Section:GDN 1N PaGe:31 Edition Date:190808 Edition:01 Zone: Sent at 7/8/2019 19:43 cYanmaGentaYellowbl
Thursday 8 August 2019 The Guardian •
Financial^31
Hargreaves
executives
forgo bonuses
after equity
fund apology
Sean FarrellThe boss of Hargreaves Lansdown
and his senior team have waived their
annual bonuses after about a quarter
of its clients were aff ected by the
suspension of Neil Woodford’s invest-
ment fund.
Chris Hill , the chief executive of the
investment service, had previously
said he would not take his bonus
until Woodford’s equity income fund
reopened. Hill will now forgo the pay-
out, which was worth £1.7m last year.
Hargreaves ’ chief fi nancial offi cer,
Philip Johnson, whose bonus was
£997,000 last year, will also receive no
bonus for 2019, along with its research
director, Mark Dampier , and its chief
investment offi cer, Lee Gardhouse ,
whose pay is not disclosed.
A company source said: “Chris
believes this is the right thing to do.
He recognises the impact that the
gating [of the Woodford fund] has had
on our clients. This demonstrates his
and Hargreaves Lansdown’s continued
focus on putting clients fi rst.”
The company has been under
pressure for continuing to recommend
Woodford’s fund until he blocked with-
drawals on 3 June. The suspension
of the stock-picker’s equity income
fund affected more than 290,000
Hargreaves clients. Their savings are
likely to be trapped for six months.
Hill issued an apology to clients
a few days after the fund’s suspen-
sion and has waived Hargreaves’ fees
for those aff ected. He has also urged
Woodford to stop taking fees from the
fund’s investors, although Woodford
has refused to do so.
Hargreaves is expected to face
questions about the effect of the
Woodford aff air on the investment
fi rm’s business and reputation when
it reports its annual results today.
Hill has answered written questions
from the Treasury committee but
these concentrated on his company’s
dealings with Woodford and how it
decides which funds to recommend.
Woodford blocked customers from
taking money out of the fund after
becoming overwhelmed by withdraw-
als following a series of bad market
bets. The value of the fund has fallen
from more than £10bn at its peak to
£3.5bn because of withdrawals and
poor performance.Kalyeena Makortoff
Banking correspondent
The fund manager Neil Woodford
has been dealt a new blow after more
than £1bn was wiped off the value of
Burford Capital, the second largest
holding in his suspended main fund.
Shares in Burford Capital, which
specialises in providing funding for
lawsuits, fell 6 9% in 24 hours after the
US hedge fund Muddy Waters took a
short position on its stock, betting the
price would plunge, and then launched
an attack on its fi nancial status.
Burford, chaired by the former Barc-
lays boss and Treasury mandarin Sir
Peter Middleton, had been one of the
strongest performing stocks in Wood-
ford’s portfolio. The fund manager,
who was forced to shut his Woodford
Equity Income fund in May following
a surge in redemptions, holds a 7%
stake in Burford. Woodford’s former
employer , Invesco, is Burford’s largest
shareholder with a 14% stake.
A letter by Muddy Waters released
yesterday confi rmed its short position
and claimed Burford was a “poor busi-
ness masquerading as a great one”.
It criticised the way Burford meas-
ured returns on its investments, saying
they were “heavily manipulated and
greatly misled investors” and that
much of its profi t since 2012 had come
from just four legal cases.
The attack caused Burford shares
to drop from £13.95 on Tuesday after-
noon to 428p before recovering to
close at 605p. It means Woodford’s
stake, worth £212m on Tuesday, is now
worth about £92m. Burford’s shares
are still strongly up since Woodford’s
fi rst investment, at 120p, in June 2014.
The reduction in the value of thebill of health every year since 2010. It
had a “strong” cash position, with
more than $400m (£330m) to hand.
It acknowledged it may need to raise
fresh funds to fuel growth, but said:
“This is a cause for celebration, not
for alarm, because it means the busi-
ness is growing rapidly.”
