At Woodford, we feel strongly that existing and potential clients are entitled to understand what we’re doing with their money. Understanding our long-term, disciplined investment approach and process is crucial in helping investors understand how their investments are being managed and the experience they can expect when investing with us.
As investors, we are active, engaged, long-term, disciplined, diligent and focused. That’s a lot of things to say about ourselves but each word is important in helping you to understand how we manage money.
Investmentapproach
First and foremost, we are stock pickers. We combine rigorous analysis of companies with our view of the economic variables that may impact them. This approach allows us to construct robust investment rationales. We focus on what matters: the long-term perspective and the fundamental attractions of a business.
At Woodford, we believe that compelling investment opportunities do not start and end with larger, listed companies. For more than a decade, Neil and his team have also recognised the attractive investment proposition of early-stage companies and have been deploying long-term patient capital to young businesses. Our focus in this area remains on the fundamentals (principally of the business as the wider economic picture is less relevant in this area) and really supporting businesses through to commercialisation and fulfilment of their long-term potential. The risks are undoubtedly higher than in the more mainstream investment universe but, when adjusted for these additional risks, we believe that the potential long-term rewards are very attractive.
An active strategy
We believe that being an active investor means doing something different from the market and adding value through the investment process.
Every investment we buy, we buy on merit – we never invest in companies to make our portfolios look more like the index. As a result, our portfolios tend to look and behave very differently to the general market. We understand this can make investors uncomfortable at times but our unwavering focus is on identifying long-term value.
Company engagement
We are also active in our engagement with company management teams, as we want to represent our investors’ best interests in our discussions with management teams. We engage with management and work in partnership to try to influence change where necessary.
Long-term focus
Our long-term approach to investment management is encapsulated in a patient capital investment style. The forces of fundamentals and valuation may be over-ridden by sentiment and market momentum in the short term but we believe it is the longer time periods that count. Our focus is always on the long-term drivers of share prices.
Our approach is focused on value discovery, not on price discovery. We believe that focusing on valuation and identifying companies that can deliver sustainable growth, today or in the future, is the way to secure good long-term investment outcomes.
Absolute focus
We believe investors expect a return and protecting our investors’ capital is our key priority.
In the case of younger businesses, investors do have to tolerate the prospect of loss on a stock-specific basis. Our due diligence efforts are designed to minimise this risk and we also aim to achieve capital preservation through diversification, by investing in a larger number of smaller positions.
There will inevitably be periods when a fund falls in value but we believe our disciplined strategy, with a focus on valuation and diligent stock picking, can help us deliver a positive return over the long term.
Process
The Woodford investment process is circular and continuous. There are no set criteria for stock selection and investment decisions are continually revisited to ensure their ongoing relevance and appropriateness.
Idea generation
We have a broad-based approach to idea generation. Some are internally generated, while others are identified through proprietary analysis and external research from a wide range of sources. Many originate from our extensive interactions with the wider investment industry and through our conversations with company management teams. We also have an extensive (and growing) network of relationships that regularly bring new ideas to our attention.
Our network is especially important when identifying suitable early-stage business investment opportunities. We have cultivated close and collaborative relationships with a trusted group of organisations and individuals spanning a range of skills needed to take a business from seed to commercialisation and covering multiple industry sectors and geographical locations. Our network includes tech transfer specialists, leading academics, venture capitalists, successful entrepreneurs, development-stage and commercial executives, investment banks and retired executives and experienced board members. We use our network to share ideas, reinforce due diligence, secure specialist technical advice and tap into commercial acumen.
Macroeconomic view
For us, a comprehensive, fundamental understanding of the long-term macroeconomic outlook (the bigger economic picture) is a critical part of our investment approach. This does not involve trying to precisely forecast macro variables. More, it is about evaluating the likely direction of those variables and trying to understand the key drivers of (for example) growth, inflation, labour markets, liquidity and trade. If we can understand the long-term direction and influences of these variables, we believe this will inform better long-term decisions.
This long-term view of the bigger economic picture helps to direct our research efforts and inform our assumptions and judgements on all investment opportunities. The view is of more importance when judging the attractiveness of mature businesses as the fortunes of earlier-stage businesses are determined more by their own fundamental progress.
