Woodford anyone?
Discussion
98elise said:
Tim330 said:
What do folks think this will trade at in 28 days?
Surely it should still be the value of its underlying investments?If you are in super liquid investments then when half your investors pull their money you can sell down those investments into cash quite quickly and return the funds without impacting the price of the investment too badly, if at all.
But if they don't trade much (illiquid) and you are a big investor then your partial exit can collapse the price dramatically.
Furthermore, funds like this tend to trade at a premium / discount to NAV (net asset value = the value of the underlying investments) and that usually reflects confidence in the fund manager to create value over-and-above the point-in-time value of the underlying.
Given what has happened any Woodford premium would now be a significant discount (more likely it was already a discount which will now widen).
Finally, even after a steady unwinding which a suspension allows, there will be a massive rush for the door on opening which will lead to the same problem that caused the suspension in the first place...
So... not pretty I suspect.
I have a few k in the LF WOODFORD INCOME FOCUS which seems to be suffering also. I trimmed my holding a year ago but kept some as the dividend has been pretty good and I've worked on the basis that my 20% loss (on paper!) will eventually be recovered by the dividend...now I'm starting to wonder whether this fund might also catch a cold...
Is anyone else in this situation?
Is anyone else in this situation?
walm said:
The problem is the illiquid investments within the fund and that is why they temporarily closed it.
If you are in super liquid investments then when half your investors pull their money you can sell down those investments into cash quite quickly and return the funds without impacting the price of the investment too badly, if at all.
But if they don't trade much (illiquid) and you are a big investor then your partial exit can collapse the price dramatically.
Furthermore, funds like this tend to trade at a premium / discount to NAV (net asset value = the value of the underlying investments) and that usually reflects confidence in the fund manager to create value over-and-above the point-in-time value of the underlying.
Given what has happened any Woodford premium would now be a significant discount (more likely it was already a discount which will now widen).
Finally, even after a steady unwinding which a suspension allows, there will be a massive rush for the door on opening which will lead to the same problem that caused the suspension in the first place...
So... not pretty I suspect.
I sold half my investment last month after the poor performance. I'd been invested since shortly after launch. Its in a sipp so 30 years or so to try and recover the losses. I realise that in a very, very small way I was a contributor to this problem. If you are in super liquid investments then when half your investors pull their money you can sell down those investments into cash quite quickly and return the funds without impacting the price of the investment too badly, if at all.
But if they don't trade much (illiquid) and you are a big investor then your partial exit can collapse the price dramatically.
Furthermore, funds like this tend to trade at a premium / discount to NAV (net asset value = the value of the underlying investments) and that usually reflects confidence in the fund manager to create value over-and-above the point-in-time value of the underlying.
Given what has happened any Woodford premium would now be a significant discount (more likely it was already a discount which will now widen).
Finally, even after a steady unwinding which a suspension allows, there will be a massive rush for the door on opening which will lead to the same problem that caused the suspension in the first place...
So... not pretty I suspect.
walm said:
...funds like this tend to trade at a premium / discount to NAV (net asset value = the value of the underlying investments) and that usually reflects confidence in the fund manager to create value over-and-above the point-in-time value of the underlying.
Walm - the suspended fund is the daily-priced one, so this premium / discount question doesn't apply. The fund trades (or not!) only at it's NAV.I suspect the fall out will be pretty big. Both for holders individually and HL share price.
I’ve held the fund and still hold a larger number in various HL accounts. Including those of my children in their pensions. Lots of money now locked out. The fund is also wrapped up in many HL managed fund funds. They were also acting like a massive advert for Woodford when he launched all of these based in his previous success. I also have a copy of Mark Dampiers investment book and it features in there as a good fund to have in various types of portfolios. Of course none of this should be accepted as investment advice from them, I get that. But when it’s in their Wealth 50 even after their reduction of Wealth 150 to the new 50 you can’t help but think they should’ve completed the due diligence for us. Still there was plenty of time to get out given the poor performance but like many I saw the poor performance as an opportunity to buy more and have over 30 years to get a return. But for now I’m locked out
I’ve held the fund and still hold a larger number in various HL accounts. Including those of my children in their pensions. Lots of money now locked out. The fund is also wrapped up in many HL managed fund funds. They were also acting like a massive advert for Woodford when he launched all of these based in his previous success. I also have a copy of Mark Dampiers investment book and it features in there as a good fund to have in various types of portfolios. Of course none of this should be accepted as investment advice from them, I get that. But when it’s in their Wealth 50 even after their reduction of Wealth 150 to the new 50 you can’t help but think they should’ve completed the due diligence for us. Still there was plenty of time to get out given the poor performance but like many I saw the poor performance as an opportunity to buy more and have over 30 years to get a return. But for now I’m locked out
It’s a unitised fund so the price will only reflect the value of the underlying investments, accruals, cash etc. Popularity of the manager isn’t reflected in the price.
