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WCPT
Shetland
Posted: 07 April 2017 16:33:25(UTC)
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How much longer should we be patient with WCPT ?
Sara G
Posted: 07 April 2017 16:47:24(UTC)
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It depends on the reason for buying it...

Anyone who bought it for a quick profit and missed the chance to sell when the sp was around 120p may want to consider selling if there is something else out there with better short term prospects.

Personally I'm in for the long haul - at least 10 years - as I like the philosophy behind it. I was hoping the sp might fall to around 80p following the news about Allied Minds, as this would tempt me to top-up, but no such luck!
3 users thanked Sara G for this post.
Shetland on 07/04/2017(UTC), Guest on 13/04/2017(UTC), gillyann on 17/07/2017(UTC)
King Lodos
Posted: 07 April 2017 18:33:22(UTC)
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I always told myself I'd be patient – having bought at launch .. If he'd launched a year earlier returns could look incredible, as some of the Equity Income fund's Unlisted biotech stocks exploded in value.

One of the fund's top contributors was a less than 1% holding – so at the kind of weightings in WPCT, that could have been substantial.

That was a great time to be in Biotech .. and I'm sure there'll be others .. But I sold breaking even once it looked like Clinton was likely to be the next president, knowing she'd crack down on the sector .. Turned out Trump had similar plans .. You learn what kind of investor you are – I'm evidently not a patient one .. I want a positive return every quarter, ideally from everything I'm holding.
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Shetland on 07/04/2017(UTC), Sophisticated Investor on 11/04/2017(UTC)
Mickey
Posted: 08 April 2017 09:04:46(UTC)
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When this was being launched my impression was that the intent being for it to be a long-term hold, I saw it as a bit of a 'play' for Woodford so have not chosen to invest. For Biotech you have to go some to beat the main players who have a long track record of employing specialists in this field.
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S Dobbo on 08/04/2017(UTC)
Freddy4Skin
Posted: 08 April 2017 10:52:13(UTC)
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As a tangential post as I have no interest in WPCT I was nevertheless very interested in KLs take take on the Biotech sector.

"That was a great time to be in Biotech .. !"

It certainly was!

"and I'm sure there'll be others .."

I very nearly bought back in (IBT) on Trumps election or more pertinately, Clintons defeated but ultimately resisted. I still suspect that Trump will prove to be more sympathetic toward the Biotech sector but have adopted a wait and see approach.
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mc2 on 08/04/2017(UTC)
King Lodos
Posted: 08 April 2017 16:41:58(UTC)
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Call me a tinfoil hat, but Trump's said some interesting things on investigating the value of certain vaccines and flu shots..

Huge cash cows for the pharma industry, but I'm not sure governments have done decent cost-benefit-analysis on some of these practices.

Valuations looked excessive to me in Biotech when I sold in 2015 .. Then again so much value is in patents and information, and I've always been skeptical how well fund managers can value these firms.
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mc2 on 08/04/2017(UTC)
mc2
Posted: 08 April 2017 20:40:26(UTC)
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It looks like it will go further down and become a very good entrance point - at least for me
xcity
Posted: 09 April 2017 16:19:23(UTC)
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The prospectus for WPCT included the following quotes:

“The Company will invest in a diversified portfolio consisting predominantly of UK Companies, both quoted and unquoted. The Company will invest in: mid and large-capitalisation listed, mature companies; Early-Growth Companies, which are typically quoted although may be unquoted companies; and Early-Stage Companies, which are likely to include both quoted and unquoted companies.

Initially, the Company is expected to have a portfolio that is dominated by mid and large-capitalisation listed, mature companies that offer growth opportunities. It may also have an allocation to cash, pending investment in Early-Stage Companies and Early-Growth Companies. Over time, the exposure to Early-Stage Companies and Early-Growth Companies is expected to gradually build. This process is anticipated to take one to two years from Admission. In due course, the Company’s portfolio is expected to reflect the following breakdown:
• approximately 25 per cent. invested in mid and large-capitalisation listed, mature companies;
• approximately 25 per cent. invested in Early-Growth Companies;
• and approximately 50 per cent. invested in Early-Stage Companies,”

“The Company’s portfolio is expected to be diversified across a number of sectors

There was an emphasis on the difficulty British businesses experienced in raising early stage capital and the need for patience, with a 10 year timescale.

