Woodford Patient Capital Share Discussion Threads

[chucko1] 22/10/2018 22:54

Saltraider, you are quite free to filter any of us as I do most of your ilk. It’s quite a job keeping up, however.

Also, could you stop blubbing so much - it’s rotting my virtual keyboard.

[chucko1] 22/10/2018 22:50

That last paragraph!

First percentile is, for example, if you have 1,000 results, then you are in the bottom 10 (1% of 1,000) - and 2nd percentile is being ranked between 11 and 20 and so on. You also get deciles (groups of 10%) and quartiles (groups of 25%). The median is the dividing line between the bottom 50% and top 50%. Actually, there are not 1,000 funds in their sector - there are about 250, so 1st percentile means bottom 2 or 3 (not sure of Bloomberg’s coding).

Autocorrelation basically means that you correlate the return in period (i) to that of period (i+1). If they are uncorrrelated, it is saying that whatever has happened in the past means nothing for the future. So EIF’s poor recent performance need not continue (from a purely statistical perspective).

What about mean reversion? Interest rates, for example, mean revert - meaning that the more they fall, the more they are likely to revert (be pulled back) to some long term average at some time in the future. Option traders use mean reversion parameters in some asset classes to calculate forward prices, thus making a correction to the classic “arbitrage-free” calculations. So, in terms of funds, if you are ranked last in some class (as Woody currently is), then it is LIKELY that you will be ranked well in the future - your rank mean reverts. Of course, there are exceptions to this - apparently, some managers actually do have a long term edge, though we only see that in the rear-view mirror (we could argue for eons on that last point). And if you recall, there was once that infamous Manish Fund. That one did not mean revert as it had a total lunatic at its helm.

The 8th percentile of the 250 funds would mean being about 18th, 19th or 20th from the bottom out of the 250 funds. Not what Mark Barnett would want.

Structural issues would be impediments to mean reversion etc. and that is my issue with investing with Woody, for now.

I entirely agree with your comments about the credit cycle. Not easy to say when it will start to keel over, and perhaps Woody gets lucky and enough stuff will refinance before the rivets start popping. But it’s not a great risk/reward.

[saltraider] 22/10/2018 22:46

Oh ... please ... Tom, just give it a rest. This smacks of desperation ... again.

For heaven's sake, how much of WPCT do you think we all hold ... altogether, in total? Even if you could frighten, cajole, con, mislead and bamboozle all of the holders on here into selling everything on the same day, it would probably scarcely register as a measurable fluctuation in the share price.

I don't know why you bother.

[ltcm1] 22/10/2018 22:04

Anyone see WPCT closed down today???

This is a marvellous time to exit, the Industrial Heat mirage can only last so long. Air breathing rockets rarely have much lift off in my experience. It's sod's law the absence of any profit from the WPCT fantasy stocks will come home to roost once Trump blows the US economy up.

I don't know the catalyst but the credit cycle will turn guys. Financial disclipline will one day return to the markets and long forgotten metrics like eps, cash flow and balance sheets will become important again.

By all means have your fun at my expense but I think a great many of Woodford's Wonders are going to find it awfully hard to finance themselves in the new normal of tighter capital markets.

You have been warned!!!

[ltcm1] 22/10/2018 21:54

chucko1 I have to be honest and admit I don't understand any of that last paragraph!

Are you saying it is perhaps more balanced than people have given it credit for in terms of resiliance in a market decline? What is first percentile and eighth percentile?

As I saw it the EIF seemed to be a large bet on real wage growth and higher productivity in the UK. The wage growth number was better recently but then I heard that the figure is not that reliable and can be heavily skewed by shortages in just a few sectors.

I can't really see how the Brexit inertia can benefit the businesses Woodford has invested in be it housebuilders, shopping centres, personal loans.

[littleweed1] 22/10/2018 13:15

Ho Ho. Bloody nonsense, winnie. And you know it.

[chucko1] 22/10/2018 12:59

ltcm1, I would not bother studying it any further! In simple terms (which is apt), there is no evidence from any of them (open question as to how many human individuals there really are) of being concerned with “what if I am wrong?”. They try and mock and heavily criticise me, you, Jonwig etc. but I asked myself that question and so avoided losses on all of NW’s funds. In fact, I kept a good portion of the gains, as the problems with his funds only became apparent relatively recently.

I do not rule out investing again, but this episode has yet to pass.

Now, on a more positive note - EIF has risen from the first percentile to the second percentile in terms of 3 year performance. Furthermore, there is close to zero autocorrelation of returns in Fund performance over long time periods, and even evidence of mean reversion in terms of rank. Seriously. But that is to ignore any structural issues which I think is the principle risk factor here, so I would rather place that bet with the Invesco HI Fund (8th percentile).

[ltcm1] 22/10/2018 12:24

This is what worries me about this place, the LOL. It's like a lot of you have forgot that stocks regularly do double in three and a half years. It is interesting to observe as a bystander how the losing mentality has infected you and dimmed your horizons over the passage of time.

I mean when WPCT started out there was huge buzz and a NAV premium, as most investors thought it would double as a matter of routine.

Now we are left with the brittle, the fragile, the over-sensitive, types who desperately defend their underperforming investment yet can't handle feedback let alone criticism.

Instead they cling to a romanticised fiction that Woodford is some sort of guru who has an edge in the biotech and disruptor sphere.

All I can say is it is an interesting process studying the losing mentality.

