Neil Woodford’s hopes of restoring his reputation as a stock-picker have taken a knock, with people queueing up to criticise his planned comeback.
Woodford is looking to return to fund management barely less than eighteen months after his Woodford Equity Income Fund was shut down with horrendous losses for investors.
A new fund, to be called Woodford Capital Partners, is being set up with US firm Acacia Research, which acquired 19 of the Woodford Equity Income Fund’s life sciences investments for GBP224mln last July.
The comeback was mooted in an interview Woodford gave with the Telegraph newspaper over the weekend and if this was Woodford dipping his toe back in the water, it has been more like dipping his toe in magma, such has been the volcanic eruption.
The Financial Conduct Authority (FCA), considered by some to be asleep at the wheel as Woodford’s Equity Income Fund headed at pace for the buffers back in 2019, got its retaliation in early, saying that Woodford is still under investigation for his part in the collapse of his fund.
The FCA noted that Woodford would need its permission before getting back in the saddle and the betting is the FCA is in the mood to hide the saddle.
“In taking any decision on whether to authorise a firm, we consider whether it is ready, willing and organised to comply, on a continuing basis, with our requirements and standards. That includes, for example, the sustainability of the firm’s business model and the fitness of its management,” said Mark Steward, the aptly named director of enforcement and market oversight at the FCA.
Woodford said he planned to open a new firm based in Jersey and Buckinghamshire, which probably set alarm bells ringing as Woodford has “form” when it comes to his operations in the Channel Islands.
When the Woodford Equity Income Fund was in danger of falling foul of restrictions that stipulated no more than 10% of the fund’s assets can be invested in private companies, he controversially encouraged four of the privately-owned companies to list on the Guernsey-based The International Stock Exchange.
The move earned him a nomination for the highly-coveted Robert Maxwell Businessman of the Year award …
The Jersey Financial Services Commission (JFSC) gave Woodford’s comeback plans a cool reception, saying he should have contacted the Commission before announcing his plans.
“We are disappointed to see this announcement in advance of either receiving or processing any application from this company for authorisation to conduct licensed business as an investment management firm in Jersey. It would be normal practice when making such an announcement to make it clear that it is subject to regulatory approval’.” the JFSC said.
The activist and fund manager Gina Miller has called for the Treasury Select Committee to start an independent investigation into the collapse of Woodford’s previous fund as she is evidently fed up waiting for the FCA to complete its investigation.
That at least prodded the FCA into announcing it would update parliament on the investigation before the end of May. In the meantime, savers who backed Woodford’s previous venture are still waiting for almost GBP200mln of their money to be given back.
Woodford says his new fund will be aimed at professional investors but that community will be unlikely to rush to embrace a man whose previous exploits are still the subject of an official investigation by the FCA.
It seems the only people that would welcome Woodford’s return are the privately-owned biotech firms that Woodford is apparently still keen to invest in.