GVF - Staude Capital Global Value Fund

[System]

Global Value Fund (GVF) is an investment company that provides shareholders with the opportunity to invest in a global portfolio of securities purchased at a discount to their underlying asset value. By capturing this discount for its investors, the Manager aims to provide an alternative source of market out-performance compared to more common stock selection strategies.

http://www.globalvaluefund.com.au

 

[Dona Ferentes]

GVF is one of my holdings, and it held its ground today. Closed even.

But that's to be expected as the manager runs it to absorb the volatility.

 

[aus_trader]

GVF is one of my holdings, and it held its ground today. Closed even.

But that's to be expected as the manager runs it to absorb the volatility.

Management fees must be a killer for anyone who invests:

 

[Dona Ferentes]

You have hit the nail on the head. You wrote

anyone who invests

, rather than traders.

Now is not the time, with a crisis swirling around (Covid-19 precipitated panic, for anyone reading this in a decade's time) to explain, but lifecycle wealth creation takes many forms.

 

[Dona Ferentes]

GVF is pleased to announce a Share Purchase Plan to existing GVF shareholders, offered to existing shareholders at a price of $1.06 per share, which is in line with the Company’s Net Tangible Asset backing per share (NTA) before tax as at 31 October 20211, with the opportunity to acquire parcels of shares to the value of $1,000, $2,500, $5,000, $10,000, $15,000, $20,000, $25,000 or $30,000.

The current year has seen extraordinary volatility in financial markets. This volatility has created significant dislocations across the Company’s investment universe, and an environment that is highly compelling for the investment manager’s specialist strategy. Given this backdrop, and feedback received from the Company’s shareholders during its recent virtual roadshow, the Board believes it is an appropriate time to offer shareholders the opportunity to add to their investment in the Company.
Reflecting the current investment environment, GVF’s recent investment returns have been strong. Financial year-to-date, the portfolio has generated net investment returns of 9.1%, while calendar year-to-date – a period that includes the February and March market crash - net investment returns have been 3.2%. Both figures represent substantial outperformance over equity and credit markets.

The Company will invest the proceeds of the SPP using its proven discount capture strategy, providing shareholders with exposure to a diversified portfolio of carefully selected global assets, all trading at significant discounts to their intrinsic value. The investment manager has considerable expertise in finding such investments and in identifying or creating catalysts that will be used to unlock this value for its investors.

 

[Dona Ferentes]

GVF will issue 11,569,607 new shares in respect of the SPP and a further 12,617,558 new shares pursuant to the Placement, at an issue price of $1.06 per share. The shares issued under the SPP and Placement together represent 16.3% of the pre-SPP share capital of the Company.

 

[Dona Ferentes]

Highlights
• Operating profit before tax of $24.2M
• Adjusted pre-tax NTA increases by 16.7%
• Discount capture strategy generates a record 16.3%, the best half-year period since launch
• An increased fully-franked dividend of 3.0 cents per share declared

 

[Dona Ferentes]

... and, six months on; Highlights

• Record operating profit before tax of $44.9M
• Record investment performance of 30.2% inclusive of franking
• Shareholder total returns of 32.0%
• Strong returns drive a 14% increase in the final fully franked dividend, to 3.3c

Even with this increased dividend payment level, the Company’s year-end profit reserve of 22.4 cents per share remains sufficient for GVF to cover its next seven semi-annual dividend payments without any further additions needed.

OUTLOOK
Looking ahead, for financial markets to hold the incredible gains they have enjoyed recently, interest rates need to remain roughly where they are today for years to come. That is an entirely plausible outcome, but it is also not one without risk. Moreover, holding recent gains is different to generating future returns. The latter requires boring fundamentals, such as companies growing earnings, or economies expanding faster than the lofty assumptions already baked into market prices. If interest rates do remain at today’s incredibly low levels, and barring some new unforeseen market crisis, expecting single digit returns for most asset classes over the year ahead would seem to be the neutral place to sit.

Against such a backdrop we would expect GVF to perform very well. While the markets we focus on have begun to normalise, the opportunity set for us continues to remain elevated compared to what we typically find. Moreover, even in more ‘normal’ operating environments, we have been able to demonstrate large amounts of outperformance - over a long period of time now - through a range of different market conditions.

