Woodford Patient Capital Share Discussion Threads

[frederickbloggs] 18/6/2019 03:07

I think it prudent to value IH at nil. So subtract that "value" from any NAV assessment you are making would be my advice.

[henchard] 17/6/2019 23:20

I agree with William that WPCT could get interesting in the 20-30p range, which accords with the back-of-a-fag-packet calculation of 28p I posted a few days ago.

[henchard] 17/6/2019 23:11

"the NAV might be 86p in an orderly market"

Indeed, but it seems that with many of these unquoted, cash-burning stocks needing further funding Woodford is the market, or Woodford and another cornerstone investor or two (Invesco in particular is lumbered with many of the same nobody-else-is-interested Oxbridge spinout start-ups that Woodford bought when he was there).

What's going to happen to the valuations and funding of these cash-hungry businesses now the Woodford money tree's dried up, and with the Invesco funds and other cornerstoners like IP Group (IPO) also looking decidedly distressed?

It doesn't look good to me and the 86p NAV seems fanciful in the circumstances.

[williamcooper104] 17/6/2019 23:11

And yes there’s a point at which I would take a punt

I would work backwards and start with companies that I suspect are actually worth their NAV (ONT for instance, but even that’s a huge assumption) assume that everything else is in for free and that there’s no liquidity issues - eg the overdraft sorted out and new funding raised for follow on investments


Haven’t worked this out but my guess would be that it would break into 20-30p share price

[williamcooper104] 17/6/2019 23:06

Careful - I have no position in WPCT - plus I don’t think it’s easy to short at the moment - o

I’m curious as I hold some of the same stocks as Woodfords funds and I had a WPCT position some time ago (closed out at only a small loss)

I place little faith in most property companies NAV - and its much easier to value a Commerical property than it is a pre-revenue, loss making, privately held company

I’m not necessarily saying that Woodford has deliberately inflated his NAV - most that as a consequence of raising and spending so much money so quickly he effectively created his own market and bit against himself

[chucko1] 17/6/2019 23:01

Careful, you do seem to be arguing with the posters who certainly are NOT clueless. Especially since they have been arguing that there is untold weakness in the Woodford funds for almost two years.

So it seems that you are not only confused about the stock, but also of the people expressing opinions about the stock.

You also appear to be confused about your confusion.

[careful] 17/6/2019 22:28

The Association of investment companies define the method of valuation.
So this method results in 86p asset valuation.

I am not that stubborn and ignoring advice.
I start from the assumption that most posters are talking their book in support of their position.

I also assume tat they are mostly clueless.

[careful] 17/6/2019 22:23

I have a position here and trying to understand how the net asset value is arrived at.
I understand information is about such as 'industrial heat exposed'.

...but are you claiming that despite all of these worthless investments, they still persist with this daily valuation farce.

And when was industrial heat 8.8%
is that in todays valuation?

[skatersav] 17/6/2019 21:47

@careful: Industrial Heat is the largest position in the fund at 8.9%. You have to tot up the classes of share, and that number is a couple months old. Given the collapse in value of Autolus in recent weeks, it’s probably a bit higher than this now.

[little beaker] 17/6/2019 21:07

In all fairness he does have AJ bell.. oh wait

[topvest] 17/6/2019 20:57

Let see if they can sell anything for £150m. I doubt it. I do feel sorry for NW as he has tried something different. Unfortunately, his over confidence, tearing-up the basic rules of investing and poor stock selection is ending up as an absolute car crash. He has been choosing absolute shockers. Kier today is another example, of his stellar value-trap stock picking skills. If he was shorting his stocks, he would have made a fortune!

He seems to have morphed into a speculative story stock (biotech, fintech etc) and value trap big cap style which is schizophrenic and a highly unusual style. Investors are normally high growth or of a value style, but Neil seems to sit at the far end of both styles.

[dalesiders] 17/6/2019 20:57

Windup merchant

[chinahere] 17/6/2019 20:52

You don't listen to all the sensible advice you are given!

[careful] 17/6/2019 20:46

£1bn assets, £150m debt = £850m net debt.
Sell 150m of assets leaving zero debt, £850m net assets as before.