Fundamental analysis
Over-arching all of our research efforts is a desire to be as comprehensive as possible in our understanding of a company’s fundamentals (its actual operating performance, including its ability to deliver growing revenues, profits, cashflow and dividends). We consider inputs from a wide range of sources, with the aim of reaching informed investment decisions that will add long-term value for our investors.
Quantitative analysis plays an important role in our investment process but needs to be considered in conjunction with many other qualitative judgements, including:
Do we have confidence in the executive management team to deliver on their long-term objectives?
Is management aligned with shareholders?
Are margins and cash flows sustainable?
What long-term growth can this company deliver and how will it fund that growth?
Are there any regulatory, legal, political or other threats to this company and its industry?
Does the price that we are being asked to pay for a stake in this company represent compelling value?
When investing in early-stage businesses, the analysis is particularly detailed and aims to demonstrate that the management team’s account of the attractions of the business can be evidenced by fact.
Initial investigation involves the team looking at the business area the company operates in, intellectual property and technology, patent estate, products and services, financial characteristics and management team. We also consider market size, commercial opportunity, competitive environment and risks.
During the next stage of the process – detailed due diligence – we undertake site visits, meet the wider team, talk to potential customers, suppliers and analysts, carry out detailed scientific diligence, engage with industry specialists to better understand the technology and science and the competitive context, commission detailed intellectual property reviews, undertake extensive financial modelling, check underlying assumptions and complete a comprehensive review of valuation, based on a longer-term investment time horizon.
Around half of the companies on which we complete due diligence will be approved for investment and enter the final pre-investment stages of legal process and final approval. In this stage, we conduct more technical diligence on companies as required (covering subjects such as financials, intellectual property, legal, tax and anti-money laundering) and submit to the company the investment terms on which we are prepared to invest.
Company engagement
Meeting company management teams is a vital part of our investment process and responsibility for it sits with the investment team. For us, corporate governance is about ensuring that the executive and board of a company are aligned with us as shareholders and that the course that they have set for the business will create long-term shareholder value. If we fear that this alignment does not exist or feel that an alternative strategy may result in the realisation of more shareholder value, we will engage with management to try to influence change.
We meet with management teams regularly – typically at least twice a year after the release of financial results but more frequently where the need arises. These meetings are an important source of information in building our conviction in an opportunity – which in turn leads activity.
We are necessarily highly engaged with the management teams of the early-stage businesses in which we invest – although not so involved that we influence day-to-day decisions. For our private investments, a combination of board meetings, board packs and quarterly management reviews ensures we stay current with our investments from the perspective of monitoring – for oversight and valuation purposes. If we identify an issue, we become more engaged, trying to get to the root cause and encouraging the business to address this through a number of means. We hold each company to account to make sure it achieves the milestones we have set. If it does, we put more capital to work and if it doesn’t, we stop or withdraw funding.
Portfolio construction
The construction of the portfolio is the sole responsibility of the fund manager, Neil Woodford, with other members of the investment team assisting in information gathering, analysis and implementation.
The aim of all of our research efforts is to arrive at an informed judgement about long-term value so that we can assess whether the investment opportunity is attractive enough to include in a portfolio. There is always intense competition for capital within portfolios, so a new investment opportunity has to fight for attention and prove its credentials alongside existing positions.
Portfolio construction is entirely a product of stock specifics – the fundamental attractions of each individual investment and the level of our conviction in each opportunity. It is not by reference to any index or sector preference. Each stock is included in a portfolio on its own merit – we do not hold positions purely to manage relative risk. Portfolio weightings are determined by the level of our conviction in an investment thesis and our judgement of the balance between the potential upside to true inherent long-term value and the risks that may stand in the way of that long-term value being realised.
All of this is informally balanced against a desire to be appropriately diversified at a stock and sector level, in pursuit of a portfolio that can deliver attractive long-term risk-adjusted returns.
For early-stage investing, when we first invest, it will be with a typical time horizon of somewhere between three to five years, split into funding more discrete 18-24-month business plans. If a business is successful, a 10-15 year holding period is entirely possible. The largest portfolio positions are typically those where the company is furthest along the development or commercialisation path.
