News about Woodford and Industrial Heat

  • Is there really a market for Industrial Heat shares? Where, who and why?

    I think that depends on what you mean by "market"? Woodford was only one of many, having already invested in IH. Ahlfors provided a fairly large list of them. So obviously there is interest in buying a stake in the company based on an evaluation.

    Can these individuals, and groups, turn around, and sell to others?...If that is what you are asking, then I guess we will find out soon with Woodford sinking fast.

  • Alan Smith

    Thank you for this. In my previous post, I got the performance numbers incorrect. I was looking at their website, which is only current up to April 30. I didn't realise how bad things had gotten re: performance at the PCT. The Equity Income accumulation shares are more or less flat on their launch price, but down quite a way from their high point. It's much easier to understand the panic, and the dynamics that ZenoOfElea referred to, in light of this.

  • Back to Woodford.

    Comment by market watchers and regulators suggest that the capital resilience of other Investment funds need examining 'they have been taking too many risks'...some say another bear market is signalled, since the closure of a fund to withdrawals against the backdrop of a bouyant market is unprecedented.

  • Woodford did very well managing traditional investments with a contrarian style.

    He started out for himself, more of the same, but also the freedom to incorporate early-stage (= value not known, illiquid, 50% never pan out) investments.

    The problem with that, in a regulated open-ended fund, is that you have a legal limit on the fraction of unquoted investments. NW would say that Patient Capital is not supposed to be for those who want to realise money quickly. Unfortunately if people lose confidence and sell he is legally obliged to do that.

    So his known problem was incorporating a significant amount of capital from an OEIC into unquoted and illiquid investments. Although no-one minded when he did it, so presumably everyone felt this stuff could be sold if it had to be.

    My guess is that quite a bit of the unlisted stuff that could be sold has been, so he is left with this stuff that is impossible to value, depends on confidence, and does not do well in a forced sale.

    As far as IH goes: Woodford's investment in it no longer looks like any validation - but for those of us with open eyes at the time it never did.

    Still this is not IH's fault, and although Woodford provides no validation the fact that IH stays in Patient Capital is not exactly IH's fault either.

    FWIW I think it may be difficult to sell IH. Those interested in LENR with deep pockets have probably already put their money in? But who can tell...

  • Back to Woodford.

    Comment by market watchers and regulators suggest that the capital resilience of other Investment funds need examining 'they have been taking too many risks'...some say another bear market is signalled, since the closure of a fund to withdrawals against the backdrop of a bouyant market is unprecedented.

    FWIW again.

    The closure here is some combination of:

    NW pigheadedness. He refuses to sell his unquoted stuff at heavy discount because he is convinced it will come good (and - remember "patient" capital).

    NW error. He should never have put "forced sale does not work" unquoted stuff into this type of fund. The stuff that can't be sold is often the stuff that will end up worth nothing.

    NW risk. He took too large single positions in some unquoted investments on a high risk high return basis. But that does not fit with the OEIC structure.

    Of course - the market looks weird at the moment - propped up by virtual money - and another big crash some time seems plausible. Unfortunately next time round we have no fiscal tools to deal with it - I can only see higher interest rates and inflation (with corresponding asset price drop) as the long-term solution to too much public and private debt dragging on the economy.

    21st century economists are going to have a field day writing textbooks about the blinkered behaviour of their predecessors whilst no doubt making their own mistakes.

  • One reason for Woodford Patient Capital Trust (WPCT) falling is the overlap in holdings between the two funds. Everyone knows he will be forced to seek some stocks so those are being marked down and that's effecting any funds that hold them.

    If you like any of the listed companies he's holding then now might be a good time to buy them.

  • Quote

    Or Rossi is bogus and IH and Woodford are a bunch of dummies.

    Rossi should have been seen as bogus since late 2011 after the fiasco of the "megawatt" demo. I can't say about other investments but inasmuch as Woodford bought pretty heavily and enthusiastically into IH when its mainstay was Rossi, yes, they are a bunch of dummies!

  • The hedge funds are shorting a whole basket of stocks in this case, some less liquid than others. Whatever Woodford sells from the portfolio is an opportunity for profit, because in the current situation nobody will pay top dollar for even the good stuff.,

  • "Analysts said the investment raises serious questions over Woodford’s due diligence processes and his research.

    One person who was close to Woodford’s fund said: “It’s a controversial pick. It shows they simply do not have the research available that a big fund house has at its disposal.”"…ntor-andrea-a4165641.html

    TRANSLATE: Research would have disqualified Rossi.

    google had research, and they failed. Why?

  • Well yes, I have previously highlighted my concerns over the Woodford "due diligence" and particularly as regards the IH investment.

    Woodford claimed at the start that he and his team did two and a half years due diligence before investing in IH.

    Sounds good, sounds careful, on the face of it.

    But if IH got Rossi so badly wrong and they were working closely with him, then what kind of due diligence could Woodford do?

    I would expect that it was Darden that approached Woodford for funding.

    Certainly Woodford knew Darden well and they may even be friends. That comes back to some of the current criticisms Woodford is receiving for relying on the "cosy" factor in his business dealings.

    Certainly some of Woodford's team flew to the USA and met IH and met Rossi and travelled around various places.

    I would be surprised if Woodford had tried speaking to scientists with relevant experience in LENR.

    I would be surprised if he directly had communications with any of the profs who have supported Rossi.

    I doubt he or his team had any real technical understanding of LENR and the difficulties in finding heat.

    So I suspect Woodford relied on the IH "due diligence". That does not really sound like due diligence to me when you rely on the company you are investing in to provide the "due diligence".

    Anyway time will tell.