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Army officer's intelligence didn't help Woodford when he came to investing in tech start-ups

JIM ARMITAGE

It’s hard to overstate the importance to Neil Woodford’s investment machine of Saku Saha.

Having joined the now-fallen star’s team at Invesco, former Army intelligence officer Saha was a key member of the crew when Woodford struck out on his own.

He served as the gatekeeper for early-stage tech businesses trying to access Woodford cash. Woodford made the final call, but Saha was his consigliere on such investments.

Which is why our disclosure of his departure today is so significant.

For it was precisely Saha’s types of investment tips that got the funds in so much trouble. High risk and difficult to sell, they triggered the tangle in which Woodford is; stuck with a portfolio of illiquid stocks and demands from investors for hundreds of millions of pounds of redemptions.

One such stock is Industrial Heat, a firm hoping to create electricity with a process called cold fusion. Most physicists put the science in the same bucket as alchemy and Uri Geller. Not only did Woodford invest, but last September upped its valuation on the books by 357%.

After a gushing Woodford blog on the upgrade, science PhD Mike Ingle wrote in, saying cold fusion was “garbage” and asking how many university-level science grads the fund manager had on the team. The best it could come up with was one, with a pharmacology doctorate. “Admittedly that isn’t relevant to Industrial Heat,” it said sheepishly.

We don’t know precisely which Woodford picks were Sandhurst-trained Saha’s. Nor do we know the exact reasons for his departure, beyond it being by mutual consent. But it’s hard not to see the end of Saha’s career at the firm as a significant chapter in this parable of foolhardy City investing.