Burford said of the short attack:
“ Short sellers of this ilk are not long-
term investors. Rather, their goal is to
panic investors into selling their hold-
ings and thereby to drive down the
share price. If investors oblige them,
then the attack succeeds, long-term
investors are harmed and the short
sellers pocket a quick payday.”
Nick Burchett, a fund manager
at Cavendish Asset Management,
said it was bad news for Woodford.
“This move will have Mr Woodford
and Invesco seething. It seems the
troubled Mr Woodford can’t catch a
break at the moment.” he said.
“While shorting is certainly an
important part of the markets when
it comes to providing liquidity, this
kind of activity can also be harmful to
a business’s recovery prospects. This is
largely down to the ‘fear factor’. Once
a company announces that it is hop-
ing to raise funds, short sellers are able
to jump into gear, while also declaring
their reasons for shorting the stock to
the wider markets.”
Woodford declined to comment.Short seller launches
attack on company
in Woodford fund
suspended fund comes as he is trying
to raise money by cashing in some of
its holdings. He needs cash so inves-
tors who want to quit the fund when
it reopens will be able to do so.
The Equity Income Fund, largely
invested in the shares of smaller
companies that are harder to sell,
was suspended in May after its value
dropped from £10bn to £3.7bn. The
“gating” came after the fund could not
meet a request from Kent county coun-
cil for the return of £263m. Investors
are locked in until at least December.
In a market statement on Tues-
day, Burford defended its position,
insisting its fi nances were “robust”
and that returns from litigation rose
to their highest levels on record at the
end of June. It said the fi rm used the
same accounting rules as companies
across the fi nancial services sector and
that the auditor EY had given it a clean▲ Neil Woodford, whose suspended
fund needs to raise cash for investorsProperty market ‘fl atlining’
as Brexit day risks increase
Richard Partington
House prices dropped by more than
expected in July with consumers
becoming increasingly cautious as
Brexit day nears. The Royal Institu-
tion of Chartered Surveyors (Rics)
said house prices continued to fall as
the property market showed signs of
“fl atlining” in the face of rising risks
to the economy from a no-deal Brexit.
The Rics house prices balance – the
number of estate agents and property
surveyors anticipating rising prices
compared with those expecting price
declines – dropped to -9 in July from
-1 a month ago. City economists had
forecast a reading of -1.
Simon Rubinsohn, the Rics chief
economist, said house prices and salesvolumes in Britain appeared to be los-
ing momentum as Brexit and political
uncertainty heightened. “All the key
indicators are pretty much fl atlining.”
Analysts said the increasing like-
lihood of no deal this autumn was
holding people back from buying or
selling a home. Retailers have also
warned of households reining in
spending on big -ticket items.
The latest snapshot from Halifax
yesterday suggested house prices fell
in July. Britain’s biggest mortgage
lender said the average dipped by 0.2%
in July after a drop of 0.4% in June.
House prices are high relative to
incomes, with growing numbers ofyoung adults unable to buy. Govern-
ment fi gures show the number of
people aged 20 -34 living with their
parents has risen by 24% over the last
decade to one in four – 3.4 million.
The average price of a home has
dropped by almost £600 in the last
three months to £236,120, about eight
times the average annual wage.
Russell Galley, Halifax’s managing
director , said new buyer inquiries were
up as wage growth accelerate d and the
Bank of England held interest rates:
“While economic uncertainty contin-
ues to weigh on the market, the overall
trend actually remains one of compar-
ative stability.” Homes in
Hastings, Sussex.
Nationally,
prices fell £600
in three months
to £236,120
PHOTOGRAPH:
RICHARD BARNES/
ALAMY290,000
The number of Hargreaves Lansdown
clients aff ected by the suspension of
Neil Woodford’s income equity fund£1.7m
The value of Hargreaves Lansdown
boss Chris Hill’s annual bonus last
year. He will not be take one for 2019‘Economic
uncertainty
weighs on
the market,
but the trend
is one of
comparative
stability’
Russell Galley
HalifaxРЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS