Woodford Patient Capital Share Discussion Threads

[rcturner2] 28/9/2019 09:20

I wonder if they could even get another manager to take it on. Anyone with a brain would stay well clear.

[cc2014] 28/9/2019 08:51

I suspect Woodford will be retained as you'd have to find an alternative manager. An alternative manager will want:

1. A fee of at least 1%+ plus a performance over a certain figure. Woodford charges zero so this won't be too exciting to the Board although I suspect Woodford will want a charge soon. He can't carry on as he is.

2. To write down the NAV by a considerable amount (25% plus is my guess, maybe as much as 50%). I wouldn't like to be a Board having to explain this to shareholders

3. To reposition the weightings of the Trust so no one holding is more than say 2-3%. which can't be done as so many of the holdings are illiquid or unquoted this would take several years, or that's going to knock another 20% of the NAV if implemented

4. To have some money to invest in new shares which have potential. Which again can't be done as there's no spare cash, the gearing to deal with and selling anything to buy something new is the same problem as getting all holdings below 2-3%.

When I write it up like you'd have to drop the NAV by in excess of 50% to get someone interested. It's all a mess. Better to let Woodford deal with some of this and get rid of him when some of the problems are resolved.

[jonwig] 28/9/2019 06:22

"We sold ... Watkin Jones". And its share price promptly rose by 10% straight after!

daffy - that pic looks like an updated version of one I've used already.

But his skin condition is awful: he must have stopped using the beauty cream which Jessica gave him!

[daffyjones] 28/9/2019 01:45

New header image for jonwig in this Daily Fail story

[daffyjones] 28/9/2019 01:26

More from the WIFF interim report:

The portfolio delivered a negative return during the period under review. This underperformance is in part due to some company-specific disappointments, but it is also because conditions remained unfavourable for our valuation-oriented investment approach.

The portfolio has been biased towards the few areas of the market which we believe continue to offer valuation appeal. This has resulted in a meaningful exposure to domestically-focused businesses, which have been left behind in the late-stage bull market conditions that have prevailed, and therefore represent the most attractively valued stocks in our investment universe.

Nevertheless, this positioning proved unhelpful during the period, with continued Brexit uncertainty weighing on the share prices of many business that have a reasonable exposure to the UK, irrespective of their starting valuations. This explains a further part of the portfolio’s underperformance during the period, with negative contributions from the likes of Provident Financial, Redde and NewRiver REIT. Construction and infrastructure business Kier was also weak during the period. Kier has been an undoubtedly troubled business, but it is beginning to take appropriate action to address its problems.

More positively, some of the portfolio’s exposure to UK housebuilding started to perform well, including Barratt Developments, Bovis Homes and Taylor Wimpey. We also saw helpful contribution from the automotive services business BCA Marketplace during the period, following a bid from private equity. There are many ways through which under- valuation can ultimately be realised, and corporate activity is one of them.

The suspension of the LF Woodford Equity Income Fund also led to a temporary increase in redemptions from the LF Woodford Income Focus Fund, primarily from the exit of one large investor, Hargreaves Lansdown Multi-Manager Funds. Some portfolio activity was required to meet redemptions, which peaked on 10 June, since when outflows have dropped by more than 95%.

We sold several positions from the portfolio in June, including NewRiver REIT, AA and Watkin Jones. We also exited the position in BCA Marketplace following the bid from private equity.

The portfolio has therefore maintained a selective bias towards profoundly undervalued companies that are exposed to the UK economy. It is also positioned to capture income and long-term capital growth potential from a range of other businesses with attractive valuation characteristics. We understand that many investors are disappointed at the capital performance of the Fund so far. We share that disappointment, but we remain confident that the disciplined investment approach that has served Neil Woodford and his investors well for more than thirty years, is determining an investment strategy that is appropriate for the economic and market environment that confronts us.

[jonwig] 27/9/2019 17:11

As Woodfinger has learned from history, "If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

Neil Woodford has blamed the poor performance of his remaining open investment fund partly on the suspension of his flagship Equity Income vehicle, which sparked Britain’s biggest investment crisis for a decade.