But what are the assets really worth if the bank called in the loan?
Every company and individual in the land would struggle if the banks called in their loans.

Todays price assumes the worst of all possible scenarios with some to spare.

[jonwig] 17/6/2019 20:43

careful - there's a link in the header "Industrial Heat Exposed" which ought to tell you all you need to know to "Beware of the Dog".

[careful] 17/6/2019 20:37

The original investment was I read £54m.
So Brad Pitt and Steve Job's widow have a stake.

What is this valued at in todays net asset number.
and how is the research going?
Why invest in technology that was thought to be impossible decades ago.

Are they such idiots, there must be more to this story than these simple facts.

[henchard] 17/6/2019 20:25

William, I read that WPCT's £150m overdraft facility ran to January 2020. I thought that might guarantee it a bit of breathing space. But it looks like borrowings may be repayable on demand.

"Originally, the overdraft facility was for £75m, with any borrowings “repayable on demand.” If this is still the case and Northern Trust was to demand repayment, things would go from bad to very ugly indeed for Patient Capital."

[careful] 17/6/2019 20:24

cold fusion.


An odd investment agreed.
Seems like scam for suckers.
But if Brad Pitt bought a stake then the science must be sound.(not)

In todays estimate of net assets, is this investment still valued at its loftiest levels?
So much bad publicity with this particular investment it is surprising that they are allowed to fully value the stake in Industrial Heat without writing it down.

[williamcooper104] 17/6/2019 20:17

Orinocor - yes - but ironically many VCs actually stocked up on relativity lower risk investments

And I don’t think any of them have put almost 10 percent of NAV in cold fusion

And of course the tax breaks on VCTs are attractive

[williamcooper104] 17/6/2019 20:15

Careful - the 86p is mainly a historic record

And even if it’s true there’s that old saying that markets can remain irrational much longer than you can remain solvent

Funding commitments and an overdraft (an overdraft - thought that was a mistake when I first read it) it’s debatable if you can survive long enough to see 86p

[orinocor] 17/6/2019 17:44

This has been wrongly marketed. It's a venture capital trust in everything but name.

[chucko1] 17/6/2019 15:33

Careful, consider the following:

In 1994, Mexico ran into some deep problems. Firstly, a presidential candidate got bumped off and just as it looked to start recovering, the Fed unexpectedly raised interest rates.

So Mexican debt did rather badly. And so did Argentinian debt, although there was nothing specifically bad about Argentina at the time. And then it got worse and traders could not work out why. So they bought some more. Then it got worse and people bought more. And then it got worse until the Brady Bonds (collateralised long-dated USD denominated instruments) traded at such a stupidly low price that a neutral observer would have assumed that they were in default. Although it looked as though they were worth only 33% of face value, once you had correctly adjusted for the AAA collateral (US Treasury strips) they were actually being priced at 22%.

In comparison, WPCT is far worse. You may think it is a bargain, just as people did with Argentinian debt. Especially as the Argentinian debt eventually bounced back to 70% or so. A year or so later.

When Argentina hit rock bottom, one thing it had was some intrinsic value of sorts. It was a country that was going to exist, with a population paying tax, and a World Bank to borrow from and an IMF to hold its hand along the way. And the US to borrow bilaterally from.

Where is WPCT’s IMF, or World Bank? What is its intrinsic value? You may argue it is its NAV. Many on this board argue otherwise, though it does not mean they are correct, of course. But it’s a pretty low intrinsic value given the risk of error in its makeup. Probably a lot lower as compared with that of Argentina back in the day.

But what Argentina had was a backstop, agencies to shore it up at a time when there was a run in it. In contrast, WPCT has a creditor who I fear will pull the plug if there is line of sight of full or substantial repayment of its loan. As such, whatever its intrinsic value may be, it may never be able to achieve it. To me, that’s just as big a risk as is the argument that its NAV is something the regulators, or even law enforcement agencies, might be taking a look at in due course.

For Argentina, you can easily substitute Ireland, Latvia, US ccc-rated credits in 2009, Next shares, Turkish Lira (after 1999 earthquake), Korean assets of all sorts post 1997, Russian equities. And so on.