Woodford anyone?
Discussion
PhilboSE said:
B9 said:
In lay terms, if investors didn't pull their money out, do we know roughly where the fund would be sitting today?
I understand Taylor Wimpey for example had a fair weighting, which has since increased 15% since the fund collapsed?
I'm interested in whether ultimately he picked good stocks but became too confident on liquidity.
I don't know the answer to this, and would be interested, however he picked some utter dogs and took major positions in them.I understand Taylor Wimpey for example had a fair weighting, which has since increased 15% since the fund collapsed?
I'm interested in whether ultimately he picked good stocks but became too confident on liquidity.
Capita - lost 99% of its value 2014-2020.
Centrica - lost 75%.
He owned 31% of Eve Sleep, became worthless in 2019.
He also backed Purple Bricks in a big way, having to bail when the price tanked.
Amigo - lost 80% by 2019 and worthless today.
Provident Financial - again lost 80% by 2019.
He must have been an investor's dream in 2015 - he had so much money to "invest", I wonder how much due diligence he and his team did. Still they, must have been good at it as they're all clubbing together to start up all over again. I guess Woodford wants to buy back his equestrian estate.
egomeister said:
At these those were pretty liquid. There was a lot of tech and bio stuff that was pre-revenue or private where he sunk good money after bad and had no chance to exit the positions.
So at first he tried to play games to hide the illiquidity and then, especially as he had some failures even in the liquid majority, to meet redemptions he ended up skewing into the illiquid ones he couldn't move as he had to sell in the liquid end.Mind you, the picture I am getting is that he just couldn't say "no" to any potential investment opportunities, hence the due diligence "lite".
Do you know he even invested in a crazy scheme which reckoned cold fusion was possible.... and never (seriously) seemed to question it?
K12beano said:
egomeister said:
At these those were pretty liquid. There was a lot of tech and bio stuff that was pre-revenue or private where he sunk good money after bad and had no chance to exit the positions.
So at first he tried to play games to hide the illiquidity and then, especially as he had some failures even in the liquid majority, to meet redemptions he ended up skewing into the illiquid ones he couldn't move as he had to sell in the liquid end.Mind you, the picture I am getting is that he just couldn't say "no" to any potential investment opportunities, hence the due diligence "lite".
Do you know he even invested in a crazy scheme which reckoned cold fusion was possible.... and never (seriously) seemed to question it?
egomeister said:
Yeah, it wasn't the poor performance that was the real issue it was the shenanigans he did to shore up the valuations of the illiquid crap which prolonged the problems (and allowed him to take a few more million in fees...)
Disagree. The poor performance of his liquid equity investments was the real problem. He was limited (by FCA regulation) to only having 10% of his fund by value invested in unlisted stocks. He went pretty much up to this limit, and then when the value of the other 90% dropped, the unlisted stocks became "worth" more than 10% of the whole so he had to engage in machinations. He wasn't trying to "shore up" the valuations of the unlisted stocks, because they didn't have a valuation that could be shored up. They were notionally priced at what he paid for them because there wasn't a mechanism to determine a market price. His solution was twofold: (1) his other funds did share swaps for the unlisted stocks, diluting the Equity Income holding and (2) he converted some of the unlisted stocks to "listed" status by putting them on a Jersey-based "market" which in reality did nothing to make them any less illiquid but allowed him to claim he was compliant with the regs.If the performance of the other 90% of the fund in liquid equity was OK, all of this would have gone unnoticed and no-one (especially the FCA) would have cared. Woodford's main issue came from the fact that he picked some utter dogs to invest in. I think I used the phrase years ago in this thread "reverse Midas touch" - for a while it seemed that everything he bought turned to crap.
Eventually, after a couple of years of being in the bottom 3 performers in the entire equity fund market, investors got fed up with -20% returns in a bull market, and began to take out their money, which exposed the unlisted stocks. But the root cause was bad stock picks by him and his team.
In my opinion, Woodford should have his feet held to the flames for the following reasons:
1) he quietly completely diverged from the published objectives of his fund (steady income derived from FTSE 250 companies with established revenue generation) into becoming effectively a VC funder. Eventually the fund had <20% in FTSE 100 companies and >20% in the AIM.
