On the occasion of the news that Neil Woodford had been fired as manager of his soon to be wound down flagship Equity Income Fund, the great man posted a comment on his Pravda-esque blog saying that he could not accept the decision. His arrogance did not surprise me. What shocked me, as I noted HERE, were the comments by unit holders which were universally supportive of Neil. Unit holders have lost a fortune while Woodford himself is likely to have made £100 million or more from Woodford Investment Management. Everything we read in the press suggests unprecedented levels of fury towards Woodford and others such as the FCA and Hargreaves Lansdown who allowed this farce to unfold. Yet the Woodford website seemed to suggest that investors were totally behind the great man. I concluded from this that either:
The reviews were bogus and being created by Woodford Investment Management (WIM)
Only the truly deluded registered to post
WIM was censoring any critical posts.
Whichever was the case it was pointless. Woodford and WIM were doomed. But a superficial read would have left an uninformed investor believing that folks were lining up at Woodford’s door begging him to manage their money again, perhaps one should join them? For Woodford it sounded too good to be true and that is certainly my takeaway.
The FCA bolted another stable door this week where the horse bolted with £230 million of investors cash. 4,500 investors were duped. It says it will try to get some of it back but frankly I have more chance of getting lucky with Cheryl Cole this weekend than of that happening. The ponzi scheme in question was called Park First and investors were told that their cash would be invested in car parks. The FCA says that the scheme was promoted to the public using false or misleading statements. The defendants made statements to the effect that investors could realistically expect returns of 10% in years 3 and 4 of their investment and 12% in years 5 and 6. With interest rates at sod all that sounds a cracking investment, in fact too good to be true. As indeed it was. As investors in mini-bonds - the next big financial scandal to break - are discovering: if someone promises you a double digit return or even close they are almost certainly up to no good. Which somehow brings us back to Versarien (VRS)...
Back in April Versarien announced an MOU with a mysterious Chinese entity BIGT whereby the Chinese (an entity with zero web presence or even a phone number) would inject an unspecified sum into the company for a 15% stake. The shares soared to 137p and CEO Neill Ricketts promptly cashed in several hundred thousand pounds worth of stock. Ricketts told investors the deal would be signed on around the September AGM. But instead of a deal he brought a new name into the picture CIGIU. It claims to have 18 offices around the world including in London. But no-one has been able to locate it and Ricketts refuses to say where it is.
Versarien shares are now 95p. One suspects those who bought the shares off Ricketts into the spike he created are not happy. But the market cap is still £146 million. For a loss-making business, running out of cash and whose core graphene business has sales of well under £1 million a year that sounds too good to be true… it remains an outstanding short. And if you don’t agree maybe you might want to buy a few car park spaces to balance out your portfolio?
This article first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve and a new shorting piece this week click HERE
Filed under: Versarien, Tom Winnifrith Bearcast, Woodford, Infrastrata, ASOS, Hargreaves Lansdown
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