Woodford Patient Capital Share Discussion Threads

[careful] 09/5/2018 08:37

Roaring ahead today, we are cooking on gas.
at last the turning point, onwards and upwards.

[daffyjones] 09/5/2018 07:46

Prothena Q1 financial results came out after market close yesterday. Big earnings and revenue miss.

Prothena (NASDAQ:PRTA): Q1 EPS of -$1.26 - misses by $0.40.

Revenue of $0.23M (-11.5% Y/Y) - misses by $22.5M.

Net loss of $48.7 million for the first quarter of 2018, as compared to a net loss of $35.4 million for the first quarter of 2017.

Costs rising
Research and development (R&D) expenses totaled $34.7 million for Q1 2018, as compared to $25.7 million for Q1 2017.
General and administrative (G&A) expenses totaled $14.2 million for Q1 2018, as compared to $10.8 million for Q1 2017.
Total compensation expense was $6.9 million for Q1 2018, as compared to $5.6 million for Q1 2017.
Cash on hand $433m.

[topvest] 08/5/2018 18:17

If he’s not selling there is no value creation really. Undoubtedly good news, but don’t they need some cash flow? No doubt they have moved the valuation up already. Most companies announce an IPO once its successful rather than on publishing a prospectus, but hey Woody isn’t amongst the most prudent of investors. Take the gains now.

[chucko1] 08/5/2018 15:55

I have read today’s RNS which does not indicate a number of $100mm, though the SEC filing does indicate a number of “up to $100mm”. Not that that in itself is an important distinction, but we really do not know anything about the pricing and therefore if this represents a good outcome for Woody. I suspect that it does, but it may need to be quite a lot better than “good”!

[daffyjones] 08/5/2018 10:08

Some relatively good news for WPCT.

Autolus which makes up 4.1% of WPCT announced plans to go public a couple of months ago. Today they've confirmed they are listing on the Nasdaq, filing for an IPO which is set to raise $100m. Woodford owns 26% of the company having invested around £30m in early funding rounds.

[daffyjones] 08/5/2018 09:53

Careful - I agree with Woodford that the market is mis-pricing shares. QE has led to cheap money being pumped in to the stock market and ludicrous valuations based on expectations that growth will continue forever. A stock market crash of some sort is inevitable.

The problem is, unlike with the dot.com stock market boom and bust, Woody isn't well-placed to ride out a market correction. He isn't in the steady and boring defensive stocks that saw him outperform his peers after the dotcom crash. Instead he's piled in to faddy biotech, internet marketing and property companies that are just as vulnerable if not more to collapsing when the QE money fountain stops and the stock market goes down.

Just look at what happened with the mini-correction earlier this year - when stock markets around the world fell, Woody's companies fell just as much if not more. If he truly believes the market is set for a correction, as he keeps stating, he should be in more defensive stocks

[kemche] 08/5/2018 09:17

Does he hold FARN too?

[careful] 08/5/2018 09:14

Warren Buffett said that it takes years to build up a reputation.
but it can be destroyed in weeks.
Woodford may be mega rich by now, but he will be feeling terrible.
His reputation is taking a hammering.

I was interested to read his comments a few months ago.
Basically he suggested that the market is mis pricing shares.
Particularly UK shares.

This is a long term game, only time will tell.

[ltcm1] 08/5/2018 08:51

Careful if you believe Woodford will 'return to form' you are better off buying the Income funds in my opinion. The point is Woodford only has bad form when it comes to start-ups and biotechs. It's not like we can look back over 25 years of excellent performance in this field.

To pick up on Minerve's point about abandoning dividend paying stocks in WPCT, the thing is Woodford is now so far down he needs to take more and more risks. Not least because he isn't getting paid and the fund must be costing him a small fortune. A 5% safe divi stock isn't going to cut it anymore, he needs a quick treble up to restore confidence and credibility.

'Woodford said after the recent setback that the investment case was still 'compelling'.

He said the same about Capita, ALM, AA and Prothena and three out of the four have turned out badly. Just be aware Tony Blair's 'I know best' mantra didn't turn out well either!!!

[minerve] 07/5/2018 23:06

"Allied aims to commercialise university and military inventions and has a portfolio of more than 20 start-ups. ➡️ None have been listed, sold or become profitable.⬅️"

This was from August last year. I don't know if that has changed. Probably not. 7 were closed.

Why wouldn't this happen to Woodford holdings?

[minerve] 07/5/2018 22:59

careful

Yes, it is pessimistic, but with the type of investments made, it goes to show that the odds are already much against you from the very beginning. I cannot understand what posessed him to get rid of a large dividend payer in the fund. That made a lot of sense to me.

[careful] 07/5/2018 22:50

Sometimes you are a philosopher Minerve.
With all high risk/ high reward investments you hope to come good, it is as simple as that. On occasions we must put some money in harms way.
Woodford said after the recent setback that the investment case was still 'compelling'.

Your example above is comically pessimistic.
(Assuming that 90% of the investments will go bust.)
I would have thought the target should be 1 good investment in 3, 1 in 3 average, 1 in 3 bust.

We shall give Woodford his 5 years.
Worth a punt, he will return to form.

[minerve] 07/5/2018 22:31

careful

I would seriously consider what you stand to gain by remaining an investor. Does fear of losing out drive you?

How many stocks are in the fund? I don't know. They want me to subscribe now. Say 100. Say 10 make it and the others don't. The ten that remain need to deliver 10 fold in order to break-even if they are all 1% of the fund.

