Woodford Patient Capital Share Discussion Threads

[tim 3] 15/10/2019 14:36

I think you have to at least ask the question did he mislead investors.

While there is not much you can do if a fund manager gets it wrong and underperforms thats the risk you take.

However when Woodford said in relation to prospective buyers of his Equity income fund and I quote from his website, "protecting capital is our key priority" with actions like buying so many of what are clearly high risk companies and getting round rules using the Guernsey exchange can he honestly say thats putting protecting capital as the key priority?

From his website.

Our original investment proposition
The original Woodford fund, focused on delivering attractive long-term returns for investors through investment in undervalued companies that can deliver sustainable dividend growth
Investors expect a positive return and that is what we aim to deliver over the long term – protecting capital is our key priority
We aim to offer investors capital growth and a growing income stream, paid quarterly

[my retirement fund] 15/10/2019 14:15

...but why is the daily nav so shamelessly high?Jeez some of you thickets still don't get it! Lets spell it out for you shall we! The NAV of these kinds of charades are shamelessly high in order to get mugs like you to imagine they are buying something that has value and part with your money. The money has to come from somewhere and thats you matey!

[essentialinvestor] 15/10/2019 13:57

Careful, perhaps a bit of humility from yourself would not go amiss, you've reiterated the
same points you made at much higher levels.

[earthian] 15/10/2019 13:50

Porsche1945

You beat me to it - I was just about to post a reply to your earlier post on this. When I saw that the ability to post was 'open' again I was surprised. Now we know why! I shouldn't wonder that if one tried to post something akin to the truth on their, it would be almost certainly moderated out!

[porsche1945] 15/10/2019 13:33

Woodfords site seem to have only opened comments and are moderating them just to allow those on the board slagging Link so I guess they are using it to back up woodys self denial. Got to wonder about the whole woodford thing, i said 18 months ago this would become newsworthy, the tie up with HL, the guernsey listings, cosy relationships with Raven etc...poor oversight from wpct board....the whole thing starting to look, well, a bit dodgy.

[1oughton] 15/10/2019 13:26

nice try ltcm nice try sunshine

wont wash

[tim 3] 15/10/2019 13:14

Can only say that some on here have called this spot on from the start saying the equity fund will never reopen well done much better information on here than in most press reports.

[ltcm1] 15/10/2019 13:01

I agree it does look really bad for Woodford right now. But he can't be the only one in this and what role did his partner have.

The part we don't know is who did what within WIM. There were loads of others that could have warned about the illiquids and the Guernsey listings, yet chose not to. In my view they are more guilty than Woodford himself, it's not like he hid stuff from anyone, it all went on in plain sight.

[ltcm1] 15/10/2019 13:01

1oughton do you know psychochomper, you nearly always reference his/her posts.

[jubberjim] 15/10/2019 13:01

What if any impact will this latest announcement have on those shares that the woodford trusts had been diversifying into
Will the short sellers be able to go after those

[biggest bill] 15/10/2019 12:45

Looking at the share trades today in wpct, there is still an amazingly large number of private investors buying shares here. Obviously, they must think that they are getting a bargain because of the discount to the published nav. I can see court cases in the future if the real nav turns out to be much lower than the published figure.

[ltcm1] 15/10/2019 12:40

It is all well and good saying WPCT should go into "run off mode" but the whole situation as outlined by Shareprophets is the WPCT companies need a boatload of cash to get into the stage where investment could be realised. The FT are essentially endorsing the Woodford 'patient' strategy!

If WPCT went into run off mode it would run off to zero IMO. I would have thought the only way out is a sale and transfer of WPCT into another fund or funds, with WPCT holders receiving paper in the purchasing funds.

The game is over for WPCT, this thing needs to be broken up ASAP.

[chucko1] 15/10/2019 12:24

EI, it was quite an easy call. Far easier than, say, Carillion which had had positive write ups from JP Morgan for example.

When I say “easy call”, I am referring to the outsized (and various) risks, relative to the share price. And the consequent explanation as to why the NAV discount was widening - something caused by market forces. There were clearly others who were deeply sceptical. Now it’s clear why.

[jonwig] 15/10/2019 12:24

FT's Markets Live hasn't much on Woodford, since the FT is busy pushing its fraud exposure of Wirecard (German, DAX30) - a much bigger fish! However:

Here's Stifel's Iain Scouller

There was always a high likelihood that investors in the Woodford Equity Income Fund (WEIF) would not wish to stay in the fund once it re-opened, and we think that today’s news of a wind up and return of cash to investors gives investors clarity now, rather than having to wait until the end of the year to see the outcome. The Woodford Patient Capital (WPCT) board has put out a brief holding statement reiterating they are undertaking a review of the management arrangements and will make a further announcement in due course.

