The bulk of the comments appeared in a series of posts that followed the patient capital announcement from Philip Hammond in the 2017 budget. The chancellor announced a £2.5bn investment fund to help knowledge-based UK businesses scale up, which Woodford described as “transformational”.
“When I look across the portfolios, I am proud to have played a small part in the increasingly evident progress being made by many of the young businesses we have backed,” he said in a blog post dated 29 November 2017, a week after the budget announcement.
Oxford Nanopore, Purplebricks, Immunocore and Gigaclear were the businesses Woodford named.
‘Tired of being treated like charity donors’
The government’s patient capital fund was a “a watershed moment for young, British, knowledge-intensive businesses and they are profoundly important for Britain’s long-term economic future”, Woodford said, although the response from investors was not happy.
The Woodford Patient Capital Trust had fallen 12.9% since its launch in April 2015 at the time of the blog’s publication. Woodford Equity Income was doing better, having returned 26.9% at launch, but had fallen 9.3% from its peak at the start of summer.
“All very well Neil, but an investment fund is not a charitable nor a state-subsidised institution,” came the first comment, which was echoed by other investors. “We should have been told it was a charitable donation we were making – and not a chance of any more than that,” said another investor.
“I think many of us are getting tired of being treated like charity donors – oh hang on perhaps we are,” came a further comment. That same person said they had lost about £3,000 in the trust.
Woodford’s metamorphosis into tech warrior
Willis Owen head of personal investing Adrian Lowcock says it was understandable for investors to be questioning where Woodford’s allegiances lay.
“Whilst Woodford claims to be focused on the customer, there has clearly been a disconnect between what Woodford’s fund was doing and what a lot of investors thought it was doing,” Lowcock says, pointing the Equity Income fund, which also invested in a lot of companies held by Patient Capital.
Meanwhile, Fund Expert managing director Brian Dennehy questions whether Woodford morphed into a “small cap-cum-tech warrior” in recent years. “It certainly wasn’t where he built his previous reputation as an outstanding manager – and the reconstruction is forcing him back to the roots of his success in the 1990s, when he avoided tech like the plague.”
An impact investor view
EQ Investors head of impact investing Damien Lardoux says while not all companies in Woodford Patient Capital have an impact focus, EQ would consider its biotechnology companies strong impact-investment candidates.
Lardoux said: “We like the concept of patient capital as the market is too focused on short-term performance and there is generally a lack of investors willing to support fast growing businesses in the UK. It’s also good for the economy as companies know that those types of shareholders can handle short-term underperformance or phases of investments that can have a negative impact on profits in the early years.”
Just over a month before the 2017 budget, Woodford suggested he would like to achieve positive impact with his funds.
“I exist and am paid to deliver attractive returns to our investors,” Woodford said at the British Private Equity & Venture Capital Association summit in October 2017 in response to a question about where he would like to see the Patient Capital Trust in a decade’s time, predicting it would “blow the lights” in the next decade.
But this was not all he wanted to achieve over the period.
“The second and third goal would be that we help create multi-billion dollar organisations that become recognised for doing fantastic things and really do change the world that begin to address many of the challenges the world face, whether it’s climate change, whether it’s human disease, or all sorts of things. That would give me a lot of satisfaction if on that journey we’d been able to achieve that.”
Proton Partners milestone
Not all investors were opposed to Woodford doing good as he invested their money.
In July 2018, Woodford posted a promotional video about Proton Partners, which has since been renamed Rutherford Health, detailing its “significant milestone” treating its first cancer patient in the UK.
“Having just read this article after also reading about this news in the Daily Mail I feel that my investment in Patient Capital Trust has hopefully been more than justified by this extremely positive medical news,” said one investor. Another commented: “Really good news sometimes it’s not all about the money.”
However, others pointed out they did not invest in Woodford for positive impact. “Putting aside the obvious benefits to cancer patients, what ultimately matters to us are the returns this company will make for us,” responded one investor.
One investment manager, who did not want to be named, said it was “very unusual” for a fund manager to post such a promotional video to their website.