In the event Woodford raised far more money than originally targeted and appears to have splurged it remarkably quickly with a substantial chunk into US Biotech (then at the top of an obvious bubble). He sold off the 25% larger companies to put it into early stage. He tried to raise even more money despite NAV having reduced, but found that hard to get off the ground.

On seeing all this, my thoughts were
Fool. And his money. Burning holes. And WTF happened to patient!

Early stage companies tend to have an insatiable demand for new capital. The essence of investing in them is identifying losers ASAP, and having plenty of dry powder for further investment into potential winners. Allied Minds is a good example of avoiding necessary hard decisions for far too long. I’ve not seen any signs of Woodford having the hard analytical ability needed.

Losers will become apparent usually before winners have properly shown themselves, so I’m not bothered by early losers. And Purple Bricks has been a success and might still get a great deal bigger. And for such early stage investments, the NAV has been pretty steady.

But I don’t think Woodford has done what he said he was going to do; I don’t know where he is going to get dry powder from unless he raises more money (which would dilute current investors), has WPCT take on borrowings, or do the further investment through his two funds; I see no signs of losers being cut (and one or two should be apparent by now) and I’m not sure he is patient enough for this end of the market.

(You need a patient strategy, and you need to accept that winners may take time to come to full fruition, but you can never have enough money to afford patience with losers – the critical thing is being able to tell the difference losers and possible winners).

So I think two years is far too soon to lose patience (though it may be sufficient to teach you that you are not a patient investor), but I don't like the way the Woodford strategy has developed. A clear answer really requires a detailed analysis of all the holdings; I'd keep an active watch on any shorting being done.

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horshamtim
Posted: 11 April 2017 14:04:49(UTC)
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Useful discussion - I have built up a small holding in WCPT as part of my long term portfolio. It was never going to be a core element and I was willing to give this IT a go based on Woodford's overall track record. As an investor rather than a trader, I do not expect everything to come good every quarter every year.

It is however coming up to the two year mark now, so I have definitely put it on my watch list to sell if things do not pick up - nobody wins with all of their picks. There are times when we have to write the losses off, as hanging on may just mean you sell for an even bigger loss! At present it is using 8% short term debt and is 64% invested in healthcare stocks in the UK and US.

As xcity says the size and sector allocation is not what was originally specified. Part of the problem was the speed with which it grew - if the fund is based on a concentrated holding it means that it has to trade in bigger and bigger companies if it wants to avoid taking too big a stake in any one of them. For a fund which was always supposed to be focussed on small emerging companies, this causes more difficulties.

I tend to rebalance/adjust that portfolio periodically, so will probably take a decision on whether to stick with this one for another year next time.
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Shetland on 11/04/2017(UTC), deepblue on 16/04/2017(UTC)
King Lodos
Posted: 11 April 2017 14:38:58(UTC)
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The question I couldn't answer is whether Woodford is better equipped or qualified than a specialist Biotech VCT that may have been investing in this space since the 80s?

Does his reputation with retail investors mean he's pressured into short-term thinking? Is the US or Asia a better space for this type of company for a good reason?

I actually think it's a great thing he's doing .. It's clearly an area of the market that needed capital, and if it leads to one or two innovative new treatments, you can almost forget what the trust returns .. So another question may be: Was it set up to maximise returns or because he wanted to do something meaningful?

xcity
Posted: 11 April 2017 15:26:07(UTC)
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I think he did want to do something meaningful and that he genuinely believes in patient capital. But his argument was for meeting the unmet need in the UK rather than the need in the US which was well catered for already. And the investing public agreed with that, as did I, but it is now a huge play on biotech which isn't what investors were signing up for (though it was a habit he had already developed).

