Woodford gave an interview to the Sunday Telegraph yesterday (February 14) in which he apologised for the outcome he produced for investors, but largely blamed the actions of his funds’ administrator Link for suspending his Equity Income fund in June 2019, and for subsequently announcing the liquidation of the strategy.
Woodford’s new business is named Woodford Capital Management Partners. At present, the firm’s only client is Acacia Research Corporation, a listed US investor in early-stage life science and biotech companies.
Acacia Research Corporation previously bought, and then swiftly re-valued at a substantial profit, a number of the assets which had been in the Woodford Equity Income fund. Those assets were sold by Link to Acacia as part of the liquidation of the fund.
Woodford believes the assets were sold by Link to Acacia for £229m, but are now valued by Acacia at £690m. If those valuations are accurate, clients of Acacia have gained £461m, at the expense of clients in the Woodford funds, who received the lower sum.
Woodford’s new role will see him advise Acacia on the portfolio of unquoted companies it continues to own, following the acquisition from the Woodford Equity Income fund. As that suggests, the agreement is an advisory one, rather than a contract to manage the assets directly. As a result, WCM Partners is currently closer to a corporate advisory business than an asset management firm as it stands.
However, while Woodford's new work does not involve the creation of a fund, or managing money for retail or advised clients, it is thought a fund could be launched in future.
Woodford also remains adamant the Acacia holdings can appreciate further. He says: “These stocks have already demonstrated the huge potential in the tech and biotech sectors where early stage, patient investment can deliver outstanding value. I am focusing all my energies on identifying value and providing that support.”
But Woodford admitted in the newspaper interview that it was not appropriate to invest in the kind of early-stage companies held in the Acacia portfolio in a daily dealing fund aimed at retail investors.
The presence of unquoted assets in the Equity Income fund meant that Woodford was unable to meet the level of redemptions sparked by a prolonged period of underperformance. Withdrawal requests ultimately amounted to a net £9m per day, at which point Link took the decision to suspend the fund. Woodford’s firm was later fired by Link as manager of the strategy.
FTAdviser has previously reported in detail on the events surrounding the closure of Woodford Investment Management.
Woodford is listed as chief investment officer of the new business, which will be based in Buckinghamshire and Jersey. The manager's business partner at Woodford Investment Management, Craig Newman, is also involved in the new company.
While Acacia is presently the only client of Woodford’s venture, the intention is to have more in future.
A statement from the new company says the advisory agreement with Acacia is the “cornerstone of a new strategy to rebuild the Woodford investment operation under the WCM brand, serving institutional and high-net-worth investors.” Acacia chief executive Clifford Press described Woodford as a "truly exceptional" investor.
Clients of Woodford's old business are still waiting for their money to be returned. To date £2.54bn has been returned since October 2019, with around £186m still trapped in the fund and sizeable losses sustained on initial investments. Last September investors were told it could take up to a year for the remaining funds to be distributed.
In the meantime, a number of law firms are actively seeking to pursue claims on behalf of investors in the shuttered Woodford Equity Income fund. Last week Leigh Day announced it had secured funding for a claim against Link that is being backed by the consumer body ShareSoc.
Link has been approached for comment regarding Woodford's statements.
david.thorpe@ft.com