With Woodford Investment Management effectively in wind-down, we think the board of WPCT does now need to appoint a new manager as a matter of necessity, given the trust does not pay an annual management fee (only a performance fee) and Woodford IM will have little revenue to pay its expenses now that there is no fee income from WEIF. We think that any new manager of WPCT will expect a conventional annual management fee to be paid going forward.

We also think the wind-up of WEIF increases the likelihood that the board of WPCT will decide to put the trust into run-off, with investments realised gradually over a number of years and cash returned to investors once the bank debt (£111m at 26/09/19) is repaid. We commented on the bank debt issue in a note last Thursday (link here).

WPCT opened down 3p in trading this morning to an all time low of 35p - in the short term, we think the shares may see some bounce, given the increased likelihood that a new manager will be appointed to WPCT and a run-off of the trust appears more likely. However, we would expect the price to continue to be volatile, given the question marks around the realisable value of the portfolio, especially the unquoteds and issues around WPCT’s need to reduce leverage

One of the biggest factors in corporate failures has been excessive leverage, so it is always a factor to monitor closely. This trust has been running with leverage of 15% to 20% of NAV in recent years. In normal circumstances this should be quite manageable, however Woodford Patient Capital (WPCT) is clearly not in normal times and we think a close eye needs to be kept on leverage, given the debt facility expires in January 2020, unless renewed.

We assume that by 31/12/19, there is a sale of a number of unquoteds from WPCT, resulting in a cash inflow which can be used to pay down debt. The manager says there are negotiations underway on a number of company-specific transactions, together with interest from parties looking at acquiring portfolios of assets. We also assume that a new bank facility will be negotiated, although at more onerous terms than the current LIBOR+1.5% cost. As 2019 draws to a close, if neither of these developments materialise, this would be a cause for significant concern.

There are clearly a number of scenarios for potential outcomes for WPCT over the next year. It continues to be a high risk investment in our view given leverage, management company issues and the illiquid portfolio. Given the current inability to make new investments and difficulties in making follow-on investments due to the trust being close to its leverage upper limit (19% of NAV vs 20% maximum at time of investment), we think the board should seriously consider adopting a 'run-off' strategy where investments are gradually realised over a number of years and cash is returned to investors, once the bank debt is repaid. There is also a question over the viability of Woodford Investment Management and the board have already said they are reviewing management arrangements. If a new manager is appointed, we think it would be helpful for portfolio companies if some of the existing management team transfer over to any new manager, in order to maintain continuity and knowledge of portfolio investments.

[essentialinvestor] 15/10/2019 12:13

Well done to posters here who rightly warned on the dangers, shouted down by
those who did not either accept or fully appreciate what was transpiring.

Hopefully those posts made some think twice and saved some PI losses.

[minerve 2] 15/10/2019 11:51

careful

"Are they not obligated to make a realistic and prudent estimate?"

Yes they are. Unfortunately they will rely on information as it stands until it no longer stands. I know that seems an obvious comment to make but a company that needs capital injections is unlikely going to be open and transparent about a dire future situation when it is tempting to raise or need future capital. It wants to raise capital and it wants to raise capital at lowest cost. It will not be lying about its current situation, it will not be lying about its future situation, because its assumption is that capital is raised. Not many companies plan to go bust. When most of the information emanates from the company itself (as in start-ups with little trading history) it is extremely difficult to know whether that capital will be forthcoming and at what cost. You have to rely almost 100% on the executive.

[porsche1945] 15/10/2019 11:50

They have “ opened comments “ on woodfords site!! Could be interesting if they dont moderate it all out.

[jonwig] 15/10/2019 11:47

@ ltcm1 - "Has he done anything wrong?" Unfortunately he probably won't face criminal charges on current evidence, but setting the bar at "a fit and proper person" is a matter where the FCA can be judge and jury.

[careful] 15/10/2019 11:38

Minerve
But why is the daily net asset total so shamelessly high.
Are they not obligated to make a realistic and prudent estimate?

[minerve 2] 15/10/2019 11:35

careful

If small companies are relying on forward cash flows to maintain the status quo until their product or service is commercialised and that capital suddenly becomes unavailable, late or more expensive then NAVs (which are only opinions in these types of assets) can quickly go to zero from anywhere. £711m to £150m is certainly in the realms of possibility IMO.

[trying2getrichquick] 15/10/2019 11:34

I believe the NAV will be considerably lower when assets are realised

[1oughton] 15/10/2019 11:31

if i am mad for investors about woodford's behaviour then spare a thought for those investors.

what he has done is criminal in my view and i hope they bring some civil action against the scumbag