Our more conservative, all-weather portfolio typically struggles to keep pace with periods of very strong share market returns. We console ourselves to this by knowing that recent share market returns are not a normal or sustainable state of affairs, and that over the long-run sustained market outperformance of the magnitude we have delivered should compound powerfully for our investors. .... we will continue to run with our lower-risk portfolio, focusing on unlocking value and generating outperformance, regardless of how the coming year unfolds.

 

[Dona Ferentes]

there seems to be a whole bunch of opinions on ETFs and LICs. Here is an excerpt from GVF addressing what they see as their advantages

An exercise we have promised to do for our shareholders for some time, has been to produce a historical return series over the life of the Company on a before tax and other non-investment items basis. The reason for this is that looking at the investment returns of a listed investment company (LIC) in this manner is comparable to looking at the investment returns reported by openended investment trusts, which are the most common collective investment vehicle used in Australia. The most important difference between the two investment vehicles is that trusts typically do not pay tax on behalf of their investors in the way a LIC does.

In our view, the LIC is a wonderful corporate structure available to Australian investors, and one that is well suited to many of the investment strategies that are available today. Unlike a trust, a company comes with a board of directors who are tasked with representing shareholders’ best interests in a far broader manner than what the trustee of a trust is charged with. A company is also its own legal entity under law, making it a much more flexible corporate vehicle. In practice this means that boards can adjust a company’s objectives through time to reflect, say, shareholder feedback or changing market conditions.

Probably the most important benefit of the LIC structure, however, is its ability to accumulate retained profits over time, and thus build up a dividend reserve that can be drawn down against in leaner investment years. This important feature of the LIC means shareholders in these vehicles can benefit from a reliable dividend stream when planning out into the future.

In building retained profits LICs pay tax on behalf of their shareholders (and generate franking credits in the process). This process of paying tax can make it hard to assess what a LICs investment returns have been over time, or to compare their investment returns to those reported by investment trust offerings, which essentially operate on a pre-tax basis. Looking simply at the changes in a LIC’s NTA between two months will miss how much tax was paid on behalf of shareholders during that period. It can also miss the accretion or dilution to NTA that occurs when new shares in the company are issued, something that is separate to the investment returns a manager generates.

Calculating these investment returns for GVF over its seven and a half year life has been a painstaking exercise, one that has taken longer than we had hoped. We are pleased to present the information publicly today....

 

[Dona Ferentes]

GVF outperforms global share markets with lower risk profile

Highlights
• Operating profit before tax of $21.8M ; operating profit after tax of $15.2 million
• Adjusted pre-tax NTA increases by 10.7%, outperforming both global equity and debt markets
• Discount capture strategy drives returns, generating 9.2% over the period
• A fully-franked dividend of 3.3 cents per share declared

Hold; don't mind the Management Fee(s)

and an interesting take on Inflation in the commentary

 

[Dona Ferentes]

rather than cash, some of my de-risk bucket is parked here

GVF announces an operating profit before tax of $6.2 million and an operating profit after tax of $5.5 million, for the full year ended 30 June 2022.

Despite there being significant falls recorded for most asset classes during FY2022, the Company was pleased to generate positive investment returns for shareholders. Adjusted pretax Net Tangible Assets increased by 2.8% (or 3.3% including the benefits of franking credits). Shareholder total returns for the period were +5.2%, driven by the continued high level of dividend payments the Company makes.

.... and will pay a 3.3c ff final dividend

FY2023, we expect little to change in terms of our approach. We see considerable value embedded within the current GVF portfolio, value we will work to unlock regardless of what markets throw at us during the year ahead

 

[Dona Ferentes]

Miles Staude and Emma Davidson from the Global Value Fund (ASX: GVF) are on the front cover of the Australian Financial Review today as 'The Giant-Slayers'. (With story inside).

They took on a Wall St hedge fund and had success.

 

[Dona Ferentes]

NTA around $1.23

...and the perils of being a small lizted entity:
.
Portfolio disclosures
Regular readers will notice a change to the format of the monthly report today, with our list of ‘Significant Holdings’ being replaced by a new list of ‘Selected Holdings’. We face a challenge in running our specialist investment strategy inside a publicly listed vehicle. On one hand we naturally want to share with shareholders the enthusiasm we have for the exciting investment opportunities we find around the world. On the other hand, we understand that the information we provide inside a publicly traded company is also read by competitors and opportunists alike (and if that is you, we’re flattered).