2) he lied about the makeup and prospects of the fund, constantly defending his picks without really seeming to evaluate their models and exposure
3) he overexposed the fund to unlisted shares, which led to the need for the gaming of the regulations
Fundamentally IMO investors simply threw too much money at his fund. I was one of them - I thought that a steady income bearing fund should be part of my portfolio. When you are given £10bn to invest, where do you put it? There simply weren't enough suitable shares for him to buy. But his way of managing that was simply to diverge from the fund objectives.
Of course he also appointed Link as trustees - a bunch of people wholly unsuited to the task even before they were appointed. The way they pissed investor's money up the wall during the fund closure is another sorry tale. But Woodford has the hubris to suggest that it was Link closing the fund that triggered the problems, rather than his stock picks. He does take responsibility for picking the stocks, but then asserts that the quality of those picks can't be determined over the long term because Link closed the fund i.e. not his fault.
Really everyone involved in this in Woodford Investment Management and Link was just riding the gravy train and all they wanted was investor money to stay invested with them so they could cream off their %age. They patently didn't invest any of their greater income from fees into more and better quality research, they just took the money and paid it to themselves.
Another bad thing about the whole tale is that the FCA ignored all the warning signs (signs that were obvious enough to me as an investor to bail out, luckily on a neutral basis) and doesn't seem particularly willing to hold anyone to account. It really could happen all over again. Investors are just taken for mugs by the whole industry - fund platforms, fund managers, IFAs - all they want is investors to go through them: investors provide all the capital, shoulder all the risk, and the industry takes 2% whether it succeeds or fails, and the FCA just observes and makes sure the machine keeps grinding.
I'd agree with most of that Philbo, it's a great summary of what went on. Perhaps my post would have been better worded in relation to morals. It's not immoral to pick bad stock, but what occured afterwards very much is.
The one point I'd expand on is the shoring up of unlisted company valuations. He was able to do this by leading funding rounds at overblown valuations, meaning that the rest of his stake could be revalued upwards on the books. Of course this only exaggerated his illiquid holding issue, but I guess was a tactical move to prioritise fund performance (and tangentially his earnings...)
The one point I'd expand on is the shoring up of unlisted company valuations. He was able to do this by leading funding rounds at overblown valuations, meaning that the rest of his stake could be revalued upwards on the books. Of course this only exaggerated his illiquid holding issue, but I guess was a tactical move to prioritise fund performance (and tangentially his earnings...)
PhilboSE said:
Of course he also appointed Link as trustees - a bunch of people wholly unsuited to the task even before they were appointed. The way they pissed investor's money up the wall during the fund closure is another sorry tale. But Woodford has the hubris to suggest that it was Link closing the fund that triggered the problems, rather than his stock picks. He does take responsibility for picking the stocks, but then asserts that the quality of those picks can't be determined over the long term because Link closed the fund i.e. not his fault.
Really everyone involved in this in Woodford Investment Management and Link was just riding the gravy train and all they wanted was investor money to stay invested with them so they could cream off their %age. They patently didn't invest any of their greater income from fees into more and better quality research, they just took the money and paid it to themselves.
Owen Walker's assertion is that Link (actually Crapita before CFM was sold off) was foisted on Woodford as part of the authorisation from the FCA.Really everyone involved in this in Woodford Investment Management and Link was just riding the gravy train and all they wanted was investor money to stay invested with them so they could cream off their %age. They patently didn't invest any of their greater income from fees into more and better quality research, they just took the money and paid it to themselves.
Actually, with hindsight this does beggar belief.
It's bad enough picking Crapita or Link because they're cheap - but with that comes a lack of quality as we can all only guess.
Why the FCA should believe the ACD had appropriate capacity and integrity given their previous track record is amazing. Connaught and Arch Cru were both well known, and should have been understood in the most minute of details to the FCA. Whilst the rules call for an ACD appointment to a fund, it is effectively the regulator sub-contracting its responsibilities and then keeping its fingers crossed... at the best of times.
But, of all of the faults in Woodford the man and the IM, he was never left to his own device on ACD, wow. Sadly issues like the role of the ACD are beyond the horizons of a lot of retail investors; of course the professionals should probably have been awake, but hey! it's the Superstar Manager that everyone was interested in.
egomeister said:
I'd agree with most of that Philbo, it's a great summary of what went on. Perhaps my post would have been better worded in relation to morals. It's not immoral to pick bad stock, but what occured afterwards very much is.
The one point I'd expand on is the shoring up of unlisted company valuations. He was able to do this by leading funding rounds at overblown valuations, meaning that the rest of his stake could be revalued upwards on the books. Of course this only exaggerated his illiquid holding issue, but I guess was a tactical move to prioritise fund performance (and tangentially his earnings...)
