Robert88 wrote: Surrey Commuter wrote: Robert88 wrote: Rick Chasey wrote: Surrey Commuter wrote:
Shirley Basso wrote:Ah.
even worse they are likely (if successful) to need extra rounds of funding
If you run an open ended find with lots of illiquid investments (because you are a “long term investor”) you better make bloody sure your liquid investments are on the money, and not who’s-who of ftse100 & 250 car crashes.
He’s made a classic case of underperformance, which all managers go through, and turned it into an existential liquidity problem.
You are picking on Woodford but maybe his predicament is a straw in the wind. HL's share price doesn't seem to be recovering yet from backing what you suggest is "a classic case of under performance, which all managers go through".
The liquidity problem might prove to be wider and deeper than you suggest. There is also the problem that large companies like HL have large backers in the same game; they hang together lest they be hung out to dry separately.
It may not be another BCCI, Northern Rock or Equitable Life, but when do you find out?
Can you explain what you mean about liquidity.
For example, it is reported that since the banks had to improve their solvency ratios they have been willing to sell debt to people like Woodford who wanted the level of returns commensurate with the risk the banks wanted to offload. If the likes of Woodford decide they want out who is going to buy the asset at the price he needs?
Woodford was unlikely to be the only investor in such debt and there are other forms of debt with the same profile. A heck of a lot, in fact. Maybe not quite sub-prime mortgage territory but it could be very damaging.
I was not aware Woodford was buying debt off the banks, if he did it has not been widely reported. His problem is that he owns shares that are not traded on any exchange.
Most funds hold very small % of listed companies so they can easily sell and pay back investors.
Funds with illiquid assets such as property and corporate bonds are only available to institutional and professional investors who tend not to act irrationally. Some property funds were gated in 2007 and post referendum but there was no stampede when they reopened
If you want to worry about something then check out public sector unfounded pension liabilities or at a push car finance.