Woodford Patient Capital Share Discussion Threads

[mad foetus] 29/12/2017 11:27

Yes but in the long run, we are all dead. Anyone who thinks Amazon hasn't been a great investment over the last 20 years is daft.

[topvest] 29/12/2017 11:15

Spot on. FANG stocks have just crazy valuations. Technology companies lead for a decade or two and then lose out. Nokia, IBM, Blackberry, Polaroid, Kodak...the list is endless!

[mad foetus] 29/12/2017 07:33

For many years value investors have proclaimed that this will be their year and I am still waiting. Part of my scepticism is about how technology is changing the future. For much of the last decade I worked in a global bank, which consistently could not understand why its share price was not double what it was. On any sum of the parts calculations banks look dirt cheap. And yet, if you were designing a bank now, it wouldn't look anything like any of our existing banks. If Google, or Apple, or Amazon were to choose to start a bank, what percentage of the market would they take? How much more knowledge would they have of businesses and individuals that they could use in making credit decisions? If value means investing in banks, real world retailers, ageing pharma companies etc, their cheap rating may not just be a fad. But I would have thought WPCT was, if it is anything, a vehicle for growth investing.

[p1nkfish] 29/12/2017 00:14

Advice is the same, grow up.

[minerve] 28/12/2017 23:52

I'll be referencing some of p1nkfish's points over the next few days. Adding improved insight or shooting them down. Child's play to me is still far superior to his ivory tower seriousness.

[minerve] 28/12/2017 23:38

p1nkfish

I decide whether I post something of value and/or whether it is serious or not. If you don't like my posts and my sense of humour you can take time out of your supercilious tone of condescension and hit the filter button.

[topvest] 28/12/2017 19:08

Thanks. Lots of people are talking about patience. In my view You can't afford to be patient when you have too much debt and illiquid poor quality holdings (in loss making companies which rely on you for funding) which is the case here!
I'm very patient with low average turnover so know how to be patient, but being patient on low quality holdings when a bear market is on the way sooner or later is speculative and could end in tears. It was risky without debt, but with 20% leverage its close to stupidity and certainly "driving without due care and attention".
I think, after 20 years of success, he has become excessively confident in his own stock picking skills. Surely, that must be the reason for the predicament he now faces?
Many of his holdings were also bought on IPO within his equity income portfolio which is another RED FLAG and basic investment error. Always better to be selective on participating in IPOs when the vendor is holding all the cards!
What Woodford needs for this to be a success is a bubble in early stage pharma companies or a multi-bagger in one of his holdings and quickly. There appears to be a lot riding on Purplebricks. Boom or bust for this trust (and by association the Equity Income Fund) within 1-2 years!?

[kenmitch] 28/12/2017 17:44

Excellent info from topvest. Also any competent investor and fund manager will have done well in 2017. To do badly in a roaring bull market is inexcusable. To double up on losing investments is also often unwise. Woodford is not unlucky. E.g because holding quality investments in underperforming sectors. Too often he has bought poor quality as topvest has explained.

[minerve] 28/12/2017 17:07

The game here is not to play the 10 year wait. If it were an embryo wait until it is born and starts to grow - you will have plenty of time to buy in at that stage. You will know the time is right when you smell the full nappy.

[eastbourne1982] 28/12/2017 16:42

p1nkfish,

Is the 10 year wait worth it though ??

What return would you hope for considering one has to be so patient ?

[p1nkfish] 28/12/2017 16:31

Patience, 10 yrs.
That's the sort of timescale.
3-5 is not patient capital.

[ttg100] 28/12/2017 15:50

>> topvest - many thanks for the work - not sure I agree with all of it but interesting and useful.
am still trying to be patient - BUT !!!!!

[p1nkfish] 27/12/2017 18:00

Take a look at holding changes.
Short interest to be updated soon but you can see previous peak.
Target prices illuminating too.
Go figure.

[pugugly] 27/12/2017 13:36

topvest - Useful research - but you will get down pipped by those for whom the sun shines out of Woodford's nether regions - If your very plausible scenario comes to pass one day they will realise they have lost much of their investment and may even have difficulty unloading their WPCT -

[essentialinvestor] 27/12/2017 13:32

topvest, interesting view, let's see how 2018 develops.

[topvest] 27/12/2017 12:51

I have been doing some research following the points made by ShareProphets and I have uncovered something that I think is a major problem for Woodford. It's a shame as he has done some very good things, and none of us want him to hit the rocks, but I thought I would share what I think is a bit of a potential issue if things don't start to improve for the golden boy of the asset management industry.

Let's have a look at his main Woodford Equity Income Fund. This company has an objective "To provide a reasonable level of income with capital growth". OK fair enough, so an income and capital focus. Let's look at the Top 10 holdings: Prothena, IP Group, Purplebricks and Provident Financial are 4 of the 10. 3/4 are loss making and 4/4 won't be paying dividends anytime soon...a little odd for the funds objective, but it's just the top ten.

Now the really interesting thing. Well surely the £8.25bn fund (was nearly £10bn) has some quality in the rest of the portfolio. From my run down of the 126 holdings I was amazed that 30-35% is, in my view, SPECULATIVE RUBBISH (story stock, loss making etc.). The tail is long and ugly. Call me an overly prudent investor if you wish, but I would have holdings 67-126 (by size) on my bargepole list.

What could happen? Well if Woodford is actually buying some of the rubbish in WPCT then this has alerted me to a real and unfortunate possibility as he is making his largest fund increasingly toxic. I've run some very high level numbers.

At the moment I have segregated the portfolio into "good" and "bad" portfolio's. Let be generous and say that 70% is good and 30% bad. Now what happens when outflows accelerate as they MIGHT given performance is really bad and his portfolios are stuffed with toxic illiquid investments bought high.

What happens if outflows move to £4.125 billion (50% run for the exit)? Well isn't Woodford going to be forced to sell out of the liquid good portfolio. If that happens, they will run out of things to sell and have to stop redemptions / sell the rubbish at very low prices. The portfolio will end up being almost entirely rubbish with no income.

Of course this may not happen, but I think it underlines that there is a lot more than WPCT at stake now. Worrying even in a BULL market, let alone if we have a correction or BEAR market.

[minerve] 27/12/2017 11:37

Patient means patient!

Once you have been invested here for several years you will understand the word.

[pugugly] 27/12/2017 07:28

And yet another holding looks as though it may be going to Chinese Money Heaven


Wantage - Could not agree more - Might be something in the unlisted holdings but very opaque - Needs as many realists have said before a significant discount to claimed nav to be an interesting possibility.

[wantage] 27/12/2017 00:30

Ironic.The die hards will read this thread, and have listened to T W 's five parter,
a brilliant and damning expose.
I will be shorting this tomorrow, but those who should sell for their clients ,
those discretionary brokers, fund managers, and IFAs will hold their longs til the axe has fallen,
because like Woodford, it might look bad on the next round of valuations if their clients see a 25% loss.So much better to join the herd, and go for the full monte,
50% and beyond.So much better to be lost in the crowd,so much better if no one's
responsible.