That's a fair point and thanks for mentioning it. I can imagine the recipient companies just being bewildered at the money that was showered on them. From the Woodford side, when you have £10bn invested, throwing a few £10M into overvalued funding cycles is just noise and part of a bigger game he was playing.The one point I'd expand on is the shoring up of unlisted company valuations. He was able to do this by leading funding rounds at overblown valuations, meaning that the rest of his stake could be revalued upwards on the books. Of course this only exaggerated his illiquid holding issue, but I guess was a tactical move to prioritise fund performance (and tangentially his earnings...)
PhilboSE said:
egomeister said:
I'd agree with most of that Philbo, it's a great summary of what went on. Perhaps my post would have been better worded in relation to morals. It's not immoral to pick bad stock, but what occured afterwards very much is.
The one point I'd expand on is the shoring up of unlisted company valuations. He was able to do this by leading funding rounds at overblown valuations, meaning that the rest of his stake could be revalued upwards on the books. Of course this only exaggerated his illiquid holding issue, but I guess was a tactical move to prioritise fund performance (and tangentially his earnings...)
That's a fair point and thanks for mentioning it. I can imagine the recipient companies just being bewildered at the money that was showered on them. From the Woodford side, when you have £10bn invested, throwing a few £10M into overvalued funding cycles is just noise and part of a bigger game he was playing.The one point I'd expand on is the shoring up of unlisted company valuations. He was able to do this by leading funding rounds at overblown valuations, meaning that the rest of his stake could be revalued upwards on the books. Of course this only exaggerated his illiquid holding issue, but I guess was a tactical move to prioritise fund performance (and tangentially his earnings...)
PhilboSE said:
<snip excellent write-up>
Another bad thing about the whole tale is that the FCA ignored all the warning signs (signs that were obvious enough to me as an investor to bail out, luckily on a neutral basis) and doesn't seem particularly willing to hold anyone to account.
Glad to hear you pulled out without any losses. Another bad thing about the whole tale is that the FCA ignored all the warning signs (signs that were obvious enough to me as an investor to bail out, luckily on a neutral basis) and doesn't seem particularly willing to hold anyone to account.
During my annual portfolio review around Nov 16, I felt the Woodford fund fee was expensive (at least minimum x 3 over my passive funds) for the given performance, plus I didn't have any confidence on the holdings. As a result, I sold my entire Woodford holding (not life changing amount, but still 6 figures) for a small profit. I am no expert stock picker (my portfolio is mostly passive funds) but the Woodford episode clearly remind me to regularly monitor my active fund!
Legal action is now moving forward.
Any consensus on the three companies taking legal action? Can't find any clear advice on which is the best company to go with and what the options are. What have/are others doing? If I do not join any of the claims, would I still potentially get a payout if Link or HL decided to settle?
See this article.
https://www.thisismoney.co.uk/money/investing/arti...
Any consensus on the three companies taking legal action? Can't find any clear advice on which is the best company to go with and what the options are. What have/are others doing? If I do not join any of the claims, would I still potentially get a payout if Link or HL decided to settle?
See this article.
https://www.thisismoney.co.uk/money/investing/arti...
On Sky News today there was an advertisement by one of the claims firms inviting people to sign up with them on a no win, no fee basis for legal action against Hargreaves Lansdown over the Woodford fiasco.
If there's a win against HL they say they will "only" charge you 25% of your compensation!
If there's a win against HL they say they will "only" charge you 25% of your compensation!
rockin said:
On Sky News today there was an advertisement by one of the claims firms inviting people to sign up with them on a no win, no fee basis for legal action against Hargreaves Lansdown over the Woodford fiasco.
If there's a win against HL they say they will "only" charge you 25% of your compensation!
They have to earn somewhere. 75% of something is better than 100% of nothing. See my post above, there are three companies making claims. If there's a win against HL they say they will "only" charge you 25% of your compensation!
HL promoted the golden boy but ultimately it was his choices that caused the problems
I'm with HL but had some of Mr Woodfords funds (only a limited amount in my ISA and sons JISA).
As was questioned above, if you don't register with the claims company would you still get compen or is registration a necessity. And what sort of compen would we be likely to receive anyway (or 75% of it).
Reality is of course that folk like myself, took their eye of the ball and let him get on with it, wrongly as it turned out.