Now here is the thing, Woodford's funds are huge. So when he invests he will be investing many millions that puts an immediate super-valuation on a very small company. He invests £10 million and he gets 5%, so all of a sudden the company - the bean counters will say - is worth £200m. What else is there to go by? Valuation at this stage of the game is a black art. So the company first has to realise the £200m valuation - which is no mean feat. Then it needs to go on and deliver 10 times that just to break even if my example represents anything near reality which I think it does.

I have quite a large portfolio but I am a great believer in not having any funds or investments that need to be carried. No dead wood. Opportunity costs. I also believe the primary objective of any investment should be to reduce the chance of losing money - not increase it. I know with shares this generally doesn't hold true but you get my drift....

So I invest in something less risky. Say it gives me 2%. That is 2% I can spend or 2% I can compound. How long is Woodford's fund been running? 3 years and is heading for 30% down. That is a long way behind 100% and 3 years at 2% compound - plus you can sleep at night.

There are better ways to build up your portfolio. Contribute more or take out less. Life is more guaranteed that way.

It may come good, but quite frankly, who cares? Who knows what our lives hold in 3 year's time, never mind 10.

[careful] 07/5/2018 21:27

Interesting post and worrying.
If Woodford and his team do not know all you know then they are not doing their research.
You seem to know so much inside data you must be an insider.

I have invested here because I have faith in Woodford's judgement and diligence.
If someone has conned him by a flashy presentation it is very worrying.

I wonder what the counter argument would be?

[ltcm1] 07/5/2018 18:35

IPO coming soon then!

[topvest] 07/5/2018 17:46

Well it’s discounted about 20 years of mega success already in the valuation. Say £50m profit per annum. Think the sales are currently £2m. It’s what you call a sucker stock. Of course, there is a small probability that it’s the next FANG stock, but it’s gambling.

[topvest] 07/5/2018 17:44

Well it’s discounted about 20 years of mega success already in the valuation. Say £50m profit per annum. Think the sales are currently £2m. It’s what you call a sucker stock.

[ltcm1] 07/5/2018 16:04

Interesting article on BeneloventAI here including comments:

hXXp://blogs.sciencemag.org/pipeline/archives/2018/04/23/benevolentai-worth-two-billion

Is BeneloventAI set to become the new Autonomy???!!!

[topvest] 06/5/2018 17:09

Another interesting article today by Tom on some of the ludicrous valuations in the accounts. Thinking about it the unquoted nature definitely helps keeping the show on the road. Basically, they can make up some pretty ridiculous valuations and its rather difficult to question. Benevolent AI at US$2bn...you must be bloody joking! Somebody is having a laugh valuing a loss making company at about 1000 times its sales! It's all OK until the music stops and there's no cash left.

I'm surprised some punter hasn't listed an AIM shell with AI in the title to raise lots of money from suckers. Its an odd bull market isn't it. No such frothy shells this time around, but no shortage of stupidity elsewhere in certain valuations.

[minerve] 06/5/2018 13:08

From having founded a small start-up in the 90s, my experience, versus what seemingly is happening here today, gives me great concern for WPCT.

It seems apparent that the environment of QE that we have had for a decade has manifested itself in the loosening of conservative, prudent financial stewardship in start-ups as well as the fund management industry. We have probably got hundreds of thousands of (otherwise) bright individuals in accountancy/finance departments, even financial directors, who have never known anything other than the cheap cost of finance we have today. That isn't healthy.

If some of these companies are questionable as going concerns the executives should be reducing their remuneration substantially or freezing pay altogether. We did. Their reward can be aligned with investors in shares. If they believe in the company's future they will stay. It is a good test of sorting out executive/management confidence in the ability to commercialise a product.

I enjoy the comments on Musk. Personally I think Tesla has a high chance of ending in tears. As someone has already brushed upon the issue, car manufacturing is all about production and supply chains. The incumbents have had decades of experience and are cash generative. VW plan to spend more than Tesla's entire market cap on R&D over the next four years or so. Tesla are a modern-day TVR.

Battery technology obviously is a key component but whilst Elon is waxing lyrical about low cobalt technology we have a company in this country (Johnson Matthey) who have already proven cobalt-free technology. VW could engage with JMAT and it is bye bye Elon.

To me, he is the world's wealthiest story teller. Anyone remember Jackanory?

[riskvsreward] 06/5/2018 12:44

The differences are that Buffet made far fewer and less critical (ie. with big mistake on holdings as big as over 10% of his portfolio, even though he is of far more concentrated investment style) mistakes, admitted to his mistake far more candidly and crucially rectified it more timely.

Woodford instead is defensive, often repeating the line it is always the market or somebody else to blame, and often double down on his mistakes, as amply manifested with his holdings like prta, aa, cpi, pru, drax.

[jimpubes] 06/5/2018 12:05

ITCM1
Would this be the same Buffet who bought heavily into Tesco at the time that Woodford dumped his Tesco shares? Buffet later acknowledged it was one of his worst investment mistakes.

[jonwig] 06/5/2018 10:32

@ wantage - it'll be wealth managers and IFAs, not fund managers. And at float, his reputation was high - where safer of shrewder to put your clients?

At IPO a broker advised me to avoid the initial hype and wait until it settles down. The 'down' bit of that is right, but it hasn't 'settled'.