Portfolio monitoring
Monitoring of portfolio holdings is a continuous process and is primarily the responsibility of the fund manager, assisted by the rest of the investment team. All portfolios are reviewed daily to ensure appropriateness, consistency and adherence to the mandate, including any relevant restrictions. Individual holdings are assessed and monitored daily for news flow and relevant conversations with brokers and directly with the company.
Sell discipline
A decision to sell tends to be formed around three, often inter-linked factors:
Our judgement that a stock’s valuation has started to look less attractive (the gap between ‘value’ and ‘price’ has closed)
An event such as financial results or an acquisition, which changes our view of the company
A stock starting to look less attractive than other investment ideas that are competing for a place in the portfolio
These factors will always dominate a decision to sell or reduce a position, unless we are mandatorily required to sell (for instance, if we could exceed the maximum permitted size due to share price movements or in a bid situation).
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At Woodford1 we are committed to safeguarding and preserving your privacy.
This Privacy and Cookies Policy (together with the website Terms and Conditions) explains what happens to any personal data that you provide to us, or that we may learn about you while you visit our websites2, attend Woodford events, visit our offices, use our services or invest in one of the funds discretionary managed by us. This notice also informs you about your privacy rights and how the law may protect you.
We update this Policy from time to time, so please do review it regularly.
Please read the following carefully to understand our views and practices regarding your personal data and how we will treat it.
How and from where we may receive personal data
From you
When you contact or correspond with us (for example, by phone (including during recorded calls), e-mail or otherwise) for any other reason (for example, to request services from us);
When you use our Website, post comments on our Website or via social media;
When you report a problem with the Website;
When you:
register to receive information from us;
meet with us;
attend our events;
interact with us at third party events;
hand us your business card;
subscribe for blog alerts and bulletins;
sign up to receive news and updates from us;
participate in our surveys, competitions, questionnaires etc.; or
When you provide us with feedback, opinions and / or comments regarding the Website or our services.
Data from other sources
Like many other businesses, we may receive personal data from many sources. This section seeks to list various places from where we may receive personal data about you.
Data we indirectly gather about you:
When you use the Website, details of your usage (including the date, time, location or duration of the usage);
If you visit the Website, certain technical information, for example, the type of device (and its unique device identifier) you use to access the Website, the Internet protocol (IP) address used to connect your device to the Internet, your login information, browser type and version, time zone setting, browser plug-in types and versions, operating system, mobile network information and platform; and
Information about your visit to the Website including the full Uniform Resource Locators (URL), clickstream to, through and from the Website (including date and time), pages you viewed, page response times, download errors, length of visits to certain pages, page interaction information (such as scrolling, clicks, and mouse-overs), and methods used to browse away from the page.
Data we may receive from third parties
Companies that introduce you to us (such as financial advisers)
Financial advisers
Investment platforms through which you access our clients (investment companies and funds)
Investment fund administrators or shareholder/unitholder registrars
Social networks (e.g. google, twitter – see below for further details and our cookies policy below)
Public information sources such as Companies House or the Financial Conduct Authority’s Register
Market researchers/Data providers who collect and provide personal data from many sources for the specific and approved purpose of sharing such data with businesses like ours to help with our internal analysis (including assessing market trends, fund distributions statistics etc).
Marketing partners engaged to help distribute content on us and our services through any medium
Agents, consultants and advisers. These can be specialist companies who advise us on ways to develop and improve our services and products. These can also be types of firms that help us to prevent, detect and reports unlawful acts and fraudulent behaviours, in particular with regards to financial crime.
