A couple of warnings before we begin - (i) this article is for entertainment purpose only and no part of it should be considered an investment advice, (ii) we have no financial position in the mentioned companies.
Finally it is game over for British Biotech investor Neil Woodford. Yahoo Finance reports that his fund is being shut down, and he is fired from his namesake fund Woodford Equity Income Fund (WEIF).
The story is intricately linked to the expected IPO of Oxford Nanopore as The Telegraph reports in “Neil Woodford’s plan to float Oxford Nanopore looks ‘increasingly like a daydream’”. According to the article, Woodford was hoping to pay the investors of his frozen fund from IPO cash of Oxford Nanopore, but the IPO market would not accept his expected valuation of Oxford Nanopore. Investment Week quotes from same The Telegraph article -
It is thought the manager will struggle to exit life sciences company Oxford Nanopore either through floating on the stock exchange or as part of a private debt raising fundraising before the end of the year due to the sluggish IPO market, sources told The Telegraph.
The shuttered Woodford Equity Income fund (WEIF) is slated to reopen in December but this is dependent on the manager raising the necessary levels of cash, while the Woodford Patient Capital trust is facing a debt deadline. The board of WPCT is hoping to extend a lifeline from its lender after plunging to a £232m loss.
Even though The Telegraph was touting Woodford’s Oxford Nanopore investment merely one month back, our readers had a front row seat in this entire saga since early 2016.
In “Our AGBT16 Forecast Oxford Nanopore Will Go Out of Business by 2017”, we predicted that Oxford Nanopore would go out of business by the end of 2017. That forecast did not materialize because Woodford and others poured more money in the company at an unbelievable valuation.
In “A Decision Point Arrives for Oxford Nanopore” published in May 2019, we wrote -
There are two possibilities at this point.
If the market believes Woodford can be rescued by stock market listing plans of his companies, and the stock market overbids his companies, his fund will start to recover.
If the market does not believe his plans will work out, his fund will sink further and he will be forced to fire-sale the companies to meet the liquidity needs.
Clearly the market is going for option 2, and the implications are dire for the entire unicorn zoo. To understand what is coming, please read “Will Companies Like Oxford Nanopore be at the Epicenter of the Next Financial Crisis?”.