[petethepict] 22/10/2018 08:54

The lying shareprophet is following the Saudi template to the letter. Even the explanation of the lie isn't true. He has no shame. The Crown Prince Squalid Walid..

[ltcm1] 22/10/2018 08:32

OK cheers RAM, the Sunday Times did a typo and printed '17' when it should have been 17th.

Great we have cleared that up but two conclusions can be drawn.

1). Mr Woodford is not as patient as his investors.

2). Value Act are clearly bringing something to the table Woodford can't.

In both examples it is a litle sloppy.

[trollwatch] 21/10/2018 23:09

Somebody should throw a bucket of disinfectant over the squabbling shareprophets.


jonwig, where are you when we need you most?

[researchanalystman] 21/10/2018 20:10

Itcm1 - misinformation. Please if post , - post accurately'Woodford sold a slug of Horizon Discovery to US activist fund Value Act last year"They did not sell last year but less than 6 mths ago...May 3rd 2018. ie THIS YEAR woodford had 22% of horizon discovery (price about 150 p). 17th sept 2018 had 17 % sold probably between 200 - 230p

[ltcm1] 21/10/2018 18:05

Woodford sold a slug of Horizon Discovery to US activist fund Value Act last year. Shares now up 50% and brokers tipping them to go a lot higher.

Seems a bit odd the king of patience sold out after only two years and now prospects at Horizon seem much improved.

[minerve] 21/10/2018 17:14

chucko1

Yes, I would agree that Woodford's portfolio isn't 'well-balanced', but no one expects it to be. You are buying his funds for income or equity growth the Woodford way. One would normally buy a Woodford fund alongside others to build a balanced portfolio. I was thinking generally and with respect to my own. :)

Yes, I agree, Woodford is testing investors' patience, for sure.

[chucko1] 21/10/2018 16:56

Minerve, all very well, but it’s not a balanced portfolio. It’s pretty unbalanced - far more so as compared with the high focus on the the major pharmaceutical and tobacco stocks he used to have 30% of his fund in.

I don’t mind some of his stock picks, but the “deviation from the market” has been so pronounced that he risked sustained underperformance, and almost half of his investors have abandoned him. Not so smart after all, irrespective of the ultimate performance, and seasoned fund managers should be well aware of the need to understand the limits of their investors’ patience.

[1tcm1] 21/10/2018 00:39

Porsche the Chav has been thoroughly skewered by Minerve. Mind you it was a lot of effort to flatten an imbecilic troll. Nobody was taking any notice of him anyway.

[minerve] 21/10/2018 00:04

Porsche1945 19 Oct '18 - 22:11 - 4693 of 4705

➡️ Explain, why? Are you simple? He bought into Crest at 5.40, now 3 quid, Barratt TW
➡️ being destroyed by a wave of short sellers, most have lost another 4/5 per cent
➡️ just today, down, what 30/40 pc since he bought in at TOP of cycle, likes of
➡️ Telford homes down from 5 quid to 3 in a few months....the UK heading for a
➡️ hardcore brexit induced recession....so yes, insane exposure to capital destroying
➡️ dividends about to be cut cyclical house builders, and he is supposed to be
➡️ protecting investors money. Does that clear it up for you?

All that you have written tells me more about you than it does the house builders. For a start, you are purely judging a company based on its share price performance rather than its underlying business prospects. Before I talk about the house builders I would like to point out that Woodford has opportunity to average down/buy further tranches and some of those shares will have already yielded whilst he has held them. So looking at share price alone tells you nothing about Woodford's performance on each stock.

Now to the house builders. Barratt is currently an earnings king. Sure, earnings of builders have always been seen as poor quality because of their cyclical nature. At the moment residential building has hit a sweet spot. The demand/supply dynamics are incredibly strong and IMO are set to continue that way for at least another 5 years. HTB is supporting sales but is only part of the positive outlook. If we are to build the houses required the government rely on housebuilders to generate the cash to buy land and go about their business. It is therefore likely that HTB will be extended but possibly not in its current form. If the Tories make house purchases difficult they will lose votes. If the Tories create rapidly falling house prices they will lose votes. They really have no choice but to continue support - in some form - of the builders at least until after the next general election. If they halt HTB then they must have confidence that commercial lenders are now implementing similar schemes and the scheme is no longer required - I used one in the early 90s provided by the builder. Also, to add, I think some of the housebuilders are not as dependent on HTB going forward as some market participants would have you believe - like the shorters.

Barratt is set - in the next three years - to deliver earnings that are nearing 44.8% of the current SP! So in three years the share has approximately half paid for itself. Some builders even more. Some analysis has been modelled on Barratt which shows they can continue to maintain the current dividend at least 1x covered even if a recession occurred and even if it was similar to 2008/2009. Of course it is only a view and it is up to you whether you believe it or not. Looking at the balance sheets and the earnings of some of these builders I think it is quite conceivable and worth the risk.

Of course Brexit is a mess and nobody knows the outcome. There could be a recession, there might not be, nobody really knows, and history has shown that sometimes we don't know until it has actually been and gone!

As part of a balanced portfolio, holding a few housebuilders is a smart investment choice IMO. The shareholder value being pumped out of these investments is currently v.good.

You asked whether I am simple. No. Not as simple as you it seems. In order to deliver better investment performance than the market you must deviate from the market. Intelligent investors don't take the popular opinion, they make their own mind-up based on sound analysis. That behaviour might take you up the risk curve a little, but your returns on the succesful investments will be much greater, and once compounded, allow you to easily throw-away the failure on some.