arren Buffett advised investors to be afraid when others are greedy and greedy when others are afraid. It doesn’t work all the time – sometimes it’s better to sell a declining investment early; the first cut is the cheapest.
But in the garage sale of the Woodford Equity Income fund last year, the buyer was clearly right to be greedy. The seller is wrong to be so fearful.
Acacia Research, an American investor, bought some of the failed fund’s smaller investments for $ 282 million from the fund’s administrator, Link.
It immediately sold out for a heap of $ 185 million, leaving a handful, several of which have risen in value.
Woodford investors may want to look away now …
According to new documents filed by Acacia, at the start of this year the remaining assets were worth $ 267.4 million – almost as much as it was paying for the entire lot. It’s getting worse. One, Immunocore, was introduced in February, increasing the value of Acacia’s stake by $ 31.9 million.
Today another, Oxford Nanopore, is heading for an exceptional IPO. Acacia estimates its stake in Nanopore (purchased for $ 20.8 million) at $ 111 million. Don’t be surprised if the IPO results in a much higher valuation than after the bankers have woven their magic.
Two other Woodford stocks, Arix Bioscience and Sensyne Health, have also jumped since Acacia bought them.
Link says the sale to Acacia should be “judged as a whole” rather than stock by stock.
But from the profits Acacia is currently recording in its accounts, it’s hard not to conclude that Woodford investors have been disappointed yet again.
(This story first appeared in the Evening Standard newspaper on March 30)