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'I don't think I've lost it': Woodford responds to critics

Fund manager Neil Woodford answers a series of critical questions from investors following his run of poor performance.

 
'I don't think I've lost it': Woodford responds to critics
 

Neil Woodford has denied he has 'lost it' as the fund manager responded to a series of critical questions from investors following his run of poor performance.

In a series of videos posted on Woodford Investment Management's website, Woodford answered criticism that he spent too much time focusing on early stage companies and faced questions over the overhaul of his flagship fund, the size of his team and future income payments.

It follows the extended interview with the manager published by Woodford Investment Management last week, in which he acknowledged his recent performance had been 'incredibly painful'.

Woodford's flagship £9.8 billion Woodford Equity Income fund is the worst performer in the Investment Association's UK Equity Income sector over 12 months, and the only fund to have made a loss over that period.

His Woodford Income Focus fund has delivered flat returns since its launch in April, while shares in his Woodford Patent Capital (WPCT ) investment trust continue to trade below their 100p issue price more than two years since its launch.

He likened claims he had lost his touch to the criticism he received at the height of the dotcom bubble, when his shunning of tech stocks led to him underperforming peers, before the bubble burst.

'I don’t think I’ve lost it,' he said. 'I’ve been criticised before in my career, in fact those very same words were used about me in late 1999 and early 2000 as a result of the underperformance I was experiencing at that time,' he said.

'I’m sure people are disappointed, as I am, about short-term performance,' he added.

'But this is a long game, I’ve always believed that, and I’m not going to cut and run and run away from the strategy and the investment discipline and the investment principles that I’ve followed for all of my investment life.'

Early stage focus questioned

Woodford also faced questions over his investment in early stage companies that form the focus of the Woodford Patient Capital investment trust and make up the tail of the Equity Income fund.

He denied he spent too much time on these companies, to the detriment of attention on the more mature stocks that form the backbone of his Equity Income and Income Focus funds.

Five of Woodford's seven-strong investment team focus on early stage companies, and while he said this represented 'a disproportionate amount of the resource that works with me', he said his own time was not split in the same way.

'I do not spend too much time focused on early stage companies; I have to spend my time looking at my entire investment universe, both the things we’re invested in and indeed the things we’re not invested in and I believe I allocate my time appropriately across that significant workload,' he said.

A pointed question from another investor meanwhile asked: 'Unless you believe you are the master of the universe, what on earth makes a lifelong equity income investor believe they can spot early stage technology companies?'

Woodford said that throughout his career he had always examined all the potential investments he was able to invest in through his funds, and that it was 'absolutely the case that early stage businesses both quoted and unquoted are part of my investment universe'.

'The reason I am invested in them is because I think they will do a fantastic job for our investors over the medium and long term. They are in my view the most undervalued stocks in my entire universe,' he said.

Woodford went on to take a swipe at rival managers who didn't invest in such stocks. 'Most of my peer group don’t, because they don’t bother looking at this part of the stock market,' he said.

Income growth still on the cards

Woodford said he expected income payments from the Equity Income fund to grow by 'mid to single digits' this year, despite the impact of Provident Financial (PFG), the fund's fourth largest holding, scrapping its dividend.

The embattled doorstep lender has withdrawn its interim dividend, declared in July and which was due to be paid in November, and said last month a final dividend was 'unlikely'.

'Despite that, the income fund will be paying a dividend increase, I think it will be in the order of low to mid single digits, which is what we said we would do at the start of the year,' said Woodford.

'We were somewhere ahead of that budget before the Provident Financial disappointment, so despite that I’m very confident we will deliver what I said we would deliver in terms of income growth on the income fund.'

Woodford added that the Income Focus fund, which also numbers Provident Financial as a major holding, was 'absolutely on track' to pay 5p income per unit in 2018.

The manager denied that he had changed investment approach since leaving Invesco Perpetual to set up his own firm.

While he made major changes to the Equity Income fund in April, he said 'it’s important for our investors to understand that the approach, if you like, is the same'.

'It is not always the same portfolio that will do the job that we need to do for investors, that works in all economic environments,' he added.

Questioned on the team surrounding him and its ability to keep track of all the firm's investments, Woodford said he had 'the best infrastructure that I have ever had as an investor around me now'.

