What caught my eye this week.
Hard to believe it’s more than ten years ago that I wrote – slightly tongue-in-cheek – about how I was betting against [1] Neil Woodford.
The then-lauded fund manager had just handed back the reins of the Edinburgh Investment Trust – one of several funds he ran as Invesco’s superstar manager – because he was opening his own fund shop.
Edinburgh’s share price fell from a 5% premium to trade at a discount [2] to NAV in response.
But I reasoned:
Sure, a few [other] income investment trusts are on a discount, but my point is it’s clearly possible to run an income trust and be well-regarded enough for investors to pay more for shares in your trust than the value of its assets, even if your name is not ‘Neil Woodford’.
And my bet – and the reason I bought the shares after the sell-off – is I believe the same will likely be true of the Edinburgh trust at some time in the future.
In fact, I wouldn’t be surprised if the premium even comes back before Woodford has left in April!
Okay, it took until August [3] – but I was right and it was a nice little trade.
However I kind of missed the wood for the trees.
Woodford’s stock
Most readers will know Woodford’s new venture went on to collapse [4] within just a few years. It left a trail of broken-hearted followers in its wake. As well as a legal kerfuffle that was still dragging on this year [5].
Here’s a podcast recap [6] from A Long Time In Finance. Or take your pick of two [7] books [8] written about Woodford’s rise and fall.
I can’t say I predicted this disaster in my 2013 piece. Although to be fair, who honestly could have?
The scale of the drama, anyway.
Me, I even admitted I thought Woodford had as good a claim as any to investing edge.
Although thankfully – and more on-brand – I said we couldn’t be sure. Even 25 years of outperformance at Invesco – which had made him the darling of middle-England savers – wasn’t definitive evidence of skill versus luck.
Also, I wrote:
I don’t think you should spend your time looking for the next Woodford though, any more than I think you should bet your two-year old grandson is going to be the next David Beckham.
Some scant few of us are touched by the gods of fortune, but you surely don’t want to gamble your retirement on it.
That second line is pretty portentous in light of what happened next.
Hey brother, can you spare a follow?
One person who is definitely not looking for the next Neil Woodford is… Neil Woodford.
Because the fund manager this week relaunched himself as a financial influencer.
Writing on his new blog [9], Woodford says:
My name is Neil Woodford. I am 64 years old, and I live in southwest England. I have worked in the investment industry since the early 1980s. You may remember me as the fund manager who avoided the dot-com bubble and the banking crisis and delivered index-beating performance for over 25 years, or perhaps as the ‘disgraced’ fund manager who presided over Woodford Investment Management’s collapse in 2019. Others may not have heard of me at all. Whatever your perspective, you may be curious about what I have to say about a wide range of economic, social, and political issues that impact our everyday lives.
Unfortunately, much of the commentary I read about the UK economy is long on opinion but critically short on data. It is often factually wrong, perhaps because established narratives are too willingly accepted. What is clearly severely lacking is data-supported information and analysis.
The economic analysis and commentary in Woodford Views will focus on relevant facts and data without censorship from editors, pressure to toe a particular line or consensus thinking.
Well you’ve gotta admit the lad’s still got chutzpah coming out the Wazoo. There’s even a dose of 2024-style post-truth anti-mainstream posturing in there.
Only 93 followers so far on Instagram [10] though. The struggle is real.
Glass fund houses
We can surely guess how those who’ve pursued Woodford in the courts feel about this development. Or those who lost money with his funds. Or, worse, who waited for years just to get their money back.
Me? I’m a complicated soul [11].
While it’s abundantly clear in hindsight that Woodford’s mixing of private and public assets was ill-advised in open-ended vehicles, it’s not like that hadn’t been done before. It still goes on today.
He was criticised too for loading up on unlisted holdings with his closed-end Patient Capital trust. But many investment trusts are languishing on discounts today in part likely because of their illiquid private assets [12], including giants such as Scottish Mortgage and RIT Capital Partners.
