Minding the London Stock Exchange’s Business
Independent and Fearless Financial Journalism Funded by Readers
Even a few of our detractors have now come around
Neil Woodford has been fired from his flagship Equity Income Fund today, vindicating our more than 1000 articles and podcasts exposing him since 2015, but his problems do not end there. I recently commissioned a resting fund manager to produce a detailed bottom up analysis of Neil Woodford’s Patient Capital Trust (WPCT). That report from a man known as “The Badger” landed with me last night and is shocking in its conclusion: the Trust is essentially worthless. The Badger writes:
Yes, folks, it’s that time of the month again when Neil Woodford updates us on his funds, and what is in them. The good news is that both unit trust (Equity Income and Income Focus) had net cash as at 31 August…….and Woodford Patient Capital (WPCT) didn’t.
The Independent Newspaper thinks that I and 17.4 million others need a better education. Does anyone read that rag anymore? In today's podcast I look at Neil Woodford's Woodford Patient Capital Trust (WPCT), notably its holdings in Autolus and Purplebricks (PURP) in light of data out today, Eve Group (EVE), Nigel Wray's Simba, Thomas Cook (TCG), i3 Energy (i3E) and Iconic Labs (ICON).
I covered the May portfolio update from Neil Woodford’s Patient Capital Trust (WPCT) earlier today. Now I turn to his gated Equity Income Fund (WEIF). As a starting point, I note that its borrowings were up to 2.64%. With the fund valued at £3.7 billion it means the gating started with the massive headwind of a bank overdraft of £97.7 million which we have subsequently learned that the bank has demanded settlement of. Not a good start for a fund which was gated the next trading day facing, we learn, almost £300 million of redemptions. So Neil has to find £400 million just to pay that lot off.
The May month-end numbers from Neil Woodford’s funds are out and the numbers at Woodford Patient Capital Trust (WPCT) are really horrible. Just as horrible is that since the end of May the NAV per share has dropped sharply from 89.61p to the current figure of 83.79p – a drop of 6.5% in just three weeks. Bearing in mind that most of WPCT is unlisted, that’s some going.
Neil Woodford has released a short video aimed at reassuring investors in his now suspended Equity Income Fund. It will have the opposite effect. It is stumbling, incoherent, in parts misleading and frankly Neil looks like an ill man who is under mammoth stress. I can see why.
I start by talking you through yesterday's Odd One Out contest explaining the schoolboy error made by Nigel Somerville and others. I look at the Autolus news in relation to Woodford Patient Capital Trust (WPCT) where as a loyal shareholder I shall be attending the May 15 AGM in Oxford with a few questions for Neil "nomates" Woodford. I flag up a shocking little episode at Clear Leisure (CLP) which should make you worry about Octagonal (OCT) and Inspirit (INSP) given that their FD is disgraced Niliesh Jagatia then discuss Management Resource Solutions (MRS) and finally, in detail, Toople (TOOP). Tomorrow I really will read out a Woodlarks heros roll call. Please join that list ahead of then HERE
No doubt Neil Woodford will be delighted that his good friends at Crystal Amber think they can realise the equivalent of 123p a share from Allied Minds (ALM). No matter it is a loss, it will be cash in the bank – much needed – IF Crystal gets control and IF the assets are worth what they think and IF they manage to sell them. Meanwhile, dear old Neil – having yet again spunked more other people’s money on Kier (KIE) which promptly fell to a new low - is now faced with a cash-call from Autolus (Nasdaq: AUTL). What will he do?
An appertion came to me last night: it was the ghost of Cynical Bear, calculator in hand, telling me that the level of borrowing at WPCT has become a major problem for Neil-knows-best Woodford. And indeed it is: as at the end of December Gross Assets (ie before bank borrowings) stood at £969 million, according to Woodford. With net assets of 97.61p per share and 827 million shares that works out at net assets of £807 million and that means borrowing of a whopping £162 million, or 19.6% of NAV. Yikes!
Following my piece this morning on Woodford (HERE), I note that Woodford Patient Capital Trust (WPCT) published its interims at the rather odd time of 9.45am today which ruins my competition to some extent. Anyway, there is some good news in there that I am happy to report but it still begs a few questions that I am also happy to ask in my general nit-picking way.
There is good news for Woodford Patient Capital Trust (WPCT) in the end-July portfolio listings that came out yesterday, ironically due to a bit of help from the Woodford’s flagship fund, the Equity Income Fund. More interestingly, I think I have finally worked out how the Equity Income Fund is getting round its 10% unquoted stock limits which makes shocking reading if correct.
Having looked at Woodford’s Equity Income Fund earlier, I will now turn to Woodford Patient Capital Trust (WPCT) which as ever, even though the goalposts keep moving, is up against its limits and with the portfolio remaining awash with cash guzzlers, I’m struggling to understand how Neil Woodford gets out of the mess.
It’s undoubtedly been a good week for Neil Woodford, with the Autolus IPO getting off to a flying start and I also sense the Stobart tussle is moving in his direction too. Nevertheless, as I’m still in a grump about his shoddy debt non-disclosure last week, I thought I’d have a look through the Woodford Patient Capital Trust (WPCT) portfolio to see what else I could find as he’s always banging on about unicorns hiding in there somewhere.
As I’m always quick to criticise, I thought it only right to congratulate Mr Woodford when the rare pieces of good news turn up and Autolus’s news yesterday is undoubtedly good news although I’m still going to make a couple of observations re Woodford Patient Capital Trust (WPCT).
I’ve always thought it odd when investment vehicles merely take stakes in other investment funds as one ends up with duplication of fees. There is usually an investment policy limit on such stakes, not that Mr Woodford appears to be taking the limit at Woodford Patient Capital Trust (WPCT) that seriously. Why would he - rules are for the great unwashed aren’t they?
Almost three years after launch, Woodford has achieved what would have seemed impossible at the launch of Woodford Patient Capital Trust (WPCT) back in April 2015 in that he has managed to compile a portfolio of 85 holdings without one obviously profitable company among them. Having sold the star of the portfolio in the month namely A J Bell, to keep the lights on and fund a few other future dogs, he’s now left with a whole array of cash-guzzling, largely illiquid dogs – what’s not to like.
UPDATED: Over the weekend I revealed a potential nuclear landmine that could well blow up the Woodford Patient Capital Trust (WPCT).The bad news for the asleep at the wheel nmot so independent NEDS at the Trust is that I have found two more landmines which have been averted but are there more?
