By Tom Winnifrith | Monday 3 June 2019
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
You cannot say that this website did not warn you so many times. Our coverage of Neil Woodford over the past two years has been streets ahead of the game - as you can see HERE - and now the drama has become a crisis. Dealing in units in Neil Woodford's flagship Equity Income has been suspended 'with immediate effect and until further notice' after a spike in redemptions. We told you there was a liquidity crisis. We told you the FCA was on the case. As I called him out at his AGM, Neil Woodford accused me - by name - of publishing fake news. Sir, I am owed an apology.. So are your poor investors.
Authorised corporate director (ACD) Link Fund Solutions said the suspension was 'intended to protect the investors in the fund' following 'an increased level of redemptions'. It added...
'Following an increased level of redemptions, this period of suspension is intended to protect the investors in the fund by allowing Woodford, as previously communicated to investors, time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, in to more liquid investments,'
During the suspension 'no requests to redeem, purchase or transfer shares in the funds will be accepted'. Link said it would 'keep investors appropriately informed about the suspension, including its likely duration'.
There will now be contagion. Watch investors in Woodford's other open ended vehicles rush for the exit. Moreover when dealing recommences and with net debt prepare itself for a situation where it may face redemptions of 10%, 20% or more in one day?
How will long time supporters like the Mail on Sunday and Hargreaves Lansdown react? Surely they must admit their folly and when their readers are able to sell that will add to the tide of redemptions.
Meanwhile institutions who have given Woodford a mandate to manage other funds will now be almost duty bound to withdraw that m andate. It is almost game over for Woodford.
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