Neil Woodford

Speaking publicly for the first time since his business collapsed in October 2019, exclusively to The Sunday Telegraph, Mr Woodford said he “very sorry for what I did wrong”. However he lashed out at the administrator of Woodford Investment Management, Link Fund Solutions, and rejected widespread criticisms of his operating style.

Mr Woodford broke into tears as he defended the firm’s culture and denied claims its failure was partly caused by machismo and the presence of “yes men” rather than robust governance. He argued the two years of poor performance in the run up to its unravelling was “pretty insignificant” in the context of his career and revealed he has been forced to sell his main home, a £30m farm with stables in the Cotswolds.

Mr Woodford said: “Retail investors were not the only people who suffered financially as a result of what happened.

“I can’t be sorry for the things I didn’t do. I didn’t make the decision to suspend the fund, I didn’t make the decision to liquidate the fund. As history will now show, those decisions were incredibly damaging to investors and they were not mine.

He claimed he warned against the closure and that if his fund had not been liquidated and investors stuck with him they would “be enjoying the fruits of that faith and trust in me as a fund manager”.

Alongside his lieutenant Craig Newman, Mr Woodford is now preparing to launch a new investment firm based in Jersey, Woodford Capital Management Partners. He vowed not to repeat his mistake of investing ordinary investors’ cash in illiquid start-ups, who were cut off from their money for months due to a shortage of cash. The new firm will raise money from professional investors only. “If you’re going to run retail money these days you can’t have an investment strategy that tilts a portfolio too far away from a very liquid, very FTSE mid-250 portfolio. If I was running retail funds in future I wouldn’t mingle unquoted assets in a retail fund.”

Yet he reiterated his belief in speculative tech such as “cold fusion” nuclear reactors and insisted he is confident that an investigation by the Financial Conduct Authority will clear his name.

He said suggestions he had turned to Guernsey listings to overcome regulatory caps on unquoted stocks were “a complete and utter lie”. Although he said Woodford Investment Management had told its unlisted investments “if you want us to remain shareholders you have got to become a publicly interested company, so it’s your decision”.

Speaking from his home in Devon, the 60-year-old rejected criticisms of Woodford Investment Management for continuing to charge fees while investors could not access their money.

He said the last payment he received from the firm was in May 2019, before it barred cash withdrawals. He said he had been forced to sell his main home and had been accosted on the beach in Devon by angry investors.

Mr Woodford said: “I thought I never, ever want to be near the industry again, but they say time is a healer. I didn’t want what happened to me in 2019 to be the epitaph of my career, I didn’t want it to be the full stop.

“I don’t think I’m qualified to do anything else really.”

WCM Partners will focus on biotech, biosciences and healthcare. He said his comeback could mean he is “about to put my head in the jaws of a lion”. Link was declined to comment.

After nearly two hours turning over the rubble of his collapsed investment empire, Neil Woodford begins crying. He gets up and briefly walks off camera to compose himself, leaving an empty chair at his West Country home as the star of the video call.

Britain’s most famous fund manager, now its most famous failed fund manager, finally cracks under questioning about the allegedly macho culture at Woodford Investment Management. Could that have contributed to its destruction? He looks hurt and wells up as he remembers the day he told staff the business was being wound down in October 2019. The tears follow.

“I found it very difficult,” Woodford recalls. “So when people say that sort of stuff about the organisation, about the culture, about the lies that have been told about the business and the people in it, that really, really hurts, because it wasn’t like that at all. It was an amazing place, with amazing people, who fought to the end.”

Woodford alternates between sadness and anger as he dissects his downfall in public for the first time. He is ready to say “sorry” to the ordinary investors who lost out on his disastrous bets, up to a point.

“I’m very sorry for what I did wrong,” he says. “What I was responsible for was two years of underperformance – I was the fund manager, the investment strategy was mine, I owned it, and it delivered a period of underperformance.”

But he is furious at the company’s administrator Link Fund Solutions for closing Woodford Investment Management and insists, after everything, he would have been vindicated had it stayed open.

