Woodford investors miss out on hundreds of millions of pounds from sale to Acacia

Warren Buffett advised investors to be fearful when others are greedy and greedy when others are fearful. It doesn’t work all the time — sometimes it’s best to sell a falling investment early; the first cut is the cheapest.

But in the yard sale of the Woodford Equity Income fund investments last year, the buyer was clearly right to be greedy. The seller wrong to be so fearful.

Acacia Research, a US investor, bought a bunch of the failing fund’s smaller investments for $282 million from the fund’s administrator, Link.

It immediately sold on a bunch for $185 million, leaving it a handful left, several of which have surged in value.

Woodford investors might want to look away now…

According to new filings from Acacia, at the start of this year the remaining assets were worth $267.4 million — almost as much as it paid for the whole lot. It gets worse. One, Immunocore, floated in February, increasing Acacia’s stake value by $31.9 million.

Today, another, Oxford Nanopore, heads for a bumper IPO. Acacia values its Nanopore stake (bought for $20.8 million) at $111 million. Don’t be surprised if the IPO results in a far higher valuation than that once the bankers weave their magic.