Neil Woodford has stepped down as manager of Patient Capital trust and announced that Woodford Investment Management will be closing its doors.
Following the decision to wind up Woodford Equity Income fund, Neil Woodford has stepped down from his role as manager for Woodford Patient Capital trust and announced that Woodford Investment Management will also be closing down.
In a statement, the fund manager said he had “taken the highly painful decision to close Woodford Investment Management”.
He continued: “I personally deeply regret the impact events have had on individuals who placed their faith in Woodford Investment Management and invested in our funds.”
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Along with the company’s closure, it was also announced that Woodford would be stepping down as manager of Patient Capital while his remaining fund, Woodford Focused Income, will be wound up.
In a letter posted on the London Stock Exchange, the trust’s board noted: “in light of recent events, Woodford Investment Management Limited ("WIM") has today served notice of termination in relation to its role as Portfolio Manager”.
What happens to Patient Capital now is unclear. As previously noted, the board has already been considering the option of removing Woodford as manager. In its letter on the LSE website, the board said it “expects to be in a position to announce details of the new management arrangements shortly”.
Adrian Lowcock, head of personal investing at Willis Owen, welcomes Woodford’s decision to step down from managing the trust.
Lowcock notes: “Woodford’s decision to step down from the board of Woodford Patient Capital Trust was no doubt a hard decision, but given Woodford’s presence had become a distraction to the trust, it was also the right thing to do.
“Investors’ money is ring-fenced and will remain invested in the respective funds and in the underlying investments.”
The news has seen the share price of Patient Capital plummet. At open, the trust fell by 10%. It has since recovered slightly and is now down (at the time of writing) roughly 5%. Year-to-date the trust is down 55%, and it sits on a discount of over 40%.
According to Ryan Hughes, head of active portfolios at AJ Bell, the closure of Woodford’s company was somewhat inevitable.
He says: “Without the fees from the equity income fund and with no performance fee coming from the Patient Capital trust, it was difficult to see how the business could survive.”
It has since been announced that the Woodford Income Focus fund has also been suspended.
Will investors get compensation?
In a statement to Money Observer, the Financial Services Compensation Scheme said it will not be investigating any compensation claims at the moment.
Neil Woodford podcast
Woodford and Hargreaves Landsdown compensation
What is the likelihood of a group compensation claim against both Woodford and Hargreaves Landsdown. Both should be held accountable for this fiasco.
Neil Woodwford should be made to return all the fees he continued to command whilst the fund was suspended, in addition he should be fined for not complying with the required regulations on the stocks he was trading within the fund. Investors should look at taking a class action against Woodford and be able to at least walk away with a miniumum of the value of the investments that they made.
Both have been negligent.
The Neil Woodford Stitchup
Mr Woodford/his oganisation should be covered by professional indemnity insurance. A Class Action must be started with a view to recovering loss making investors funds via this insurance. Additionally, Hargreaves Lansdown have been negligently promoting Mr Woodford and his organisation when others have been recommending caution. There is therefore a case (a second Class Action) to be heard against Hargreaves Lansdown who have almost certainly profited handsomely from their highly dubious relationship. The sooner legal action is commenced the better. It is wrong to simply wind up the Woodford funds whilst ignoring investors. Some of the private companies in which investments were made could well turn out to be profitable and there are those of us who would prefer to remain invested. The only winners here will be accountants and lawyers ! This is beginning to take on the appearance of the Lloyds' scandal in the early 1990's when surprise surprise, when perjury and fraud was obvious to any reasonable person, not a soul was prosecuted. THE WHOLE THING STINKS! Woodford funds investors, let's get the guilty parties into court, prosecute them and demand to be fully compensated.
Woodford & Hargreaves Lansdown Compensation Claim
I have used Hargreaves Lansdown to invest in the Woodford Funds. I have already written to Chris Hill regarding Mark Dampier his Head of Investment Research continuing to push Woodford even though the fund was underperformimg and breaking the rules regarding the investment in illiquid assest ,,, I also accused him of insider deaing as he dumped £6 million of Hargreaves Stock when teh price was at its highest and he must of known it would fall dramatically due the tie up with Woodford. Th FCA need to ensforce compensation payments be paid to all non istitutional investors like myself and many other pensions who entrusted their hard earned cash to these crroks!