Government and law enforcement agencies
Purpose and legal basis for processing your data
Purpose of processing
Type of personal data
Legal basis for processing
To enable us to check your identity
Name, address, date of birth, passport details, driving license details and any other information you may provide us with
Legal obligation
To enable us to complete anti-money laundering checks to prevent financial crime and guard against market abuse activities
Name, address, date of birth, passport details, driving license details and any other information you may provide us with
Legal obligation
To deal with any enquiries, correspondence, concerns or complaints you have raised
Name, phone number, email address and details of the enquiry raised
Legitimate interests – to enable us to improve our services and the Website
To process any relevant payments
Bank, credit or debit card details
Performance of a contract with you
To enable us to process a referral from a third party (for example, a financial adviser)
Name, address, telephone number, email address, details of the referral and details of the third party making the referral
Legitimate interests – to enable us to process the referral
To compile internal reports and statistics of usage of the Website and our products and services
Name, details of any products or services purchased and the technical information mentioned above
Legitimate interests – to enable us to develop and manage our brands, products and services
To process your registration made via our Website to enable you (whilst acting on behalf of your company) to access the Woodford services
Your name, email address and company details (if applicable)
Legitimate interests – to enable us to provide you (where you have registered on behalf of your company) with Woodford online services
To send you our news items, marketing materials, product information, blog posts, insights and articles via email
Your name and email address
Legitimate interests – to enable us to communicate with business contacts
or
Consent – where we contact you in your personal capacity, for example where you are a user of our Website
To provide you with information, products or services that you request from us or which we feel may interest you
Your name and email address
Legitimate interests – to enable us to communicate with business contacts
or
Consent – where we contact you in your personal capacity, for example where you are a user of our Website
To assess how people use our products and services
Technical information as mentioned above
Legitimate interests – to enable us to improve our products and services
For our internal operations, including data analysis, testing, research, statistical purposes and troubleshooting
Technical information as mentioned above
Legitimate interests – to enable us to improve our products and services
As part of our efforts to keep the Website safe and secure
Technical information as mentioned above
Legitimate interests – to enable us to improve our products and services
To communicate with you if you wish to post on our Website
Your name, contact details, details of the post you wish to make and technical information as mentioned above
Legitimate interests – to review your request
To invite you to Woodford events
Your name, email address and details of the event
Legitimate interests – to allow us to obtain attendees for Woodford events
To enable us to host an event
Your name, email address, details of the event and any applicable dietary requirements (including relevant medical information)
Legitimate interests – to allow us to host Woodford events for attendees
The legal basis for processing any medical information to ensure we adhere to your dietary requirements and allergies will be consent.
To enable us to comply with our health and safety obligations when hosting an event (such as fire marshal duties)
Your name and details of the event you are attending
Legal obligation
To administer any quizzes and prize competitions we may run
Your name, email address, telephone number and your prize competition entry or quiz entry
Legitimate interests
To run polls in which you may choose to participate, for example via Twitter. We may then use the results of our poll (including your views) to inform our market insight or articles we may write
Your Twitter handle (or other relevant social media handle), the IP address associated with you (if relevant) and details of your response to the poll
Legitimate interests – collecting and analysing information for market analysis purposes, which you submit voluntarily
To receive feedback on our corporate governance and performance, including any views of investors in the funds that we manage
Your name, email address, telephone number and details of the feedback provided
Legitimate interests – collecting and analysing feedback on our performance and the performance of funds that we manage
To personalise the content you may see from us online (either on our Website or the websites of our online partners) if you have agreed to targeted advertising cookies
Your IP address and your consent to the use of targeted advertising cookies
Consent
To share your details (where you are an independent financial adviser business contact) with suppliers who carry out market analysis and information relating to IFAs, to enable them to take you into account in their research and analysis
Your name
Legitimate interest of the supplier – to carry out research and analysis on IFA market activity and publish information a directory of such activity – we would contractually require suppliers to whom we provide data to comply with data protection laws in their use of that data
Where we have a legal basis to use your personal data without consent (as we have described above), this Privacy and Cookies Policy fulfils our duty to process personal data fairly and lawfully and in a manner that you would expect given the nature of our relationship with you, by giving you appropriate notice and explanation of the way in which your personal data will be used.
Where consent is required for our use of your personal data as described above, we will request your consent. Typically, we would collect your consent by you performing an action such as ticking the appropriate consent box or otherwise communicating your consent to us (for example, by email or by you providing us with non mandatory information), you consent to our use of that personal data as set out in this policy.
You can always change your mind about our processing of your personal data. If you change your mind you can contact us by email at info@woodfordfunds.com, or in respect of marketing messages you can unsubscribe by using the unsubscribe link at the bottom of our marketing messages.