30 comments so far. Why not have your say?

Tony Peterson

Sep 11, 2017 at 17:54

Diddums.

But really worth 100 Chancellors of the Exchequer?

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doug186

Sep 11, 2017 at 17:58

Are we going to see 2000 all over again? There are many tech. stocks overvalued now and when a correction comes in the next 12 months, Neil Woodford 's performance will look good again. He has done well in the past for many years. The danger now for the private investor is to follow the herd and lose out when the undervalued stocks that are in the Woodford funds come good again. I have retained a large portion of my portfolio in Woodford funds - had I sold some earlier, I would be getting back into them now - yes now, "when others are fearful".

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DJLW

Sep 12, 2017 at 08:11

I think others are "incredulous" (not fearful) that he has managed to lose money now - when the real downturn starts I am not convinced his funds will escape unscathed.

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richard tomkin

Sep 12, 2017 at 13:28

How much of his earlier success can be put down to luck ? Luck is the great unquantifiable in investment. You could ask this question of any fund manager,but Woodford is one of the more conspicuous.

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an elder one

Sep 12, 2017 at 17:45

Once you are in the realm of the esoteric, where one man's guess of potential value is as good as another's, you're on your own; luck is the answer. During the dotcom event - AIM stocks - I more or less doubled my money, then lost most of it through not selling soonest.

This is all pointless argument.

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an elder one

Sep 12, 2017 at 21:32

and as far as recompense is concerned; we all are inclined to greed in various degree, but some are better placed to exploit the instinct - a multitude, nonetheless. The only redress for us lesser mortals, is to eschew their doubtful offers of riches.

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William Phillips

Sep 13, 2017 at 11:56

Apparently the '£350m more for the NHS'- put forward en passant by a bunch of maverick outsiders- was a disgraceful but decisive influence on the referendum result.

Whereas the combined weight of 95% of the political, academic and business establishment hollering about the Four Horsemen of the Apocalypse stalking the land if we dared to leave, headed by a Chancellor warning of an emergency budget being needed, was a mild and truthful prognosis.

Here we are 16 months later. We never got the emergency budget, and I don't yet detect the imminent collapse of our economy or our society.

But then I remember several dire forecasts of doom in my lifetime- usually signed by several hundred economists in a letter to the Times- which did not come off either. Not to mention the world becoming impossibly hot, or was it cold, in short order.

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richard tomkin

Sep 13, 2017 at 21:19

What on earth,William Phillips,have your comments to do with the problems Neil Woodford has experienced ruuning his trusts ?

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William Phillips

Sep 14, 2017 at 13:42

Nothing, Richard Tomkins.They were sent to the wrong thread.

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Capt Ahab

Sep 16, 2017 at 10:46

I cannot understand why Neil Woodford is so highly rated? He says that there that there will be jam tomorrow. How does he know that? I would prefer to have my jam today and I do so with Simon Thomson and John Baron

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Franco

Sep 16, 2017 at 13:11

Capt Ahab, Woodford saying he will do better tomorrow gives him another 50/50 chance of getting it right. Even if that proves wrong, there is always another tomorrow. Investing success is 95% luck, 5% skill. And you need 9 successes out of 10 trials to make a claim for skill. But the pay is really good.

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Mark Yu

Sep 16, 2017 at 13:55

The cases with Woodford now is totally different to that of 2000. He was then not investing in the risky and ridiculously highly valued tech stocks and invested in the reliable,income producing value stocks. With wpct he is now doing exactly the opposite and more, investing in highly speculative quoted and unquoted little bio-tech stocks, most of the quoted ones have already lost more than50% of their value, and not investing in the value stocks at all (he started the portfolio with a few value stocks like gsk and azn but exited them all).

report this

Mark Yu

Sep 16, 2017 at 13:55

The cases with Woodford now is totally different to that of 2000. He was then not investing in the risky and ridiculously highly valued tech stocks and invested in the reliable,income producing value stocks. With wpct he is now doing exactly the opposite and more, investing in highly speculative quoted and unquoted little bio-tech stocks, most of the quoted ones have already lost more than50% of their value, and not investing in the value stocks at all (he started the portfolio with a few value stocks like gsk and azn but exited them all).

