Wrong place, wrong time for Woodford
Alpha is not a bad thing; returns come with risks. And Neil Woodford was good at demonstrating alpha during his time at the seat of the wheel of the Invesco machine. It’s why he managed a lot of money from ordinary investors at Woodford Investment Management.
In fact, his latest stage-managed bungee-jump back into the national consciousness is precisely because of this reason, he believes he is still one of the top people when it comes to finding certain companies in certain fields that could seriously outperform all those around them. I mean, should Cristiano Ronaldo retire now? Woodford was arguably at that level comparatively in the retail investment world.
This isn’t the reason for the instant backlash, or in some quarters downright anger on the various consumer forums and comment sections online. The backlash is a communications mishap and a bad one; Neil Woodford, and his team, spoke to the wrong audience at the wrong time. And it brings consequences.
He decided to announce his comeback to the investment world through an exclusive in the high-end, high-circulation Daily Telegraph; a publication read in the most part by adults with some discretionary capital in their pockets to invest in retail investment schemes like that of his old funds. In other words, he told a significant chuck of the people who are still out of pocket as a result of his ‘creativity’, that he’s back for another dance, but that they need not worry because it’s institutional investors he’s focused on this time round. He has remained defiant, even his apology preceded blaming someone else (in this case his fund administrator Link Asset Services) for the debacle.
The former England football striker Michael Owen once recollected a story of when he was waiting in the reception area of the Real Madrid HQ after just signing for them, when he saw a visibly drunk Paul Gascoigne, strut in, in full Real Madrid-branded training kit and football boots. The irony was not lost on Michael Owen at the time. His hero was now a national reputational risk. If he wasn’t already, the Telegraph move has probably shifted Neil Woodford, into that territory too.
Leaders within the financial services sector are suitably foaming at the mouth at the latest ill-timed media stunt, still reeling from the timely media exposé on Woodford from the BBC’s Panorama which wholly embarrassed the sector.
Katrina Lloyd of Investment Week has received plenty of support by stating she would have preferred if Woodford had stayed ‘away and let [the] investment industry rebuild’ much of the Trust that had been eroded since the last crises, and a plethora of other scandals peppered over the last decade, including his own star turns.
Put simply, Woodford shouldn’t have said a word, and particularly not to the audience that still feel mugged off by him.
Gazza was one of the greatest, but no one wants to see him play football anymore. The circus of scrutiny following Woodford around from now on is going to be a tough one to bear by his stakeholders, and unless he keeps schtum, a tough one for the wider sector too. Get me Tony Soprano….
…in fact, the financial services equivalent of Tony; campaigning titan, Gina Miller, is already on the case as we speak. Today she’s called for the Treasury Select Committee to chair an independent investigation into how and why his investment company went bust, "The British public deserve much better" she says.
The price for poor corporate communication, will be a high one for Neil and his team to pay…