Investors are not mincing words on Neil Woodford’s dramatic return to the industry which will see him launch a Jersey investment company before the Financial Conduct Authority has concluded its investigation into the collapse of his retail business just 16 months ago.
The disgraced manager told the Telegraph over the weekend he plans to “rebuild” his investment empire under a new brand called Woodford Capital Management Partners (WCMP) alongside business partner and right-hand man Craig Newman.
The pair has also roped in Acacia Research, the US investor which riled investors after it snapped up a handful of biotech stocks in Woodford Equity Income at a steep discount only to flip several stakes for a profit days later.
The Jersey-based fund will see Woodford return to his former stomping ground of biotech and healthcare, investing in companies that are reminiscent of the unquoted holdings in his defunct fund, now rebranded LF Equity Income, like Immunocore, Kymab, Synairgen and Oxford Nanopore.
But unlike his former fund, the new venture will be targeted at institutional and professional investors as opposed to smaller retail shareholders.
‘I didn’t want 2019 to be the epitaph of my career’
After the blow-up of his investment boutique in October 2019 Woodford admitted he was tempted to quit the industry altogether.
“I thought I never, ever want to be near the fund management industry again, but they say time is a healer,” he told the Telegraph.
“I didn’t want what happened to me in 2019 to be the epitaph of my career, I didn’t want it to be the full stop. I’m not trying to rebuild an ego, I just felt I wanted to continue to do the things that I believe in. I don’t think I’m qualified to do anything else.”
Woodford should be barred from managing money until FCA investigation concludes
Gina Miller, co-founder of SCM Direct and the True and Fair Campaign, said the fact Woodford is plotting to launch a new venture while the FCA is still investigating the collapse of his former fund is disgraceful.
“Everything about the decision by Neil Woodford to start a new fund is not just astonishing, but a grave insult to investors, many of whom lost their life savings in his Equity Income fund which is estimated to have lost more than a billion pounds,” Miller said.
“Yet the FCA has not completed its 18-month old investigation and Mr Woodford remains an authorised person on its register.”
The Evidence-Based Investor founding editor and freelance journalist Robin Powell agreed the City watchdog failing to hold anyone to account over a year and half after the suspension of Woodford’s fund shows it is “out of its depth”.
“We can’t keep waiting for the FCA to get its act together,” Powell said. “This announcement makes it all the more important that the regulator redoubles its efforts to publish it findings. Otherwise, Woodford may well end up causing more damage to people’s investment portfolios and the industry’s reputation.”
See also: FCA accused of lacking bite as it fails to hold anyone to account for Woodford scandal
Miller described the ongoing probe into Woodford’s former fund, which does not consider the regulator’s or Hargreaves Lansdown’s actions in the lead-up to the fund’s collapse, as a “worthless whitewash” and called on the Treasury Select Committee to “put an end to this farce”.
“The TSC should urgently recall Mr Bailey to give evidence on the Woodford scandal, and have experts present so he cannot be economical with the truth as he was in the LC&F evidence session,” said Miller.
“Until such time as an enquiry’s findings are published, Mr Woodford should be barred from managing money,” she added.
Woodford’s recent unquoted track record should give investors pause
Fairview Investing director Ben Yearsley said because Woodford’s new fund is being targeted at professional investors it “won’t have widescale appeal” as very few people will be able to invest in it.
“So, from that perspective it matters far less than if he was to launch an equity income fund,” he said.
But commentators remain sceptical over whether Woodford will be able to win professional investors over given his bruised reputation.
“By focusing on professional investors, he clearly hopes that much of the emotion and fury that he has faced over the past two years will disappear,” said AJ Bell head of active portfolios Ryan Hughes.
“However, given the broader damage in trust and confidence that this whole affair has caused to the investment industry, it looks unlikely that investors of any kind will find it so easy to forget.”
Hughes added that Woodford’s recent track record of selecting unquoteds would likely give potential investors pause.
“While he may well be right that there are some great companies to invest in, his track record showed that it is very hard to identify them and many need years of funding before they become successful, with plenty falling by the wayside along the way.”
The investment world has changed since Woodford Investment Management
City Hive founder Bev Shah added that the investment industry’s shift toward ESG and responsible investing makes Woodford’s latest venture look even less appealing.
“I would be curious to know how this new entity would pass due diligence of any institutional investor or asset owner,” Shah said.
“With so much more focus on company culture, diversity, ESG and responsible investing, the investment world has changed even since Woodford Investment Management launched.
“Mr Woodford will always be a major red flag on all these fronts and this highly publicised comeback bid only highlights his arrogance further. Any institution investing would really need to justify to their clients why they are taking such an astronomical risk.”
