A peek behind the scenes at Neil Woodford’s new venture

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A peek behind the scenes at Neil Woodford’s new venture

Ostentatious is not a word you would use to describe the offices of arguably the UK’s highest-profile investor.

Inside, those behind Woodford Investment Management haven’t quite gone as far as beanbag chill-out zones, but the vibe is more laid-back ad agency than serious, dour money management.

Neil Woodford and the majority of his colleagues are in attire more casual than one might have expected, but the look fits in with the coffee bar at the back of the office.

There is, however, serious work going on.

Mr Woodford’s portfolio managers Stephen and Paul Lamacraft and Saku Saha are suited and booted and drilled in their boss’s investing mantra, which has helped him achieve such prominence.

In a corner of the open-plan space sits chief executive Craig Newman’s office, which, with its copious amount of scrawlings on the walls, resembles a scene from a US crime drama, such as Homeland or CSI.

The inner workings of his mind have quite literally been scatter-gunned onto the walls.

There is writing directly on the glass panels that surround his office, Post-it notes covered with various scribbles, and a circular list of tasks that need to be started, are underway or completed.

The location of the office, on a business park on the outskirts of Oxford, was chosen in large part because it allowed Mr Newman to implement the “culture” he wanted to create at the firm. He even donned overalls at one point, painting the office to ensure the company would launch on time.

There is an investment angle to the location as well. Mr Woodford is looking to strengthen his links with, what he refers to as, “the best university in the world”, Oxford University, having previously invested in businesses that have spun-out of the academic institution.

He praised the university’s achievements in areas such as medical science, a sector in which he is a keen investor, and predicted the city would “continue to supply some great investments”.

The office is in the same building as business psychology consultancy Pearn Kandola and tech firm Blinkbox, while nearby is the main Mini car plant and various scientific institutions.

The vernacular Mr Newman uses to describe the company may, even by his own admission, “seem very heady”, what with the business being “agile” and its team working on “projects”.

There are moves to “break down barriers” by virtue of the company’s lack of what it sees as unnecessary hierarchies, while consultants are used where it is felt a permanent member of staff isn’t necessary.

Moreover, in place of conventional meetings, there are short 20-minute “scrumming” sessions – quick-fire updates on how those “projects” are progressing.

The company also appears keen to communicate with its clients in a different way to its rivals. Its website is straightforward, blog posts are published regularly, and it’s been disclosing its full portfolio of holdings on a monthly basis.

The firm has also shaken up the debate about fund management fees, condensing all its expenses on its open-ended fund to a level lower than the vast majority of other groups.

Its forthcoming Patient Capital investment trust, which will allow Mr Woodford to further pursue his passion for investing in early-stage businesses, charges no annual fees and the managers only get paid if they return more than 10 per cent per year.

Some have labelled this model ‘gimmicky’, or said it has only been able to work because of who is running the trust, but Mr Newman stresses the fee structure does align the business with its investors.

The fee itself is paid predominantly in shares, which have to be kept for a one-year lock-in period, and 20 per cent of the fee goes towards the trust’s expenses, although Mr Newman says this doesn’t even cover their full tax liability.

Woodford Investment Management now has roughly 30 employees and there are plans to hire a handful more staff, although Mr Newman seems to be wrestling with how to “maintain the cultural system” he has created as the company grows.

“There are questions about how big a company can get in terms of numbers while maintaining a cultural system,” he explains. “Behavioural psychology says you can reach about 100 before you have to change.”

As the firm grows, it will need to add new investment skills or disciplines, which is “something we will turn our attention to”. The intention, though, seems to be that this will be a more organic process than a structured ‘project’.

“We will not just write down who we need to hire into the investment team because that is not how I think we will discover the right investment talent,” he states.

“Adding the right skillset has to start with what we believe in and [should be something that] does not challenge the investment belief structure. It has to be right culturally.”

There is no official line on why two of the group’s partners – Gray Smith and Nick Hamilton – left roughly six months after the business started, but reading between the lines it looks like that cultural fit, or maybe lack of, could have played a role.

In spite of all the scrutiny of the new venture, Mr Woodford seems relaxed, pleased that he is part of a business that is “in command of [its] own destiny”.

As the visit comes to an end, it’s straight back to work for Mr Woodford, who can be heard calling out to trader Grant Wentzel to no doubt discuss a potential deal.

Mr Wentzel was key in getting the Oeic invested, managing £1bn of trades in the first day, thanks in part to a market event known as ‘quadruple witching’, where traders’ futures and options expire and the FTSE rebalances.

The business has made a high-profile, bolshie start and where it goes from here is likely to be followed with as much fervour, especially if its ambitions are met.