so are by their very nature "blue-sky" investments. I do not doubt that some will be big winners, like Purplebricks.

9% gearing on a portfolio that is illiquid and doesn't generate cash is not what I would call prudent, particularly towards the end of an extended economic cycle. The gearing could easily double or triple on a stock market crash and then the trust will be a forced seller depending on what the covenants are. Selling their portfolio at the wrong time would be difficult. The covenants are not disclosed, but I suspect they are capped to 20% gearing given the nature of the portfolio which is hardly blue-chip. Incidentally, post year-end they have doubled the facility to £150m. Scary if they utilise that!

This trust is a BUY at below 50p in my book in a BEAR market. Happy to wait. Did very well buying Scottish Mortgage in 2009.

I do like Woodford by the way. He's normally very good and I read a lot of his stuff. Think he's made some major errors with this trust though and it could lose him his crown. No management fees, well that's fine albeit its not really sustainable. Buying at the wrong time and leveraging up an illiquid portfolio is a potentially disastrous combination.

[pugugly] 01/5/2017 13:54

EI: See link in 87 above will give you cos at each phase level.

[essentialinvestor] 01/5/2017 13:50

Dr, I note you said P1 is 10% to market, do you have a stat for P2 per chance?.
Thanks.

[pugugly] 01/5/2017 13:26

Looks as though I have stimulated some most interesting posts today. to clarify chance of success rate above as Dr B noted these were "concepts" . In respect of Drugs Dr B is virtually spot on
"https://www.bio.org/sites/default/files/Clinical%20Development%20Success%20Rates%202006-2015%20-%20BIO,%20Biomedtracker,%20Amplion%202016.pdf"

However many of those that do get approved while medically useful are not "Company Makers" which is what the Trust needs (imo) if it is going to achieve target.

Unquoted portfoilos (agreed virtually impossible to value) usually valued by taking share price per share at last fund raise and multiply by nos of shares outstanding - This can produce horrific write downs come (if ever) IPO's see this weekend FT (29/30 April) Lex re loss taken by Intel (subscribed at $31 -v- $15 at IPO) - trade sales can also go either way.

[dr biotech] 01/5/2017 12:45

Current portfolio is made up as

01 Quoted 61.29
02 Unquoted 47.62
03 Cash -8.91

I haven't looked in detail at how the unquoted portfolio is valued but its going to be less volatile than a stock market listing and protected from a stock market drop (obviously not recession proof etc)

Maturity stage %
01 Early stage 51.10
02 Early growth 34.08
03 Mid/large 23.73
04 Cash -8.9

A lot of the early stage is biotech. Chances of getting a P1 drug to market is approx 10%. Can calculate the odds on success or failure on that. I personally avoid all pure biotech plays now, I've had my fingers (and arms) burned too many times.

Very few of his holdings if any are "concepts". So the chances of them succeeding Id put at a lot higher than 25-1. Some will fail. As long as there are more winners than losers we will do OK long term. I invested at the beginning, sold a few down at a slight loss but continue to hold the rest.

Risky yes, also interesting and potentially rewarding.

[toffeeman] 01/5/2017 10:11

Patients require the good doctors - simplz

[jonwig] 01/5/2017 10:00

jfishy35 (#83) - you are quite correct, as the description on p33 (PDF p34) of the explains. Most discussion on ADVFN at launch was concerned with the retail investor level of patience.

topvest (#80) - I was actually agreeing with most of what you posted so would have to join you with the dunce's cap on. It's clearly a matter of subjective judgement whether this is the right time or not to invest here. If you are cautious about the stage of the cycle it absolutely isn't idiotic to leave alone.

Dr B (#81) - investment trust gearing is, of course, a matter of some controversy. The ITs I am currently invested in most heavily have negative net gearing (PNL, mainly), and a downturn usually leads to a scramble to de-gear. (NB. I don't think topvest's posts are stupid - they generally betray a very cautious outlook.)

PUG (#82) - my concern is too many holdings and insufficient focus. That makes it harder for the winners to move the assets upwards. (His promised 10% pa return is looking a bit rich now.) I'm pleased he didn't have the support to raise more equity.

My own view is that it's worth investing in this fund but the timing is quite impossible to get right. I'm therefore using pound-cost-averaging with £2,000 every quarter provided the trust stands at a discount.

