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Neil Woodford's departure
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lynne shaffer
Posted: 16 October 2013 07:47:21(UTC)
#1

Joined: 15/03/2011(UTC)
Posts: 205
To stay or to go? That is the problem.

I have a holding in Edinburgh Investment Trust. I 'm not sure what to do. I know that many people are exiting fast, but Mark Barnett, the proposed new Manager has a good reputation.

However, the price is falling fast. What do others think?

Lynne Shaffer
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eyeboy
Posted: 16 October 2013 08:53:30(UTC)
#2

Joined: 17/12/2010(UTC)
Posts: 37

Thanks: 5 times
Was thanked: 76 time(s) in 23 post(s)
People selling is a typical knee-jerk reaction. There have been discussions about Woodfords replacement within Invesco's open ended funds for a number of years - Mark Barnett was always tipped to replace him. As for EDIN, I'm going to keep holding as long as the investment strategy remains the same. Mark Barnett, who will likely take over running EDIN, has a good reputation and his ITs have outperformed Woodfords over the last few years. If anything, the fall in price could be considered a buying opportunity as the premium narrows.

Personally, I'd just hold. I don't see any reason to do anything. Just my opinion.

Just to clarify my personal opinion of Neil Woodford - I think he's great and his reputation as a high quality fund manager is well deserved.
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6 users thanked eyeboy for this post.
lynne shaffer on 16/10/2013(UTC), Barry Harland on 16/10/2013(UTC), dlp6666 on 16/10/2013(UTC), alangb on 16/10/2013(UTC), Guest on 16/10/2013(UTC), Spartacus on 16/10/2013(UTC)
steven woodford
Posted: 16 October 2013 14:06:14(UTC)
#3

Joined: 20/01/2012(UTC)
Posts: 89
I'm not a holder but I would be considering selling...

Regardless of how good the replacement is, a lot of people will follow like sheep and the fund will be forced to sell assets in order to return people's cash. I understand that the funds are invested in private companies and some smaller listed ones, as well as FTSE giants - if they are forced to raise cash quickly then it will be the liquid stocks that are sold to raise the cash, which could have an impact on the make-up of the funds and mean a heavier weighting of illiquid (and riskier?) investments.

It all depends how many people pull out and over what time frame, but that in itself could have a snowball effect - a bit like a bank run (admittedly an extreme analogy)

Although it may not be rational to take your money out, if crowds of people are going to do it anyway then i'd want to be getting mine out early.
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Jonathan Williams
Posted: 16 October 2013 14:17:39(UTC)
#4

Joined: 21/11/2009(UTC)
Posts: 3
Agree with eyeboy. The smart money will have sold some whole ago, possibly with an eye to buy again when the kneejerk reaction has run its course. I will certainly hold.
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PaphosStan
Posted: 16 October 2013 14:35:16(UTC)
#5

Joined: 05/01/2012(UTC)
Posts: 6
Regarding Stephen Woodford's comment. EDIN is an Investment Trust, not a Unit Trust. As such if people sell EDIN there is no pressure on the EDIN Managers to sell any underlying stocks

PaphosStan
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PaphosStan
Posted: 16 October 2013 14:36:24(UTC)
#6

Joined: 05/01/2012(UTC)
Posts: 6
Regarding Stephen Woodford's comment. EDIN is an Investment Trust, not a Unit Trust. As such if people sell EDIN there is no pressure on the EDIN Managers to sell any underlying stocks

PaphosStan
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steven woodford
Posted: 16 October 2013 14:55:31(UTC)
#7

Joined: 20/01/2012(UTC)
Posts: 89
PaphosStan;21181 wrote:
Regarding Stephen Woodford's comment. EDIN is an Investment Trust, not a Unit Trust. As such if people sell EDIN there is no pressure on the EDIN Managers to sell any underlying stocks

PaphosStan


Good point!

I was thinking more about the Invesco funds - where I believe my argument is quite relevant.
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Alastair Hall
Posted: 16 October 2013 15:02:59(UTC)
#8

Joined: 14/03/2013(UTC)
Posts: 1
My main Woodford holding is EDIN and like others if the price and discount falls then I will top up. Can we be sure that Woodford will not retain the EDIN mandate, it's not Invesco's to deal with but EDIN's board of directors?
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Broomtree
Posted: 16 October 2013 15:29:30(UTC)
#9

Joined: 26/04/2007(UTC)
Posts: 16
Point on closed ended funds made today - in a flat market the High Income Fund (inc) fell 2%
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eyeboy
Posted: 16 October 2013 15:55:11(UTC)
#10

Joined: 17/12/2010(UTC)
Posts: 37

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Broomtree;21185 wrote:
Point on closed ended funds made today - in a flat market the High Income Fund (inc) fell 2%


Not quite a complete picture. At mid-day, the UK stock markets were down and most closed end funds report valuations at mid-day prices. I'd be interested to know what percentage of the Invesco Income and High Income funds are held by other institutions, e.g. fund of funds and the like. One would hope that they won't be panicked into selling/switching just because of this news.

Stock markets are often driven by fear and greed. The news of Woodford's resignation has caused fear. The resulting buying opportunity will cause greed and the price will recover. Long term holders shouldn't really be affected.

Mark Barnett (assuming he takes control of EDIN) has a slightly different way of picking stocks. I'm sure I read an interview with him that says he likes companies that have the potential to grow their dividends over time, rather than focusing on out and out yield.
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