Fallen stock picker Neil Woodford is mounting one of the most unusual comebacks in investment history: He’s seizing a second chance to manage a pool of assets at the center of his fund empire’s collapse.
The manager has been picked by Acacia Research Corp. to run a portfolio of thinly traded holdings that the U.S. life sciences firm snapped up from Woodford’s former investors at bargain prices. The assets will make up the cornerstone of a new biotech-focused strategy that Woodford plans to open up to other institutional investors.
In a departure from his former approach that made him a cult figure among mom-and-pop investors in the U.K., Woodford is steering clear of retail clients in his new incarnation. Woodford’s emphasis on unlisted and smaller quoted equities, many involved in biotech, eventually led to his undoing after he was unable to sell holdings to meet a mounting spate of withdrawals in 2019.
With his plan to stage a revival, Woodford is attempting an ambitious feat that has eluded legendary money managers such as Bill Gross and Anthony Bolton. Gross, once feted as Pimco’s “Bond King” while running the world’s biggest mutual fund there, returned with a vehicle at Janus Henderson Group Plc that failed to beat its benchmarks before his 2019 retirement. Anthony Bolton, who like Woodford was a darling of U.K. retail investors while at Fidelity Investment International, sought to reinvent himself with a China-focused fund in a comeback lasting less than four years after performing poorly.
“Woodford will always be a major red flag,” said Bev Shah, founder of City Hive, an advocacy group in London that promotes diversity in the investment management industry. “I would be curious to know how this new entity would pass due diligence of any institutional investor or asset owner.”
Fund Freeze
Woodford built his reputation by calling major swings in technology, tobacco and other stocks over two decades while at Invesco Ltd. He struck out on his own in 2014, taking many of his clients with him. Over time, Woodford started veering more into thinly traded, smaller companies -- a strategy that backfired when performance started faltering. As clients started to pull out in 2019, he was forced to freeze his LF Woodford Equity Income Fund because he couldn’t meet redemptions.
In October 2019, he was ousted as manager of his flagship fund and announced he would shutter his investment firm, a stunning fall that counts as one of the most dramatic in London’s financial history. More than a year later, the money is still in the process of being returned to investors, who appear set to lose more than 1 billion pounds ($1.4 billion).
Woodford will manage a familiar set of holdings as part of his new venture, including Immunocore, Oxford Nanopore Technologies Ltd. and Arix Bioscience Plc. Acacia purchased the portfolio for 224 million pounds from Woodford’s now-liquidated fund, and the holdings are now worth around 690 million pounds as many of them benefited from a rally in healthcare stocks during the pandemic, according to a person familiar with the matter. For Woodford’s former investors in the Equity Income Fund, though, the rebound comes too late: they’ve lost out on some 460 million pounds in returns from the rally after selling out at depressed prices.