Investment manager Neil Woodford to set up new firm

Launch – and public apology – comes two years after implosion of his last venture following bets that went wrong

Neil Woodford
Neil Woodford: ‘You can imagine lots of people wouldn’t want to touch me with a 10-foot disinfected bargepole.’ Photograph: Troika/Alamy
Neil Woodford: ‘You can imagine lots of people wouldn’t want to touch me with a 10-foot disinfected bargepole.’ Photograph: Troika/Alamy

First published on Sun 14 Feb 2021 08.30 EST

Neil Woodford has announced plans for a new investment business and issued a public apology over the implosion of his last venture less than two years ago following a string of bets that went wrong.

In one of the most dramatic attempts at a boardroom comeback in recent history, the former star fund manager said he planned to open a new firm – WCM Partners – which would be based in Jersey and Buckinghamshire.

Unlike his previous vehicle, which lost thousands of pounds of investors’ money and was forced into liquidation in 2019, the new firm will focus on advising professional investors rather than retail customers.

Setting out his plans after more than a year of public silence, Woodford used an interview in the Sunday Telegraph to say he was “very sorry for what I did wrong” at the helm of the Woodford Equity Income Fund. But he rejected criticism of his management style and argued that he could have saved investors money if the fund had not been forced to close.

The new firm will draw fees for advising on biotechnology assets Woodford originally bought before the collapse. They are now owned by Acacia, a New York-listed company that bought the shares last year and which intends to use them as the foundation on which to rebuild the Woodford investing operation.

The Woodford Equity Income Fund collapsed in October 2019 following months of turmoil when investments did not perform as hoped. Woodford was removed as investment manager and its administrator, Link Fund Solutions, wound it down, returning money to many investors at a steep loss.

Woodford’s planned return is likely to raise eyebrows as it comes at a time when an investigation into the collapse of the equity income fund has yet to be published by the Financial Conduct Authority. A spokesperson for the City regulator declined to comment.

Ryan Hughes, head of active portfolios at the fund management firm AJ Bell, said about £200m of money was still stuck in previous funds and that many investors were sitting on losses of more than 25%. “The news that Neil Woodford is looking to make a comeback will come as a surprise to many, especially those thousands of embattled investors who are still waiting to get the last of their money back.

“There will be little sympathy for Woodford and the comments he made in his recent interview.”

Woodford, who earned dividends worth millions of pounds from the firm shortly before its collapse, said he had been forced to sell his main home, a farm in the Cotswolds worth £30m, in the aftermath of the closure.

The fund manager had risen to become one of Britain’s most prominent investors in recent decades, earning the moniker “the oracle of Oxford” after 25 years at Invesco Perpetual. Strong returns had garnered him a significant following among retail investors and savers, allowing him to start his own investment business in 2014, with assets worth £16bn under his control by 2017.

But by October 2019 the assets in his main fund had fallen to £3.1bn following lacklustre performance and as big pension funds lost confidence and withdrew their money.

Some investments included stakes in poorly performing companies such as scandal-hit Provident Financial, a high-cost lender targeting poorer customers, the estate agent Purplebricks, and the litigation finance firm Burford Capital.

He also chose to invest in frontier technology companies with unproven revenue prospects, including a highly speculative venture trying to pioneer nuclear fusion at low temperatures and a series of biotechnology companies. Furthermore, he faced criticism for investing in private, unlisted companies, which made it difficult to sell them when some clients withdrew their money.

“I’m very sorry for what I did wrong,” he said. “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.”

Woodford also criticised Link Fund Solutions, however, which suspended the funds he ran and then decided to wind down the funds, saying this was “incredibly damaging to investors” because they forced it into a fire sale of assets below what he believed was their true value.

A spokeswoman for Link said the decision to wind up the fund “was considered to be in the best interests of all investors”.

Woodford said that if he were to return to running retail money, he would not stray far from large listed companies whose shares could be easily sold to meet investor redemptions.

Although saying that he did not want the 2019 collapse to be the “epitaph” of his career, he added: “You can imagine lots of people who have read the media about me wouldn’t want to touch me with a 10-foot disinfected bargepole.”