Biotech can pay off spectacularly when it succeeds, but most will fail. I've seen nothing to suggest that he has more expertise in evaluating opportunities than the average man who reads the financial press. Possibly conditions are better in the US than the UK. but much harder to appraise these situations there if you are UK based.

From the investing point of view, the risks are still asymmetric. The discount is only 10%. Unlikely to narrow much unless his investments start performing well. But could easily stretch out to 20 or 30% if they start to look like duds. Won't go to a premium unless they start looking really good. So, I see a small chance of significant uplift and a much bigger chance of a significant fall. NAV rises 10%, causing discount to disappear and overall valuation rises 16%; NAV drops 20%, causing discount to stretch to 30% and overall valuation drops 40%. And the developing gearing will supercharge any of these changes.
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dyfed on 11/04/2017(UTC)
King Lodos
Posted: 11 April 2017 15:43:13(UTC)
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Well that's it – I think perhaps pressure to scale up and satisfy investors has led him to extend to the US, and then there's probably every chance of it doing well as soon as the sector experiences another uplift..

The original early-stage companies he was in, like Oxford Nanopore, being on the same industrial estate as Woodford – and with links to Oxford University – makes that core quite interesting, and possibly an area he has unique access to.

Investing's become much simpler for me since I stopped making predictions and started following prices .. Like Michael Platt's section in Market Wizards (can't remember which book): prices are always right .. If you're losing money: you're wrong.
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Ron Dawes on 11/04/2017(UTC), Will Morris on 14/04/2017(UTC)
chubby bunny
Posted: 11 April 2017 20:10:04(UTC)
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Sold half of my shares when it went to that nutty premium, then bought them back on the recent discount. It's only a small part of my portfolio with which I am happy to have a dabble. I do question a couple of his investments, but will give him the benefit of the doubt for a few years yet. No idea what he saw in Industrial Heat though, a company which anyone with access to Google could judge to be based on unproven cold fusion technology developed by a serial fraud.
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Tyrion Lannister on 11/04/2017(UTC)
King Lodos
Posted: 11 April 2017 20:26:26(UTC)
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That was the one .. That cold fusion firm.

Maybe it was a huge punt – maybe there's enough upside to buy half the solar system if it actually works – but that was what made me question how much expertise they're really bringing to the table.

I'd like a statement explaining their thinking there .. Fraud cases to boot .. I find it difficult to imagine Giles Hargreaves' team touching a company like that with a very long barge pole.

So when it comes to specialist Biotech start-ups, is the team really performing due diligence?

The head of AOL started Revolution Health, in 2005, investing in early stage Biotech .. Had a few minor successes, but ultimately fizzled through poor timing and a lot of these small firms not really going anywhere.
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Tyrion Lannister on 11/04/2017(UTC)
Tyrion Lannister
Posted: 11 April 2017 22:07:36(UTC)
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I invested in WPCT from the beginning but soon felt let down by Woodford. After launch it quickly gained a premium which I expected, and was the main reason I invested at launch, it soon hit a high of 20% above its launch price. Then Woodford decided to issue more shares, it quickly developed a discount after that, about the same time the NAV fell, resulting at one point to nearly a 40% loss from its high.

Had Woodford stood by his initial share issue, I would've stayed with it long term. However, I sold a few weeks ago at an 8% loss, frankly it wasn't patience I lacked, it was trust.
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xcity on 12/04/2017(UTC)
Tyrion Lannister
Posted: 11 April 2017 22:12:49(UTC)
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King Lodos;45735 wrote:
That was the one .. That cold fusion firm.

Maybe it was a huge punt – maybe there's enough upside to buy half the solar system if it actually works – but that was what made me question how much expertise they're really bringing to the table.

I'd like a statement explaining their thinking there .. Fraud cases to boot .. I find it difficult to imagine Giles Hargreaves' team touching a company like that with a very long barge pole.