Income Focus, the embattled stockpicker’s only openly traded fund, has halved in size since the suspension of Equity Income in June to £255m. It was hit by heavy outflows in the immediate aftermath of the closure, losing key clients such as Hargreaves Lansdown, but it has also suffered poor performance, falling 13 per cent so far this year.

In a note to Income Focus investors, contained within the fund’s half-year results published on Friday afternoon, Woodford Investment Management said several of the companies held in both Income Focus and Equity Income had been indirectly affected by the latter’s suspension.

“The performance of some of the portfolio’s holdings was indirectly impacted by the suspension of investor dealing in the LF Woodford Equity Income Fund,” the fund manager wrote.

“This has subsequently created a headwind to performance of LF Woodford Income Focus Fund in the short-term, although there is an important distinction to make here: recent market behaviour has had an impact on the price of some assets, but it does not have any impact on their value — and ultimately, we believe this value will be reflected in their share prices.”

The manager also laid the blame on Brexit uncertainty and the individual troubles for several of Income Focus’s largest holdings, including Provident Financial, the doorstep lender, Redde, the support services company, and Kier, the housebuilder.

Mr Woodford’s closed-ended investment trust, Patient Capital Trust, is due to publish its half-year results on Monday, with shareholders closely watching for signs that the trust’s independent board has stepped up its attempts to remove the manager.

[buywell3] 27/9/2019 12:32

buywell predicted IMB could chartwise fall IMO to 1500p a few months ago

And that states would start banning vaping before they did

Plus the FDA would have to act … and it now is albeit slowly V the problems accruing for the vapers

[dr biotech] 27/9/2019 11:24

Bit from the guardian...



After fund suspension Neil Woodford re-invests in FTSE 100 companies – like Imperial and BA’s owner IAG
It was a strong day for profit warnings from FTSE 100 companies – aside from Imperial, Pearson (down 14%) and British Airways owner IAG (down 4%) delivered shocks for shareholders.

In an office block outside Oxford, one imagines fund manager Neil Woodford was banging his head on a table. As he tries to repair his career, he’s been shifting his Equity Income fund into blue-chip stocks and updating investors on progress. To date, 84% of sales from the illiquid portion of the portfolio have been re-invested in FTSE 100 companies, he revealed this week. And which three stocks did he highlight as new investments since his flagship fund was suspended?

Well, one was BT, where all seems quiet. But the other two were Imperial and IAG. Unfortunate, to put it kindly.

[cc2014] 27/9/2019 11:02

Endgame in sight...

WIFF. AUM end May £494m, end June £296m, End July £287m, End Aug £258m. I suspect we will continue to see a slow reducion in AUM from here as redemptions will exceed new money but it looks like the fund will survive at maybe around £200m

WPCT. NAV down to 65p, share price at 44p. More writedowns to come but suggest major issue is the gearing and how much he has to let shares go below NAV to repay the debt.

WEIF. AUM end June £3.46b, end July £3.48b, end Aug £3.12b. Cash at end Aug 0.8%. We know what he's selling and not selling but we don't really know what he's buying. And that's the important bit as the redemptions as soon as it opens will hit £1b minimum (Kent CC and HL etc.) because I don't want to be in anything he's holding unless that cash figure goes up to 25% by the end of November, which is only two months away.


I am working on the basis that the City want to see him destroyed as his model of going direct to the public to get investment rather than through intermediaries doesn't make them any money.

[daffyjones] 27/9/2019 08:57

Woodford sells out of AA and IP group

[buywell3] 27/9/2019 07:32

NAV 65p hit

Only 3 months or so ago NAV was circa 85p

Approx 25% drop in NAV

The WPCT share price has dropped from around 83p to 42p recently a fall of circa 50%

Seems the market has put a factor of X 2 on ..... share price drop to NAV drop

[jonwig] 27/9/2019 06:38

The history of Woodford's involvement with Sphere, sole supporter with £17m since 2015:



A new nickname: WOODFINGER.

[chucko1] 26/9/2019 22:25

“Last of the write-downs”? So they think the fact that IH was recently written down is the end of the matter? Not to mention several others.

