By Nigel Somerville | Wednesday 5 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.
I read in the press that you are very disappointed that Neil Woodford didn’t give you a heads up that his flagship Equity Income Fund was so close to having to gate his find to prevent further redemptions – especially as you were a large holder. You clearly don’t understand how the system works, for taking action on inside information like that would be a criminal offence. There is a way you could have known, though.
For £5.99 a month you could have had access for the last couple of years to the huge series of articles on this website by Cynical Bear, Tom Winnifrith and a host of others which told you what was going on at Woodford Investment Management – and, critically, saw this crisis coming almost two years ago whilst then deadwood press were still happily fawning at the great man.
I gather that your prevarication since March, when the suggestion that you pull out was discussed and deferred, your holdings have dropped by something like £22 million – that’s an awful lot of £5.99 monthly subscriptions…….over 300,000 years’ worth!
Had you followed what we had to say you would have realised that you had invested in a ticking time bomb which, despite its name, was not your common or garden equity income fund. For a start, so much of it was tied up in cash-hungry dogs where the prospect of a dividend was just a pipe-dream. You would have known that Neil Woodford was running an “emergency” overdraft for the past 18 months or so and was therefore running his liquidity to the limit. Bearing that last point in mind, a demand for around £250 million was always going to cause a problem.
And with disaster after disaster – the latest being Kier Group (KIE) – the fund was shrinking not just due to redemptions but due to a series of calamitous investments which meant that the proportion of unlisted stocks was getting out of hand. You would have known about the listings on the Guernsey stock exchange and NEX which ticked the FCA’s boxes but offered zero liquidity.
You would have realised that the asset swap with WPCT was all phooey – that no additional liquidity arose from that either because Woodford could hardly be seen to want to sell his own fund.
You would have known all that, and you would have read our analysis which showed that the whole show was going to come down in a blaze of glory – and you would have known a while back that the game was nearly up. All for just £5.99 a month.
You would also realise that Woodford’s crime wasn’t that he failed to give you a heads-up, it was that there was no oversight other than him, so all he had to do was convince himself that he was right and then keep on pouring good money after bad.
It’s not as if this is a one-off – there were the China Frauds, Quindell, Globo and a whole list of others that goes on and on.
The really bad news – as you would know for just £5.99 a month – is that we believe things are going to get much worse before you can get your cash. Indeed, we think Woodford is finished and that his Income Focus Fund will be next, if WPCT is not suspended first.
Naturally we are sorry that you have lost money, but if you are going to invest in vehicles like Woodford’s, you really do need to know what you are doing – which you clearly don’t, if you don’t even understand basic market principles like insider dealing.
So how about it? All you have to do is click here. After all, 300,000 years is a very long time don’t you think?
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