Cookie policy
Like most other websites, our website uses cookies. Cookies are small text files stored on your computer or mobile device by your browser. Cookies can be used to store certain preferences on a website or track if you have visited that site before.
No cookies used by Woodford store personally identifiable data such as:
Names
Phone numbers
Email addresses
Mailing addresses
Financial data
If you would like to limit or block the usage of cookies, you can do so in your browser settings. These settings differ between browsers.
By clicking “I Agree” on the cookie consent banner when you first access the Website and by using this site without changing your cookie settings, you are consenting to our use of cookies.
If you choose not to allow cookies, the quality of your browsing experience may be reduced and you may not be able to access all or parts of the Website. You can opt out of some individual cookies as described below.
For more detailed information about cookies and how they can be managed and deleted, please visit www.allaboutcookies.org.
Retaining personal data
We will retain the personal data we receive or collect about you for the period reasonably required for us to use it in accordance with this Privacy and Cookies Policy or in accordance with our legal rights and obligations. To determine the appropriate retention period for personal data, we consider the amount, nature, and sensitivity of the personal data, the potential risk of harm from unauthorised use or disclosure of your personal data, the purposes for which we process your personal data and whether we can achieve those purposes through other means, and the applicable legal requirements.
Your rights
You have the following rights with regard to your personal data:
Access: You have the right to access data we hold about you. This enables you to receive a copy of the personal data we hold about you and to check that we are lawfully processing it.
Rectification or erasure: You have the right to request that we rectify or delete any personal data that we hold about you (unless we have the legal right to retain it). If you request that we erase any personal data that we require in order to provide our products and services to you, you may no longer be able to use it. This right does not extend to non-personal data. It is likely to be necessary for us to retain your personal data to enable us to carry out a contract with you, and your rights under applicable law to request erasure may be limited accordingly. This means your rights under applicable law to request erasure may be limited accordingly.
Data portability: You have the right to obtain personal data we hold about you, in a structured, electronic format, and to transmit such data to another data controller if the legal basis for processing such personal data is consent or on the basis of performance of a contract.
Restriction: You also have the right to restrict us from processing your personal data if the data is inaccurate, the processing is unlawful or we no longer need to your personal data for the purposes for which we hold it.
Object / Change of preferences: You have a right to request that we stop processing your personal data where we are relying on a legitimate interest (or those of a third party). You also have the right to object where we are processing your personal information for direct marketing purposes. For example, if you have given your consent to receive updates from us about new products or services, but have changed your mind, you have the ability to opt out from receiving such communications going forward by contacting us using the details provided below or clicking the relevant link in any communications you receive. Please note, if you submit a request for us to stop processing your personal data in a certain way and this type of processing is required in order to provide you with our products and services, you will no longer be able to use our products and services following your request for us to stop the relevant processing.
Complaints: If for any reason you are not happy with the way that we have handled your personal data, please contact us. If you are still not happy, you have the right to make a complaint to the Information Commissioner’s Office.
Please note that if you ask us to stop processing your personal data in a certain way or erase your personal data, and this type of processing or data is needed to facilitate your use of any of our products or services you may not be able to use them as you did before. This does not include your right to object to direct marketing, which can be exercised at any time without restriction. Please allow at least 5 working days for your request to be actioned.
Please note that the rights mentioned above do not extend to non-personal data. Please also note that it is likely to be necessary to retain your personal data for the purposes of assessing and verifying data that is submitted by you and to manage our products and services, so therefore your rights under applicable law to request erasure may be limited accordingly.
If you would like to exercise any of the rights mentioned above, please contact us at info@woodfordfunds.com.