And while it’s now far harder to make the case for Woodford’ stock picking prowess in light of the disastrous run at his second venture, there is probably even another universe where economic circumstances turned differently and his contrarian bets were rewarded.
Not need to type angry comments at me! I know he earned millions selling himself as someone who could avoid such landmines but was ultimately paid for failure, given this disastrous outcome:
[13]
Source: Guardian [4]
I’m just saying it’s a truism we only live through one reality but many other things could have happened.
If you like fund managers when they outperform, then you must at least acknowledge that such outperformance was possible because they – and you – took a risk that things would turn out far worse.
Sympathy for the devil
Even the likes of Buffett could have been wiped out in an alternative universe where, say, the US went to war with Russia in the mid-20th Century, or if his legal troubles of the early 1970s hadn’t been amicably resolved, or if a couple of key decisions during the Salomon Brothers scandal of the late 1980s had gone differently. And nobody’s track record is as a good as Buffett’s.
So yes, I too have read the stories of hubris and yes-man-ning in the Woodford Investment Management days. It all seems very off. I also agree it was ill-advised for him to go investing in blue sky nano-caps after making his bones – and his brand – as a large-cap fund manager.
But I can’t quite bring myself to write an apoplectic and hyperbolic op-ed about Neil Woodford the ‘finfluencer’ that would easily write itself.
(My co-blogger in contrast would surely have a field day.)
I don’t know, perhaps I think everybody deserves at least a chance of redemption.
I also recognise someone who can’t let go of a love of markets and the game. A fellow sufferer, perhaps?
Maybe it’s just the sheer brass balls of the man refusing to go quietly.
Or perhaps I pity anyone trying to make money [14] from a new blog these days.
Why go there?
To be crystal clear, I understand anyone who splutters angrily at Woodford’s new venture. It’s almost surreal.
And I obviously don’t think anybody needs to invest money with Woodford or any other star manager.
Invest via a global tracker fund [15] – or some other passive index funds [16] – and you’ll never face being embroiled in fund manager drama ever again.
Have a great weekend!
From Monevator
Our updated guide to help you find the best broker – Monevator [17]
25 years of a family investment club – Monevator [18]
From the archive-ator: How to protect your portfolio in a crisis – Monevator [19]
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Bank of England talks up rate cuts as inflation eases to 3.2% – This Is Money [20]
Coventry BS and Co-Op Bank agree takeover terms – BBC [21]
Brussels proposes return to pre-Brexit mobility for UK and EU young people – Guardian [22]
Hunt urged to launch inheritance tax raid on unspent pension pots – Telegraph via Yahoo [23]
London listing looms for Zopa as fintech turns in first annual profit – Yahoo Finance [24]
The parents caught out by the child benefit charge – Which [25]
How much have UK prices risen in the past two years? – Observer [26]
Rare Bitcoin from ‘Satoshi era’ moves after 14 years of dormancy – CoinDesk [27]
Historic Copenhagen stock exchange goes up in flames… – BBC [28]
…even as neighbour Sweden’s becomes the envy of Europe [No paywall] – FT [29]
[30]
Are shared ownership schemes really making up for new social housing? – Sky News [31]
Products and services
The struggle to choose the right mortgage [Search result] – FT [32]
Will letting your flat on AirBnB breach your insurance policies? – This Is Money [33]
Paying monthly for insurance could cost you dear – Which [34]
Sign-up to Trading 212 via our affiliate link [35] to claim your free share and cashback. T&Cs apply – Trading 212 [35]
Not chipping your cat could affect your pet insurance – Which [36]
London-based Nothing’s earbuds set a new standard for budget quality – Guardian [37]