The fund has been suspended to protect existing unit holders and allow the illiquid instruments to be sold in a controlled manner ie. not a fire sale.
If the redemption requests were allowed to go through then the fund would likely end up being in breach of it investment mandate regarding the proportion of illiquid instruments it is allowed to hold. If this caused a loss then it would leave the fund manager liable to being sued by remaining investors.
Depending on the level of redemption requests they get, it may be prudent to simply close the fund and then payout proceeds to unitholders in tranches.
It is not comparable to the suspension of a company’s shares on the stock exchange.
The fund has been suspended to protect existing unit holders and allow the illiquid instruments to be sold in a controlled manner ie. not a fire sale.
If the redemption requests were allowed to go through then the fund would likely end up being in breach of it investment mandate regarding the proportion of illiquid instruments it is allowed to hold. If this caused a loss then it would leave the fund manager liable to being sued by remaining investors.
Depending on the level of redemption requests they get, it may be prudent to simply close the fund and then payout proceeds to unitholders in tranches.
It is not comparable to the suspension of a company’s shares on the stock exchange.
oldaudi said:
I suspect the fall out will be pretty big. Both for holders individually and HL share price.
I’ve held the fund and still hold a larger number in various HL accounts. Including those of my children in their pensions. Lots of money now locked out. The fund is also wrapped up in many HL managed fund funds. They were also acting like a massive advert for Woodford when he launched all of these based in his previous success. I also have a copy of Mark Dampiers investment book and it features in there as a good fund to have in various types of portfolios. Of course none of this should be accepted as investment advice from them, I get that. But when it’s in their Wealth 50 even after their reduction of Wealth 150 to the new 50 you can’t help but think they should’ve completed the due diligence for us. Still there was plenty of time to get out given the poor performance but like many I saw the poor performance as an opportunity to buy more and have over 30 years to get a return. But for now I’m locked out
I was never comfortable with the relationship between Woodford and HL they seem like best mates. I was in Woodford at launch but quickly cashed in wasn’t it up 25% at one stage. Staggering amount of money he had in this fund at its peak with some very curious holdings that the average joe would never have heard of until they got into trouble. I’ve held the fund and still hold a larger number in various HL accounts. Including those of my children in their pensions. Lots of money now locked out. The fund is also wrapped up in many HL managed fund funds. They were also acting like a massive advert for Woodford when he launched all of these based in his previous success. I also have a copy of Mark Dampiers investment book and it features in there as a good fund to have in various types of portfolios. Of course none of this should be accepted as investment advice from them, I get that. But when it’s in their Wealth 50 even after their reduction of Wealth 150 to the new 50 you can’t help but think they should’ve completed the due diligence for us. Still there was plenty of time to get out given the poor performance but like many I saw the poor performance as an opportunity to buy more and have over 30 years to get a return. But for now I’m locked out
BatForcePC said:
I have a few k in the LF WOODFORD INCOME FOCUS which seems to be suffering also. I trimmed my holding a year ago but kept some as the dividend has been pretty good and I've worked on the basis that my 20% loss (on paper!) will eventually be recovered by the dividend...now I'm starting to wonder whether this fund might also catch a cold...
Is anyone else in this situation?
Yes - me.Is anyone else in this situation?
Placed the sell order yesterday - probably get hosed on it today.
WindyCommon said:
Walm - the suspended fund is the daily-priced one, so this premium / discount question doesn't apply. The fund trades (or not!) only at it's NAV.
LeoSayer said:
It’s a unitised fund so the price will only reflect the value of the underlying investments, accruals, cash etc. Popularity of the manager isn’t reflected in the price.
Got it - didn't realise it was unitised. Thanks!Gassing Station | Finance | Top of Page | What's New | My Stuff