Disclosure of your personal data
investment funds/trust or companies (including their agents or service providers) discretionary managed by us, such as the LF Woodford Equity Investment Fund;
other companies in the Woodford Group and their agents;
service providers (for example, IT services), business partners, suppliers and sub-contractors for the performance of any contract we enter into with you, and for processing of our data on the basis of our legitimate interest (as we have explained in this policy) including providing you with marketing communications or developing and tailoring products. Such service providers may help us to update your records, carry out marketing fulfilment services (such as distributing our materials and reports) and help us analyse data for our own internal purposes;
analytics, market researchers, data partners and search engine providers that assist us in the improvement and optimisation of the Website, our services, our products and their distribution;
government or other law enforcement agencies, in connection with the investigation of unlawful activities or for other legal reasons (this may include your location information);
in the event that we sell any business or assets or receive investment into our business, in which case we may disclose your personal data to the prospective buyer or investor;
if we or substantially all of our assets are acquired by a third party, in which case personal data held by us, including your personal data, will be one of the transferred assets; and
if we are under a duty to disclose or share your personal data in order to comply with any legal obligation, or in order to enforce or apply the Terms and Conditions for our website or any other contract between you and us;
or to protect the rights, property or safety of Woodford, our users, and others.
Storing your personal data and transferring data outside of the EEA
In operating our website and our services it may become necessary to transfer data that we collect from you to locations outside of the European Economic Area (EEA), such as the US and Australia, for processing and storing. By providing your personal data to us, you agree to this transfer, processing or storing. This may involve the transfer of data by electronic media, including the internet.
There is no adequacy decision by the European Commission in respect of the US or Australia which means that the laws of these countries are not deemed to provide an adequate level of protection to your personal data. However, to ensure that your personal data receives an adequate level of protection we may implement any mechanism that is approved under data protection laws to ensure that your personal data is treated by those third parties in a way that is consistent with EU and UK laws on data protection. These measures could include the following:
EU-US Privacy Shield; and/ or
EU standard contractual clauses.
If you would like to find out more about this or obtain a copy of the relevant standard contractual clauses, please contact us at info@woodfordfunds.com.
Our Website can also be accessed and used worldwide, which means your data may be processed outside the EEA. Please note that the country from which you are accessing personal data may not provide an adequate level of protection for your personal data.
Security
All information you provide to us is stored on secure severs. We will use appropriate technical and organisational measures to safeguard your personal data.
Where we have given you (or where you have chosen) a password, you are responsible for keeping this password confidential. We ask you not to share your password with anyone.
We maintain (and ensure that anyone we share your personal data with maintains) appropriate technical and organisational measures to ensure that an appropriate level of security in respect of all personal data we process. Unfortunately the transmission of information via the Internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted via the website or any of our services; any transmission is at your own risk. Once we have received your personal data, we will use strict procedures and security features to try to prevent unauthorised access or inadvertent disclosure.
Third party links
On occasion we include links to third parties on this website. Where we provide a link, we are not responsible for the collection or use of your personal data from these third party websites. You should review their privacy policy before sending them any personal data.
Letting us know if your information is incorrect
If any of the information which we hold about you is incorrect, please tell us and we will amend it. You can write to us at Woodford Investment Management Ltd, 27 Old Gloucester Street, London, WC1N 3AX or email us at info@woodfordfunds.com.
How to complain
This section tells you how you can contact us to complain about our data privacy processes and how you can contact appropriate government regulators.
Please let us know if you are unhappy with how we have used your personal data. You can contact us using info@woodfordfunds.com.
You also have the right to complain to the regulator, and to lodge an appeal if you are not happy with the outcome of a complaint.
In the UK this is the Information Commissioner’s Office. Find out on their website how to report a concern.
How to withdraw your consent and implication of not providing personal data
This section explains what to do if you no longer want us to hold or use your personal data. This section also explains the effects of not choosing to provide personal data.
Withdraw consent
You can withdraw your consent at any time. Please contact us at info@woodfordfunds.com if you want to do so.
This will only affect the way we use information when our reason for doing so is that we have your consent.
If you withdraw your consent or do not provide minimum personal data (like contact details), we may not be able to
provide information on certain products or services to you;
keep you informed on our business developments;
contact you regarding your desire to post on our website; or
report back to you on the status of any complaints you have made.
Contacting us
Please contact us if you have any questions relating to this Privacy and Cookies Policy at info@woodfordfunds.com.
Footnotes
Woodford Investment Management Ltd (company number 10118169) and referred to as “Woodford”/”we”/”our”/”us” in this privacy policy.
Including http://localhost:10000// (the “Website”)