I'm with HL but had some of Mr Woodfords funds (only a limited amount in my ISA and sons JISA).
As was questioned above, if you don't register with the claims company would you still get compen or is registration a necessity. And what sort of compen would we be likely to receive anyway (or 75% of it).
Reality is of course that folk like myself, took their eye of the ball and let him get on with it, wrongly as it turned out.
Skyedriver said:
As was questioned above, if you don't register with the claims company would you still get compen or is registration a necessity. And what sort of compen would we be likely to receive anyway (or 75% of it).
Personally I'd sit back and chill for a while, depending on the amount you think you've "lost". In other words,If you've lost, say, £2,000 it's never going to be worthwhile suing for that money so jump on the "no win, no fee" bandwagon and, with a bit of luck, it might only cost you £500 to recover a net £1,500. Job's a good 'un.
If you've lost, say, £20,000 it must be tempting to sit tight. The ambulance chasers are after £5,000 of your money. But if you sit back and watch it will cost you nothing to see how their claims work out - and if a big win is achieved you can then go in with a claim of your own based on exactly the same facts. Whether £5,000 will be enough to cover your legal costs I can't say - but if a stern solicitor's letter costing £1,000 achieved a £20k pay-out you'd be ahead by £4,000
There are no easy answers. But if Sue, Grabbit and Run recover a total of, say, £10m they're away and laughing with £2,500,000 for their trouble. And the numbers go upwards from there.
People here are rightly being careful and using the word "promoted". Without doubt, HL were big fans of Mr W. But if I've got my facts right the question will come down to whether HL "recommended" Woodford. And I anticipate every single item published by HL said "past performance is no guarantee; we aren't recommending anything; make your own decisions".
It will be an interesting case because banks have taken a kicking over not taking simple steps to prevent mistakes with bank account details and for not suppressing transfers to fraudsters. I'm not saying that's comparable with the HL/Woodford situation but it does reflect a climate of "moral responsibility" that goes beyond ticking the legal boxes.
It will be an interesting case because banks have taken a kicking over not taking simple steps to prevent mistakes with bank account details and for not suppressing transfers to fraudsters. I'm not saying that's comparable with the HL/Woodford situation but it does reflect a climate of "moral responsibility" that goes beyond ticking the legal boxes.
rockin said:
Personally I'd sit back and chill for a while, depending on the amount you think you've "lost". In other words,
If you've lost, say, £2,000 it's never going to be worthwhile suing for that money so jump on the "no win, no fee" bandwagon and, with a bit of luck, it might only cost you £500 to recover a net £1,500. Job's a good 'un.
If you've lost, say, £20,000 it must be tempting to sit tight. The ambulance chasers are after £5,000 of your money. But if you sit back and watch it will cost you nothing to see how their claims work out - and if a big win is achieved you can then go in with a claim of your own based on exactly the same facts. Whether £5,000 will be enough to cover your legal costs I can't say - but if a stern solicitor's letter costing £1,000 achieved a £20k pay-out you'd be ahead by £4,000
There are no easy answers. But if Sue, Grabbit and Run recover a total of, say, £10m they're away and laughing with £2,500,000 for their trouble. And the numbers go upwards from there.
You'd be wise to negotiate. 25% is just their top charge. If you have a big some they'll slash that %. If you've lost, say, £2,000 it's never going to be worthwhile suing for that money so jump on the "no win, no fee" bandwagon and, with a bit of luck, it might only cost you £500 to recover a net £1,500. Job's a good 'un.
If you've lost, say, £20,000 it must be tempting to sit tight. The ambulance chasers are after £5,000 of your money. But if you sit back and watch it will cost you nothing to see how their claims work out - and if a big win is achieved you can then go in with a claim of your own based on exactly the same facts. Whether £5,000 will be enough to cover your legal costs I can't say - but if a stern solicitor's letter costing £1,000 achieved a £20k pay-out you'd be ahead by £4,000
There are no easy answers. But if Sue, Grabbit and Run recover a total of, say, £10m they're away and laughing with £2,500,000 for their trouble. And the numbers go upwards from there.
Not an update, but may interest you the amount of people signed up or registered interest in the 4 companies regarding the compensation claim against Woodford and/or Hargreaves Lansdown.
https://www.investorschronicle.co.uk/ideas/2021/03...
https://www.investorschronicle.co.uk/ideas/2021/03...
Gassing Station | Finance | Top of Page | What's New | My Stuff