Neil Woodford is making a dramatic return to investment management with a new fund, less than 16 months after his previous firm collapsed in a spectacular fall from grace.
The disgraced manager has reunited with right-hand man Craig Newman to set up Woodford Capital Management Partners, which will partner with US-based Acacia Research, to launch a Jersey-based biotechnology fund.
‘We’re going to rebuild the Woodford investment operation under a new brand,’ Woodford told the Telegraph in an interview at the weekend.
‘I didn’t want what happened to me in 2019 to be the epitaph of my career, I didn’t want it to be the full stop. I’m not trying to rebuild an ego, I just felt I wanted to continue to do the things that I believe in.’
The new fund will only be available to institutional investors and will hold a number of stocks previously owned by the failed LF Woodford Equity Income fund.
Woodford’s empire collapsed in October 2019 after he was ignominiously sacked from his flagship Woodford Equity Income fund by administrators Link Fund Solutions.
This followed a run of poor performance after a string of bets on illiquid, unlisted companies turned sour, leaving investors unable to withdraw their money for months. At the time of gating, £3.6bn of investor cash was trapped in the fund.
‘I’m very sorry for what I did wrong,’ he told the Telegraph. ‘What I was responsible for was two years of underperformance – I was the fund manager, the investment strategy was mine, I owned it, and it delivered a period of underperformance.’
He remains angry with Link for suspending the fund in June 2019 ahead of his sacking, claiming performance would have turned around if he’d been given more time.
‘I can’t be sorry for the things I didn’t do. I didn’t make the decision to suspend the fund, I didn’t make the decision to liquidate the fund. As history will now show, those decisions were incredibly damaging to investors, and they were not mine. They were Link’s decisions,’ he said.
Woodford highlighted the subsequent performance of several of his former fund’s holdings.
Synairgen’s share price more than quadrupled in one day after the Southampton-based biotech company found a potential Covid-19 treatment, and Oxford Nanopore surged on developing a rapid Covid-19 test.
Another holding, Kymab, was bought by Sanofi in a $1.45bn (£1.08bn) deal in January, months after Link had sold the position for a third of its current valuation.
Link also came under fire last June for selling a portfolio of up to 19 quoted and unquoted healthcare stocks to Acacia Research, the company Woodford is working with on his new venture, in a £224m deal.
Acacia went on to flip some of these stocks, making a £113m profit in just five months.
The remaining stocks held by Acacia will form the cornerstone of Woodford’s new fund. This portfolio will only be offered to institutional investors, with Woodford saying he now accepts that unlisted stocks are unsuitable for retail funds.
It remains to be seen how much money Woodford’s new venture will raise, but the fallout from the collapse of Woodford Investment Management will continue to be felt for some time.
Solicitors Leigh Day said last week it is close to formally launching a multimillion-pound class action against Link after securing funding.
Leigh Day is one of five law firms looking to obtain compensation for investors in the fund. Harcus Parker was said to be close to going live with its claim, also against Link, at the end of last year.
Other law firms are considering pursuing claims against Hargreaves Lansdown, which was a heavy promoter of the Woodford fund. Slater and Gordon and RGL Management are both looking into class actions against the broker, with Midlands-based Nelsons considering claims against both Link and Hargreaves Lansdown.
The Financial Conduct Authority is also conducting a probe into the fund’s collapse, looking both into Link and its depositary Northern Trust.
Investors still trapped in the failed fund may have to wait several more months for a final payout as Link oversees the sale of assets left in the mandate.