Shaper: Neil Woodford

Show aired on 19th December 2015

Transcript

Elliot Moss
That was Amour T’es Lá from Snarky Puppy featuring Magda Giannikou. Good morning, this is me, Elliot Moss on Jazz FM’s Jazz Shapers. Jazz Shapers is the place you can hear the very best of the people who are shaping the world of jazz, blues and soul, alongside their equivalents in the world of business, a Business Shaper. I have a huge, amazing and big and famous Business Shaper today I am pleased to say, he is Neil Woodford; the joint founder of Woodford Investment Management. They are the investment management business you will have heard of them I am absolutely sure. They have got just under thirteen billion pounds under management. Lots coming up from Neil very shortly. In addition to hearing from Neil, you will be hearing from our programme partners at Mishcon de Reya some words of advice for your business and as well as all of that of course, I promise you some great music from the shapers of jazz, blues and soul including Madeleine Peyroux, James Brown and this from Robert Cray.

That was Fine Yesterday from Robert Cray Band, in fact someone in with me today, Neil Woodford, is a bit of a fan of the Robert Cray Band. I am sure you will be telling me why you like him in a bit. So Neil Woodford, my Business Shaper today, thank you so much for joining me. Thirteen billion pounds under management as we said, you created this fund I think it was July 2014. You’d been working for Invesco Perpetual for 30 years or so, what made you make the move? It’s quite a long time to work for the same people and then suddenly go ‘you know what, I want my name above the door’?

Neil Woodford
Yeah it sounds like a plan doesn’t it that I had spent all this time working for one business and then decided that I would jump ship and set up my own business and it sort of, it wasn’t really a plan it was the product of a number of chance events really, the most important of which was that my partner who I had known at Invesco and who had worked with me at Invesco for quite a long time, had left Invesco and he and I shared a lot, we had a sort of common vision if you like about how a fund management business should behave and how they should be structured and what they should look like and you know, I mean, it all sounds very academic really but it was quite important because we were working in a large organisation, part of which was the product of legacy. We were frustrated about some elements of that business and I think we had a vision about what a fund management business that was made to measure for the 21st century would look like. Anyway so it was all academic until he left and then when he left for me that was the sort of trigger moment that made me think well hang on a second there is somebody I could go into business with, he could handle the bit that I can’t do. I can do the fund management bit, he could do the other bit and maybe together we could be successful and it was a sort of, that was how it all started really.

Elliot Moss
Now you did I believe an agriculture and economics degree?

Neil Woodford
Yeah.

Elliot Moss
Yes, way back when. Look at me going ‘yeah that was a long time ago’.

Neil Woodford
It was.

Elliot Moss
It was a long time ago. When did it become clear that you were going into the kind of the world of money? Because I know you had a couple of jobs before Invesco but was there a plan? You talked about you know there wasn’t really a plan and when it came to leaving and all that but way back when what turned you on about the world of work? What was it that you were looking for as you first started working?

Neil Woodford
Well again my life sounds like a series of sort of chance events but there was no plan. I mean I studied economics at university. It wasn’t a terribly good course, it wasn’t that well taught and I ended up leaving university not really knowing how the world worked. Certainly I could tell you about sort of micro and micro economics and about pareto optimality but I couldn’t have told you anything about the City or you know how monetary policy worked or anything like that. So anyway I had no idea what I was going to do when I left university. I graduated in 1981; it was a pretty nasty recession. There were no jobs for graduates unless you wanted to be an accountant and I knew I didn’t want to be an accountant and I sort of ended up again by chance in the City. I happened to, I had nowhere to stay really, I had no money and I kipped on my brother’s floor and my brother had a job in the City. He had a clerical job working in the City and I kipped on his floor for a while and that is how I first got to know what the City was and where it was and I got a pretty mundane job to start with in the City just to earn a bit of cash and that is how my sort of career started in the City. It was purely by chance; again not by design I didn’t really know what the City was.

Elliot Moss
Stay with me for more about the man who is sort of saying he is full of chance; I don’t believe him. We are going to get to the bottom of this very shortly. It’s Neil Woodford, my Business Shaper today. Time for some music, this is Madeline Peyroux with Changing All Those Changes.

The buoyant sound of Madeline Peyroux with Changing All Those Changes. I am with Neil Woodford today. He is the joint founder of Woodford Investment Management, they have got just under thirteen billion pounds under management, it sounds a hell of a lot of money and for the man who was kipping on his brother’s floor and kind of as you said it was a bit of chance that got me into the world of the City, unimaginable that you would have ended up here. I mean in your wildest dreams do you think yeah I am gonna be the guy that is looking after a lot of people’s money, a lot of institutional money? At that point then what was, what was success like, what did it look like for you way way way back when you were kipping on your brother’s floor?

Neil adopted the same philosophy and long-term approach for the CF Woodford Equity Income fund that had underpinned his 30-year plus career. He invests in a company only when he is convinced of the compelling long-term opportunity but he also considers how the global economy influences the stocks he owns and the ones that he doesn’t. He shares Warren Buffett’s view that if you aren’t willing to hold a stock for 10 years then you probably shouldn’t even think of owning it for 10 minutes. When he invests in a business he does not expect to ever sell it. Clearly there will be opportunities, or on occasions he will be forced, to sell, but his discipline is to focus on the long term. When Woodford launched the fund it set out to challenge industry ‘norms’ – low-cost transparent fee structures, and openness regarding portfolio holdings with full disclosure of the entire portfolio and regular updates each month. Investor engagement via the website has played a key role in investor interaction and Woodford now has more than 24,200 twitter followers.

Follow Neil on Twitter @woodfordfunds

Listen live at 9am Saturday.

“I studied economics at university. It wasn’t a terribly good course, it wasn’t that well taught and I ended up leaving university not really knowing how the world works.”

“I had nowhere to stay really, I had no money and I kipped on my brother’s floor.”

“I have talked about a balance between humility and arrogance. Good fund managers have those two sides to their personality.”

“When I played rugby I was probably excessively competitive.”

“I was beginning to believe that I could be a half decent fund manager and I wanted to go somewhere that enabled fund managers to express their talent.”

“My ability to deliver good outcomes for investors is a product of my own judgement, but that judgement is massively informed by the people who I have surrounded myself with.”

“I think if you don’t enjoy it then don’t do it, and do something else.”

“We are working harder than we have ever worked before….maybe a bit too hard actually at the moment.”

“The idea is that the internet and the availability of information ought to have made us more productive; I think it has actually made my industry less productive.”