Hargreaves Lansdown Group  

Woodford 'not the reason' for Hargreaves' share price fall

Woodford 'not the reason' for Hargreaves' share price fall
Nick Train told a seminar that HL's share price stuttered due to the Woodford scandal

The lack of a conclusion to the Woodford scandal is not the reason Hargreaves Lansdown’s share price has stuttered, a platform specialist has said, responding to a comment made by veteran investor Nick Train.

Mike Barrett, director at the Lang Cat, said while it was right for veteran fund manager Train to call out the lack of definitive action by the City regulator over the Woodford Investment Management scandal, this was not the reason why the Bristol-headquartered Hargreaves Lansdown has seen its share price drop over recent weeks.

Barrett said that, from the customer's point of view, he was not sure how much of an issue Woodford is anymore.

He commented: “I think it's right to call out the FCA but it has been years since this thing went wrong," he said, adding that there were other things going on which have suppressed Hargreaves' share price, such as the crisis in Ukraine.

Barrett added: “For the majority of Hargreaves’ customers, Woodford [has caused] reputational damage at best, rather than anything direct.”

He was responding to Train’s comments during a seminar last week (May 18), when the co-founder of Lindsell Train said Hargreaves' share price had been impacted by the lack of action by the Financial Conduct Authority over the Woodford scandal.

When asked at the Frostrow Capital seminar why Hargreaves' share price was so low, Train said: “Four years since the suspension of the Woodford fund, there still hasn’t been any official report…there needs to be a certainty that people who were participants in that need to be sued or exonerated.”

Train also hit out at Hargreaves Lansdown’s lack of investment in its own platform, staing: “For years we've been badgering Hargreaves to stop paying so much out in special dividends and to invest more in the functionality [of its investment platform]."

Woodford fallout

Hargreaves bore the brunt of the Woodford fallout as it continued to recommend the Woodford Equity Income fund in its best buy list right up to the day of its collapse, despite awareness of the portfolio’s liquidity issues.

The company's shares have fallen 37 per cent since the start of this year.

Earlier this month, the company reported a drop in the number of customers signing up for its services as well as a slump in inflows, which its chief executive blamed on rising inflation and the war in Ukraine.

New customer sign-ups were two-thirds lower in the first four months of this year compared with the same period in 2021, and net inflows fell 46 per cent to £2.5bn.

However, HL is not the only platform to be struggling with its share price. For example, since the start of the year, AJ Bell’s shares are down 31 per cent, Quilter’s share price has fallen 31 per cent, Abrdn has slumped 24 per cent, as at May 20.