“I can’t be sorry for the things I didn’t do. I didn’t make the decision to suspend the fund, I didn’t make the decision to liquidate the fund. As history will now show, those decisions were incredibly damaging to investors, and they were not mine. They were Link’s decisions.”

A 4pm meeting on a Monday in October marked the end for Woodford Investment Management. The founder says he was told without warning that the suspended fund was being closed.

“This wasn’t a consultation, this was a fait accompli,” he recalls. He had argued in the months leading up to that day that closure would be “worst possible thing they could do” and would trigger a fire-sale of assets. He didn’t leave the Link building for four hours after being told it was over, spending the evening writing to the City watchdog and urging his lawyers, Mischon de Reya, to fight the decision.

But it was too late. The closure was announced the next day, forcing his hand on the wider business. Out-of-pocket investors are now taking the supervisor to court over its handling of the saga and Woodford says he “wouldn’t in theory shirk from being cross-examined” as a witness, though he hasn’t yet been asked. There is a long pause when asked if he would consider suing Link himself, but then his phone pings, and he has his answer.

“We have no intention of suing Link. I don’t want to give you the impression that we are thinking about it”. At least partially defiant about what he says is a “pretty insignificant” period relative to his decades-long career, Woodford has no intention of walking away. In fact, with right-hand man Craig Newman, he is ready to start all over again.

“I thought I never, ever want to be near the fund management industry again, but they say time is a healer,” he says. “I didn’t want what happened to me in 2019 to be the epitaph of my career, I didn’t want it to be the full stop. I’m not trying to rebuild an ego, I just felt I wanted to continue to do the things that I believe in. I don’t think I’m qualified to do anything else. You can imagine lots of people who have read the media about me wouldn’t want to touch me with a ten-foot disinfected bargepole.”

Those burned by Woodford – once nicknamed Britain’s answer to Warren Buffett and the “Oracle of Oxford” – will no doubt agree. Many faithfully followed the star fund manager from Invesco, where a £1,000 investment in his first fund would have generated more than £25,000 by the time he left, to his own venture Woodford Investment Management in 2014.

He had spent the previous 26 years making successful investments on big businesses often overlooked by rivals. He made maverick calls that proved lucrative. He avoided the Dotcom crash by ignoring technology stocks during a tech boom in the late 1990s and snubbed bank shares when they were soaring in 2005 and 2006, just before the financial crisis.

But at Woodford Investment Management, his winning instincts deserted him as he backed risky start-ups and a string of listed companies that promptly crashed. AA, Purplebricks and even Imperial Brands, the type of stock he built his name on, all felt his reverse Midas touch. “My investment approach never changed,” Woodford protests.

“The stock market is a dynamic and fluid beast and the valuation opportunities that exist over a 30-year period change. It shifted from very large cap down.”

He does admit, however, that his focus on unlisted start-ups was a mistake. “If you’re going to run retail money these days you can’t have an investment strategy that tilts a portfolio too far away from a very liquid, very FTSE mid-250 portfolio. If I was running retail funds in future I wouldn’t mingle unquoted assets in a retail fund.” The new firm will raise money from professionals only.

Yet despite this apparent contrition, Woodford still believes in many of the ventures he backed, most of which are drugmakers. He claims that if his fund was not liquidated and investors stuck with him they would “now be enjoying the fruits of that faith and trust in me as a fund manager”. He points to Oxford Nanopore, which has developed a rapid Covid test; Synairgen, where shares jumped 420pc in one day after it found a potential coronavirus treatment and Kymab, which is developing a drug for the treatment of eczema and has just been bought by Sanofi for $1.1bn. Investors trapped in Woodford’s failed fund last month missed out on £28m after the Kymab stake was sold off for £4.6m before the takeover was agreed.

Woodford feels vindicated. He may even continue his gamble on controversial cold fusion technology, which promises unlimited energy without high temperatures but has been widely dismissed by scientists as thermodynamic voodoo. Woodford put £54m into Industrial Heat, investing alongside the likes of Brad Pitt and Laurene Powell Jobs, the widow of Apple founder, Steve.