Open an account with low-cost platform InvestEngine via our link [38] and you could get up to £2,500 as a cashback bonus (T&Cs apply. Capital at risk) – InvestEngine [38]
Top ten credit card hacks – Be Clever With Your Cash [39]
New ISA rules starting this month, explained – This Is Money [40]
Get £100 worth of free trades when you open an ISA or trading account with Interactive Investor [41]. Terms apply – Interactive Investor [41]
Garden centres stockpile plants before new Brexit checks… – Guardian [42]
…though it seems UK will not ‘turn on’ post-Brexit checks of EU goods for fear of border delays [Search result] – FT [43]
Homes for sale that have had an eco overhaul, in pictures – Guardian [44]
Comment and opinion
Invest for the decades, not the years – Of Dollars and Data [45]
More people in the UK are downsizing to save money – Guardian [46]
Should governments tax the great boomer wealth transfer? [Search result] – FT [47]
Why wealthy American families are creating ‘passport portfolios’ – CNBC [48]
Investing earlier in the tax year could be better for your ISA – Vanguard [49]
The limit does not exist – or does it? – Money With Katie [50]
Should you pay off your mortgage or invest your savings? – Morningstar [51]
“Please stop asking me when I plan to retire” – Herb Greenberg [52]
The realities of retiring [rich] early [Podcast] – Money Wise via Apple [53]
What are you willing to give up in pursuit of an all-weather portfolio? – Random Roger [54]
Knowledge doesn’t change behaviour – A.W.O.C.S. [55]
A dirty business – Humble Dollar [56]
Why is it so easy to disregard behavioural finance? – Behavioural Investment [57]
Use your time wisely mini-special
Time is a thief – Joy Levere [58]
The 67-hour rule – The Atlantic via MSN [59]
Naughty corner: Active antics
Will the growth of indexing lead to its downfall? – Wisdom Tree [60]
Challenging the process – Novel Investor [61]
These financial tidbits could give you an edge when picking funds – K.O.I. [62]
The market size mistake in venture – Tom Tunguz / Tobi Lutke [63]
Let’s hear it for the FTSE 100’s magnificently unglamorous seven [Search result] – FT [64]
Stocks and flows – Capital Gains [65]
The optimal allocation to managed futures [Slightly old] – Price Action Blog [66]
Kindle book bargains
How to Read Numbers by Tom Chivers –£0.99 on Kindle [67]
The Dip: Knowing When to Quit by Seth Godin – £0.99 on Kindle [68]
The Pathless Life by Paul Millerd – £0.99 on Kindle [69]
The Deficit Myth by Stephanie Kelton – £0.99 on Kindle [70]
Environmental factors
Seven countries now generate 100% of their energy from renewables… – Independent [71]
…while new wind installations hit a record last year… – Reuters [72]
…and two new offshore Norfolk windfarms approved to double capacity – BBC [73]
Wooden turbine towers could make wind energy even greener – CNN [74]
Nature officially becomes a musician, earning royalties – BBC [75]
Exploring kelp forests – Hakai [76]
No birdsong: how a haven for nature fell silent… – Guardian [77]
…except in New Zealand’s big cities – Guardian [78]
Greece becomes first European country to ban bottom trawling in marine parks [By 2030] – EuroNews [79]
Robot overlord roundup
The AI race is generating a dual reality [Search result] – FT [80]
Is there enough text to feed the AI beast? – Semafor [81]
UK rethinks AI legislation given growing risk concerns – Taylor Wessing [82]
All are punished culture wars mini-special
From Intellectual Dark Web to Crank Central – The Bulwark [83] [h/t Abnormal Returns [84]]
What is ‘lived experience’? [Social science nerdy] – Aeon [85]
Off our beat
The cloud under the sea – The Verge [86]
Amazon is filled with garbage eBooks. Here’s how they get made – Vox [87]
Everyone in finance is getting ripped – Bloomberg via Wealth Management [88]
Americans are still not worried enough about the risk of world war – Noahpinion [89]
Welcome to mass-market mountaineering – The Walrus [90]
And finally…
“Ten minutes, once gone, are gone for good. Divide your life into ten-minute units, and don’t waste even a minute.”
– Richard Branson, Screw It, Let’s Do It [91]
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