[spectoacc] 26/9/2019 19:38

Numis/JPM - what a pair! Saying the last of the write-downs ahead of WPCT interims on Monday. Er, except there's still much of the held-in-common with WEIF stuff to take a red pen to first. Then there's the OD to deal with. Then the renewal or non-renewal of it in January. Then the 9% stake held by WEIF, which has to be sold (perhaps after Monday?).

WPCT Board need to get a shift on with announcing a new manager IMO. JPM seem to think winding up WPCT "to close the 30% discount" is an option. I don't.

[scrapheap] 26/9/2019 16:36

citywire articles on this latest NAV cut have interesting and positive broker comments ... hope they are right for a change!

[chinahere] 26/9/2019 14:59

Thanks for the replies guys.

I have a few diversified Funds and a couple of Investment Trusts and I think I am generally well spread - no bonds / or gilts as I think they are expensive.

Trackers beat most funds don't they, but if you can find a good manager then I prefer doing that and it is more fun.

I guess my weakness is I am always looking for the 'diamonds in the dust' shares.

But then why did I end up on WPCT !?

Lol.

[liquidkid] 26/9/2019 14:15

How very British. Britain's Sovereign Venture Capital fund.
(Not authorised or regulated by the PRA or FCA)

Timeline:
24 September 2012 Business Secretary Vince Cable announces first steps in creating a Government-backed business bank (BBB not a bank), including new Government funding of £1 billion, supporting up to £10 billion

April 2015 Woodford Patient Capital Trust (WPCT) launched

The Patient Capital Review was announced by the Prime Minister in November 2016.
the industry panel were:
Neil Woodford, David Norwood etc

21 June 2017
Atom bank & British Business Bank Investments Ltd (BBBIL), the commercial arm of the British Business Bank, £30m Tier 2 capital facility to support Atom’s growth.
(follows BBBIL Tier 2 investment in another challenger Shawbrook Bank)

Autumn Budget 2017: Philip Hammond
A new fund in the British Business Bank (ironically -BBB), seeded with £2.5 billion of public money.

1 October 2018
British Business Bank plc has appointed Catherine Lewis La Torre as CEO of the Bank’s patient capital activities delivered through its
commercial arm a separate subsidiary: British Patient Capital (BCP Partners)Seeds the first wave of investment of this Government Managed Funds programme with £500 million.

Autumn Budget 29 October 2018
Patient Capital and Defined Contribution Pension Schemes feasibility study launched

25 September 2019
UK’s DC auto-enrolment pension schemes are missing out on higher returns not investing in the UK’s fastest growing and most innovative companies

Notes:
The Patient Capital Review
This proposal targets the lack of capital availability, particularly beyond the current EIS and VCT threshold.

2.4. The Panel’s perception is that there is plenty of interest from retail investors in patient capital-type investments. However, the
regulatory treatment for retail capital is even more
tightly constrained than for institutional capital. As non-sophisticated investors, regulation is focused on protecting investors’ capital, and ensuring any investments made are suitably liquid. This restricts retail investors from making patient-capital-type investments, which are
typically highly illiquid. Retail investors’ exposure to investing in scale-ups and science based start-ups is therefore mostly limited to VCTs and EIS, and a small number of specialist retail offerings such as Woodford Patient Capital Trust
2.5. While retaining regulatory protection for retail investors, the Panel recommends that greater opportunity should be given to allow them to share in wealth generation by UK scale-up and science-based start-up businesses.

Patient Capital (BPC) Investments:
hxxps://www.britishpatientcapital.co.uk/portfolio/
examples:
Nutmeg, Revolut, ZOPA



1 of/...

[jonwig] 26/9/2019 14:04

@ careful - yes: he I H Holdings results for YE Dec 2018 are due end-Sept. But that's so opaque anything could come of it.

[rcturner2] 26/9/2019 14:02

daffy, my funds are investment trusts such as PEY which are definitely not trackers. I have beaten the market every year for over 10 years.

[careful] 26/9/2019 13:56

Is there any more bad news to come here?
There is still a discount to assets of about 50% after todays move.

At what level do these become attractive.
There must be some speculative investments in there that will come good.

A monkey at a dartboard would beat Woodford easily.
Statistics suggest that something must come good soon.