“This wasn’t a wild-goose chase by Neil Woodford and his investment team who knew nothing about cold fusion,” says Woodford. “We employed a globally recognised scientist who was deeply sceptical about cold fusion. The upside for mankind and for the planet is off the clock, no one thing could deliver a greater gain for the planet.” Such visions are unlikely to dispel suggestions that his ego may have run out of control in his own fiefdom. He insists he was not surrounded by ‘yes men’ who failed to keep him in check (“an opportunistic criticism”).

Others had influence too, says Woodford. For instance, he says the controversial decision to list some of his investments on the tiny and obscure Guernsey stock exchange was not his but the start-ups themselves, although it was seen as an attempt to bypass rules that cap how much of his fund can be invested in unlisted stocks. “That’s a complete and utter lie,” Woodford snaps.

“The facts are that Woodford doesn’t list companies on exchanges, that activity is carried out by the companies themselves following approval from all of their shareholders.

“We made it very clear that if they wanted us to remain as shareholders, we said there’s pressure building on us in terms of our exposure in unquoted assets, if you want us to remain a shareholder you have got to list your shares, otherwise we will breach our unquoted limit. So if you want us to remain shareholders you have got to become a publicly interested company, so it’s your decision. Clearly we wanted to remain investors, but the listings themselves were the product of the company’s decision-making.” Criticism of the relationship between Woodford and Hargreaves Lansdown, the investments retailer, gets similar treatment. “No, I don’t think there was anything inappropriate at all with Hargreaves,” he says.

“Mark Dampier (Hargreaves’ former research director) followed me as a fund manager for most of my career, he knew that my longterm track record was very good. We don’t influence who recommends what.” Woodford peppers his responses with pops at the media, which he believes made matters worse. After the call his public relations adviser sends a graphic alleging a link between coverage and the rate of withdrawals.

He is riled again when asked about the £60,000 in daily fees that were extracted after his fund was suspended, another focus of public opprobrium. “From the moment of the fund suspension Craig and I received absolutely no income, or dividends or any remuneration from Woodford Investment Management, none, and indeed haven’t received any for the best part of two years,” he argues. “We had a regulatory obligation to continue. We couldn’t just turn the lights out and tell everyone to go home, so the fees that came into the business were used to pay the people who were running the organisation. What people have done is conflate fees with money going into Neil Woodford and Craig Newman’s pocket. The last pay I received was in May 2019.”

Little wonder, perhaps, he is keen to get back to work. He says his troubles forced him to sell what was his main home, a £30m farm with stables near Tetbury in the Cotswolds, in December.

“I don’t want to go into the details, but retail investors were not the only people who suffered financially as a result of what happened,” he says.

“We’re going to rebuild the Woodford investment operation under a new brand called WCM Partners [Woodford Capital Management]. We’re going to focus on the biotech sector, British biosciences and healthcare, doing the sorts of things that we’ve done before, doing the sorts of things that have developed into the likes of Immunocore, Kymab, Synairgen, Nanopore.”

In his view the UK investment industry has failed in giving “the Astrazenecas of the future” a chance, arguing that the Covid crisis has underlined just how important these investments can be. But his ambition to change that could yet be undone by a Financial Conduct Authority (FCA) investigation, which is ongoing and could result in a ban from investing. Woodford is confident it won’t come to that, and that he didn’t do anything outside the FCA rules.

This time will be different, he insists. “We’ll have a different set of investors, those investors will by definition be taking structurally longer term views – we are not going to be running daily liquidity retail funds. We won’t be exposed to the same sorts of problems.” Whatever he chooses to back next, there is one crucial detail in Woodford’s comeback plan that will inevitably infuriate former investors. Since last summer he has been advising American-based Acacia Research, which last year made huge profits buying bargain Woodford stocks and rapidly selling them on. The relationship came about after chief executive Clifford Press contacted him for advice about the portfolio, and now the pair are close.

WCM Partners will be based in Jersey with a “combination of Acacia people and Woodford people”. Woodford knows he will attract anger. “Maybe I’m about to put my head in the jaws of a lion,” he says. “But I don’t want to, for the rest of my life, hide away and beat myself up about things that happened the best part of two years ago.”

• This article was first featured in The Sunday Telegraph.