Woodford Patient Capital Share Discussion Threads

[ltcm1] 04/9/2018 15:19

chucko1 it does seem an astute move from Woodford to sell down Purp and Autolus so as to support the smaller holdings that are in need of further funding. It is clever the way he is able to source liquidity without tanking the share price.

However it remains a worry that none of the smaller holdings never seem to get moved on, you might think he would have a cull at some stage like Allied Minds did and focus on a smaller stable going forward.

But then what do I know about it? Who am I to question a star investor like Neil Woodford???

In Woodford we trust...

[chucko1] 04/9/2018 14:06

So the ones that have a visible price are vanishing and those that are a “matter of opinion”(*) are increasing? That’s good, because when the ratio is finally 0/100, WPCT can be worth whatever you like and then all the believers will remain happy. Not sure how they’re going to pay the rent, though.

Being less cynical, I do support reducing the exposure within the fund to Autolus, just as I argued with Prothena. Furthermore, realising value to support those companies in earlier stages was part of the plan. But that does not really explain PURP. Was the holding 2% higher last month? I see that (source Bloomberg) as of Aug 15th, EIF had acquired a further 5.3mm shares, but there is no information on WPCT’s holding.

(*) but do remember that there is an audit committee and annual audit, so that’s all fine. Isn’t it.

[daffyjones] 04/9/2018 13:42

August roundup is out now on the Woodford website

hxxps://woodfordfunds.com/words/insights/roundup-august-2018/

[ltcm1] 04/9/2018 13:26

New update from the Woodster:

hxxps://woodfordfunds.com/funds/wpct/trust-facts/

Proton Partners moving up, we have a new number one in Benelovant AI, Autolus much reduced, Purp has shrunk to almost nothing.

All in all a sorry state of affairs. I suggest you all sell your holdings as this is as good as it gets here folks.

[trollwatch] 04/9/2018 09:47

"Winnie and the Seven Dwarfs go mad in the West Country."

That's the next big shareprophets blockbuster

[1tcm1] 04/9/2018 09:32

Yeah, your probley right there chuckol. But I've got to keep going otherwise my Greek hovel won't get finished, and where else could I watch Pandora sunbathing?

[ltcm1] 04/9/2018 08:54

chucko1 your third paragraph sums up the situation perfectly.

The question we must face is what would happen to Woodford Investment Management if the Income funds totally melt down??? WIM would presumably be facing large losses and there might be an impact on the operational functioning of WPCT.

Researchanalystman I take your point but the original idea behind WPCT was to have a stable of investments at different stages in the company lifecycle. The reason behind the large stake in ALM for example was that income would be thrown off by say year five and WPCT had a moderate risk rating at launch. But since then the risk profile has increased many fold, a situation many of the launch investors may not fully understand.

[ltcm1] 03/9/2018 18:34

Solonic you are correct in that with the decline of Purplebricks in the portfolio there isn't much of a direct link. However if confidence in Woodford gets crushed then negative sentiment is bound to weigh badly on WPCT.

People might simply not believe these celf certified NAV valuations.

[chucko1] 03/9/2018 18:07

I am not so sure that it’s the “coming months” - perhaps a little longer - but the point is quite right. It is indeed the resilience that has been severely compromised. EIF has “purchasedR21; a number of non-income producing assets which are likely difficult to sell in the downturn you illustrate. (Without WPCT, would so many be there?)

The perfect storm, though, is a general equity sell-off focused on a poorly considered Brexit deal. The pound weakens further and confidence is shot. The issue is that NW appears to have very few FX earners and so I would expect the portfolio he currently has would underperform. So there may well be a further spate of redemptions to either invest in better performing funds or just taken out of the equity markets altogether. So then, he must sell more of his holdings right when he will barely be able to (especially if compared with the typical UK equity funds I see).

Three years ago, the EIF would never have had such a weak defence. Maybe it won’t be required, but he’s left himself more vulnerable than many other funds even after this period of terrible underperformance. I wouldn’t mind so much if he was doing a Tony Dye, and simply refusing to get involved in dot.com in 1998-2000, underperforming, getting fired and then being proved correct. Dye had no structural issues; simply temporary performance issues. The latter can recover, the former may not.

It’s a risk thing above all else.

[solonic] 03/9/2018 17:42

They might be resiliEnt, though, LOL (Chucko1 made the same spelling mistake!.) But it's of NO interest to WPCT holders. Conflation , conflation, conflation.

Of course if there is a general drop in the market THAT will affect WPCT and nearly every other bloody share. You've never been able to make that 'tar with the same brush' argument across from just the other Woodford funds. LOL LOL.

[ltcm1] 03/9/2018 17:18

The thing is the benign view of the UK economic prospects has not been fulfilled. Wages are not rising above inflation, growth is under the Woodford forecast, forward investment has declined sharply.

He's bought housebuilders, shopping centre REIT's, some retail, a huge amount of personal finance. The problem (and advantage) is it's all highly correlated so if things don't go Woodford's way the decline will be across all these sectors.

The income funds quite simply won't be resiliant if growth does stall in the coming months.

[minerve] 03/9/2018 17:17

Yes, but they still need to BUY the house before a mortgage can be repaid. Mortgage repayments are cheaper than rentals - all over the country - but that doesn't mean banks will lend you the money because they want decent LTVs to cover their downside risk. They effectively want the difference between new build and second hand underwritten - and that gap is currently getting wider.

There is a huge difference between affordability and purchase ability. Affordability depends on interest rates, inflation and wage growth etc.. Purchase ability currently depends on temporal schemes like HTB and Bank Of Mum And Dad.

[researchanalystman] 03/9/2018 16:57

A response - (to a post which actually is not a wpct related one.!!)(albeit 2017, ) our increasingly benign view of the UK's economic prospects combined with the wider market's pessimistic view towards domestically exposed businesses in the aftermath of the EU referendum, created a contrarian opportunity to revisit the UK housebuilding sector for the first time in many years. In our view, UK housebuilders and the construction industry more broadly is benefiting from structurally positive supply-demand dynamics. Fixing the UK's 'broken' housing market inevitably means building many more homes and, although some have concerns about house prices, from an affordability perspective, with interest rates near record lows, mortgage repayments represent a much smaller part of take-home pay than is normally the case

[1tcm1] 03/9/2018 16:18

Did anybody understand any of that? Especially why WPCT was belatedly brought in at the end, LOL


Apart from the shareprophets posse, that is, of course, who will claim it was perfectly intelligible and numerate. LOL

[chucko1] 03/9/2018 13:48

I have had a look at the holdings that NW has in the builders and estate agents. I am not including the REITs.

As of end of July 2018, the EIF had 14% of its assets allocated to that sector, whereas the figure for the IFF was 16%. It is useful to compare this to a FTSE 100 weighting of under 1.5% and a FTSE 350 weighting of around 1.8%.

The dividend yields of his relevant holdings are varied, but I note that his recent buys/sales have not shown any pattern of replacing low yielders with high yielders. This, at least, demonstrates that there is still some meaningful stock selection occurring, notwithstanding a previous concern that the exposure he has to this sector is (far) too high, and for the wrong reasons. On the other hand, the sector yield is 5.60%, somewhat above his target yield and some of that is made up of special dividends. The risk remains that he favours this sector only because of this current high yield while he has otherwise an income shortfall owing to a few well-documented mishaps. Perhaps in the same way that some feel that he explains his stock selection in somewhat disingenuous terms - the reality being that he is forced to adopt a particular risk profile, rather than preferring it. And all because of WPCT, in some peoples’ eyes.

[solonic] 03/9/2018 13:17

Excellent.