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Kay Vowles

Sep 16, 2017 at 18:51

Thank you, William Phillips, for your rather puzzling comments about Brexit and then the exchange with Richard Tomkin. It really made me laugh.

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Tony Peterson

Sep 18, 2017 at 17:35

Woodford's real skills are in self-publicity.

Enough punters on this site are persuaded. The only difference between Woody and the boiler room scammers is that they want all of your money but he is content with half.

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William Phillips

Sep 19, 2017 at 11:37

Mr Tomkins- There is an old institution in Britain called 'the law of libel'. It applies to the internet.

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William Phillips

Sep 19, 2017 at 11:38

Mr Peterson, that is.

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Tony Peterson

Sep 19, 2017 at 12:48

William.

It would make an interesting court case, wouldn't it?

Squarely opening up for publicity the insane levels of entitlement of those running funds.

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William Phillips

Sep 19, 2017 at 15:20

Interesting, possibly. But to compare boiler room operators with a licensed fund manager of long standing, awarded the CBE for his services to the industry, and to suggest the only difference is the amounts abstracted?

Messrs Sue, Grabbit & Runne might also be interested, especially given that Woodford's firm claims to apportion rewards more equitably than others between self and client.

I have no dog in the fight, but I know something about libel. Your remarks seem, to say the least, over the top.

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Tony Peterson

Sep 19, 2017 at 15:53

Williiam

You are probably right in one way. I should have said "a goodly part" rather than a half. Of course what he wants and what he gets are not necessarily the same thing. And he gets more than enough. More than 100 Chancellors! How entitled is that?

However, I would welcome the chance in a public forum to expose the outrageous sense of entitlement of those who operate in the wealth management industry. I don't think it worth Woody's while to try to break me, but if he does I'll represent myself and am preparing my questions now. I"m not terribly scared of Sue Grabbit and Runne - they've backed off all their threatening letters to me to date.

Nor am I impressed with the CBE. Loads of my mates picked up gongs. Green picked up a knighthood. Archer a peerage. Remember the Pirates of Penzance. They were all noblemen who had gone wrong. Many of them still are, though the peers seem to get very lenient sentences when trying to recruit hitmen online

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doug186

Sep 19, 2017 at 18:22

William

Thank for your responses to Tony Peterson.His comments about Woodford were unjustified and seemed to be disingenuous.

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richard tomkin

Sep 19, 2017 at 19:14

There is nothing here that would interest a libel lawyer : if any of you would like a tutorial/refresher concerning the laws on defamation,please do not hesitate to ask !

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Tony Peterson

Sep 19, 2017 at 19:44

What, Doug 186 - only "seem" to be disingenuous? Weasel words.

You tell me why Woodford is worth more than 100 Chancellors of the Exchequer, paypacket-wise. And explain the source of his income?

Are you one of his generous donors?

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William Phillips

Sep 20, 2017 at 11:23

Mr Peterson- It is not you but the publisher, Citywire, whom Mr Woodford might think worth pursuing for libel. It is jointly answerable for defamatory content.

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lee wood

Sep 22, 2017 at 09:50

I would say Oh God for some of the comments posted on here however i wish not to be sued by the Great Almighty or struck down like Provident in a bolt of lightning

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john_r

Nov 01, 2017 at 10:30

Tony, you're not going to let him have the last word are you??

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Tony Peterson

Nov 01, 2017 at 21:56

john-r

I simply await answers to my questions. My critics do not seem to want to give any.

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richard tomkin

Nov 01, 2017 at 22:29

Tony P : all your questions seem to amount to is that Woodford is well remunerated.Whilst that may be a glimpse of the obvious,it is in no way defam-

atory .To call Philip Green and Jeffrey Archer "noblemen" is plain silly ! I cannot really understand the basis of your animus against Mr Woodford.

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Tony Peterson

Nov 02, 2017 at 07:52

Richard

I didn't call anyone noblemen. I made a joking reference to a Gilbert and Sullivan musical.

And I have no animus against Woody. Why should I? He has never cost me a penny as I wouldn't touch his funds. Or any other funds for that matter.

If you believe the man is a genius and fully deserves seven million a year for plonking your savings around in the market, you are welcome to your opinion.

report this

richard tomkin

Nov 02, 2017 at 08:59

I agree with everything you say,Tony !!

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