[jfishy55] 01/5/2017 09:24

A "patient" fund does not so much refer to patience as it does to the relationship the fund will have with the companies it holds.

WPCT will risky early stage companies and treat them as patients to be nursed into successes.

This means start ups. Illiquidity. High risk. It is indeed possible that any one holding may drop by 50%.

At the end of the day, this is not an income fund, not a growth fund, it is a higher risk fund with the potential for higher growth.

[pugugly] 01/5/2017 07:48

tv&Dr B_- peace be unto you both !!
Just to remind you from woodford's web site
"
Who is this trust not suitable for?

Any investor who does not have sufficient resources to bear any loss resulting from the investment
Investors who are not prepared to take any risk with their money or put their capital at risk
Self-directed investors who are not able to evaluate the risks and merits of the fund
Any investor looking for guaranteed income or total return
Investors who are not prepared to accept short-term volatility as there will be periods when the fund falls in value

What I suspect it is fair comment is that in the case of some of the quoted investee companies Woodford may have made some mistakes in judging the quality of the managements ability to manage the development concepts or the robustness of the propositions - One only has to read the Devonshire Reseach Group "The Short Thesis for Allied Minds" as an example. There are other quoted examples where initial promise has as yet not materialised or has failed. (I am not going into detail at this stage - but you are I am sure both aware of them)

The point neither of you have mentioned is whether the valuations applied to the unquoted companies is a "fair value" If only a very small number of these are able to achieve their objectives then they might be worth more than the current value of the whole fund BUT the chance of outstanding success for any one company/concept is very low - Figures quoted at a recent conference were between 1 in 25 to 1 in 50.

[topvest] 30/4/2017 20:18

I think its the wrong time in the economic cycle to be buying this trust. This stock (as all the US tech bubble stocks) will get hammered when the next downturn comes. Best time to buy this is at an equivalent time to March 2009, albeit hopefully nothing as deep as the last recession.

What struck me in the latest annual report is the £75m overdraft. This is a strategic error in my book as such debt is only really advisable when you have a liquid portfolio. Lets say that the share price drops 50% on a stock market bear phase. If NAV drops to 60p and share price to 45p they are going to be forced sellers on their illiquid portfolio to avoid a covenant issue. That would be a disaster. Why take that risk at this point in the cycle? Its also pretty obvious that the premium has turned to a discount and now that discount is widening. This phase has not finished.

The trust has a good long-term model but its the wrong time...10 years into an economic recovery, a widening discount on poor performance and a very imprudent bank overdraft. I will keep on my watch list.

[a0148009] 26/4/2017 12:56

Looks as if this may be on the move up now,NAV ticking up albeit slowly and discount narrowing - on that basis relative cheap.

[p1nkfish] 19/4/2017 18:46

He's exhibiting attention deficit.
WPCT needs attention rather than just sailing into the next thing he's interested in.

[tim 3] 19/4/2017 08:59

Woodford is a huge fan of pharma's and Tobacco always has been they have traditionally been good dividend payers and steady safe performers which suites his funds perfectly.

Between them they make up a significant proportion of the EI fund.

I think there will be a lot of "overlap" between the 2 funds.

btw you can see all his holdings for free (except the new fund) if you register on his own site.

hxxps://woodfordfunds.com/funds/weif/fullportfolio/?chosenmonth=022017

[jfishy55] 19/4/2017 08:25

I was thinking there was nothing much between the funds...but hadn't realised he doesn't have geographical restrictions on the Focus fund.

It concerns me that he has pharma holdings in the EI fund, I don't think it is the correct vehicle for it. WPCT on the other hand is.

[tim 3] 18/4/2017 20:35

Yes will be interesting to see how the new income fund performs I think in this environment setting a target of 5% yield as a priority over growth could prove very popular.

Will hazard a guess that the key holdings will again be uk tobacco and pharmaceuticals even though he has not got geographical restrictions on this one.

[jfishy55] 18/4/2017 19:50

FYI - Be aware that the Woodford Equity Income fund is a different fund from the new Woodford Income Focus fund.

Also, bear in mind that funds are valued once per day (usually midday) not on a minute by minute basis.

Hargreaves Lansdown has good information on funds too.

[pete_bane] 18/4/2017 15:37

Thank you both.

[tim 3] 18/4/2017 14:36

No don't think you can add unit trusts on here.

Trustnet is the best site for unit trusts imo tons of info much better than here you can set up portfolios there too.