So when it comes to specialist Biotech start-ups, is the team really performing due diligence?

The head of AOL started Revolution Health, in 2005, investing in early stage Biotech .. Had a few minor successes, but ultimately fizzled through poor timing and a lot of these small firms not really going anywhere.



Cold fusion!!!!

That's the equivalent of falling for a door to door sales con like pyramid selling! Knowing that, I'm glad I sold out when I did.
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King Lodos on 12/04/2017(UTC)
William Phillips
Posted: 12 April 2017 10:15:22(UTC)
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Mr Woodford made his name operating within British, blue chip, income-biased equity sectors, courageously calling for or against them: anti banks and infotech before the crashes of 2008 and 2000, pro pharmaecuticals most of the time, against big oils and utes nowadays. His rotatory methods were not eccentric; only his level of conviction.

Can NW do what Anthony Bolton failed painfully to do: parlay expertise into a quite different field, where anticipating the ebb and flow of market favour among established industries within market cycles is far less relevant? Can he turn into somebody like James Anderson of Scottish Mortgage, a seer of 'disruptive' and 'transformative' little enterprises across the planet?

My qualms are not about initial performance. History suggests that by the time most fund managers are middle aged, they are set in their ways and do best to stick to their knitting. Futurology and little acorns are another skill set. Moreover, Woodford continues to plough his old furrow as well. How much of his time is spent with crystal balls?

I have never owned any of NW's funds, though not on purpose. But I am always chary of personality cults in professional investing.

C. Northcote Parkinson, the originator of Parkinson's Law, wrote that one sign of trouble ahead was an institution hubristically building a fancy new HQ for itself: St Peter's on the verge of the Reformation, the League of Nations building in Geneva completed just as WW2 broke out, and so on. Perhaps for money-runners the equivalent sell signal is to set up your own boutique, get a CBE for 'services to investment' and be touted incessantly by Hargreaves Lansdown.

Like Bolton, Woodford gave himself one last big job. On the suggested minimum holding period of ten years he will be at normal retirement age when Patient Capital is showing its paces- if it is. I suppose on his past record he deserves a decade, but how relevant is that record?
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Mickey
Posted: 12 April 2017 13:44:26(UTC)
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From reading the initial bumph when this was offered it looked as if WPCT was partly a chance for Woodford to give a helping hand to speculative science, I couldn't see the point in it when the likes of Biotech Growth etc were doing the same thing very well. If Woodford wanted to give something back or leave a legacy then he doesn't need my money to do it. Having said that, this is called 'Patient' and I think those investing in it shouldn't expect quick miracles.
King Lodos
Posted: 12 April 2017 15:29:47(UTC)
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His long-term track record is great .. I think the reason HL like him so much is because his outperformance has been extremely consistent – very Buffett-like in that regard.

I think Train and Smith are great – I only use them as examples because they're so popular – but both have spent the majority of their careers simply tracking the market (and the rest tracking Consumer Staples).

To do what Woodford's done, you need to be right again and again, through multiple market cycles .. The problem for me is that as a fund or strategy gets larger, performance becomes more market-like (as the market becomes more Woodford-like) .. And today it's not only Woodford managing a lot of money, but all the Woodford clones in the Equity Income space .. I bought Woodford Equity Income at launch because I knew the stock picks would influence lots of other managers, and no surprise it shot to the top of the sector.

http://www.hl.co.uk/__data/assets/image/0007/11713957/Woodford-track-march-17.png
xcity
Posted: 12 April 2017 17:55:28(UTC)
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William Phillips;45741 wrote:
Mr Woodford made his name operating within British, blue chip, income-biased equity sectors...
.. on his past record he deserves a decade, but how relevant is that record?

Actually he has a long-term record of investing into this space going right to his Investec days.

I'd criticise what he has done, particularly the huge emphasis on biotech, but his funds have invested in them for some considerable period and he had a lot of biotech stocks. But the prospectus stressed diversified, which it isn't very.
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