Fund manager Neil Woodford is plotting a comeback after the spectacular collapse of his last money management business.
Woodford and business partner Craig Newman are setting up a new company in Jersey, Woodford told the Sunday Telegraph over the weekend. The new business, Woodford Capital Management Partners, will focus on investments in the biotech, biosciences and healthcare sectors. It will only be open to professional investors.
The new venture follows the spectacular collapse of Woodford's last company in 2019. Newman was also the cofounder of that business too.
"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," Woodford told the Sunday Telegraph. "I’m not trying to rebuild an ego, I just felt I wanted to continue to do the things that I believe in."
Woodford developed a reputation as one of the UK's most successful money managers during a quarter century career at Invesco. He left in 2014 to set up his own venture, Woodford Investment Management.
Woodford's new company attracted billions from both retail and professionals investors. After a successful first few years, funds began to underperform. Investments in unlisted businesses also raised eyebrows.
Crisis struck in 2019 when a major investor tried to withdraw money. Facing a liquidity crunch, Woodford was forced to suspend withdrawals from his biggest fund, the Equity Income Fund, which has £3.1bn ($4.3bn) under management.
After struggling to sell-off enough investments to meet withdrawals, the Equity Income Fund was closed by administrators Link Fund Solutions in October 2019. That ultimately led to the collapse of the entire Woodford business. Investors in Woodford's funds have taken significant haircuts on their investments.
Then Financial Conduct Authority (FCA) chief executive Andrew Bailey said Woodford had “sailed close to the wind” in his management of the business. The FCA is investigating the matter and the Treasury Select Committee has also probed the matter. The Bank of England has suggested changes to how open-ended funds are managed in the wake of the collapse.
Woodford told the Sunday Telegraph he was "very sorry for what I did wrong" but blamed Link for the collapse. He attacked the "lies" that had been told about the business' culture in the press.
“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 told the paper.
"It looks as if Woodford is looking for vindication that his original investment strategy was correct all along," said Ryan Hughes, head of active portfolios at AJ Bell.
Hughes said Woodford's planned comeback was a "surprise" and predicted there would be "little sympathy" for the fund manager.
"While some investors may well agree with Woodford’s view that investors would have been better off if his fund was not forced to suspend and liquidate, others will simply be glad that they have got some of their money back after being stuck for many months and will want to finally move on from this sorry saga," he said.
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