Having given this trade-off much contemplation in recent years, wehave decided that it is necessary to make a few adjustments to the public disclosures we provide around the GVF investment portfolio. Our disclosures will still exceed our regulatory requirements, and we will still maintain our very strong commitment to shareholder engagement and marketing.

However, going forward, public disclosures around the GVF portfolio will be more focused on investments that are representative of the types of opportunities we find, as opposed to being prescriptive about what is in the portfolio at any given point in time. We will also be more prone to wait until we have successfully exited important positions before we discuss our investment theses and their ultimate outcomes (whether good or bad).

The point of these changes is to ensure that GVF is the entity that enjoys the greatest possible benefits from the investment manager’s specialist ideas - a point that is particularly pertinent in the many smaller and less-liquid securities that the Company trades in.

 

[Dona Ferentes]

"The healthy investment return from the GVF investment portfolio over FY2023 (of 15.5 per cent ) has allowed the board to declare a fully franked final dividend of 3.3 cents per share for FY2023, maintaining the Company’s high current dividend payment rate. The Company’s profit reserve stood at 28 cents per share at the end of June 2023... Since listing at $1 a share in 2014, the company has now returned over 75 cents per share of capital back to investors”.

- trading a bit below NTA, at $1.15. pay div in Nov.

 

[System]

On November 14th, 2023, Global Value Fund Limited changed its name to Staude Capital Global Value Fund Limited.

 

[Dona Ferentes]

from the monthly

NTA at end Feb $1.26

ASX Code .......... GVF
Listed ................. July 2014
Shares on issue .... 175M
Share price ............ $1.16
Market cap ............. $203M
IPO Issue Price .......... $1.00
Total dividends declared ... 76.1 cents
Profits Reserve (per share) ... 31 cents
Franking (per share) ..........2 cents
Full year FF dividend ...... 6.6cps
Grossed-up yield .............. 8.1%

goes ex-entitlement to a 3.3 cents per share fully franked dividend on 28 March 2024.

It is the Board’s intention to pay regular dividends so long as the Company is in a position to do so.

but likely to not have franking credits down the track.

 

[Dona Ferentes]

GVF turns 10: declares one cent special fully franked dividend
• On 17 July 2024, GVF celebrates its 10-year birthday
• Over the 10 years since launch, GVF has:
❖ Delivered 10 consecutive years of positive investment returns
❖ Returned 80 cents to investors on their original $1 per share investment
❖ Generated annualised net investment returnsii of 10.8% per annum

The board of directors have
resolved to pay a fully franked special dividend of 1 cent per share payable on 19 August 2024, with an ex-dividend date of 17 July 2024.

17 July 2024 marks the 10-year anniversary of GVF listing on the ASX. Given the Company’s continued strong investment performance, and the sound position of its balance sheet, the board believes this is an opportune time to declare a special dividend for shareholders.

Company Chairman Jonathan Trollip said: “We are very pleased to announce this special anniversary dividend, which coincides with the company being listed on the ASX for a decade.

"Over those ten years, we have seen GVF grow substantially in size, whilst also returning back to shareholders over $100 million in dividends, franking credits, and capital returns. "

 

[Dona Ferentes]

another good'un (imo).

Highlights for the year ended 30 June 2024
- Operating profit before tax of $28.5M , operating profit after tax of $20.0 million for the full year ended 30 June
- Adjusted pre-tax NTA increases by 14.0%
- Discount capture strategy drives returns, generating 74% of the return over the period
- A fully franked dividend of 3.3 cents per share declared

Company Chairman Jonathan Trollip said: “Financial markets enjoyed strong tailwinds over FY2024, boosted by
the exceptional strength of the US economy and continued investor excitement over the potential for Artificial Intelligence to revolutionise large parts of the economy. Against this backdrop, GVF’s lower risk investment strategy performed well, with the Company’s adjusted pre-tax NTA increasing by 14.0% over FY2024.

Shareholder total returns for the period were higher than this at 18.1%, with the difference between shareholder total returns and NTA returns explained by Company’s discount to NTA tightening over the year. As at 30 June 2024 the discount stood at 4.4%. Given the continued healthy performance of the investment portfolio, the Board is pleased to announce a fully franked final dividend for FY2024 of 3.3 cents per share. Since its IPO at $1 per share in 2014, the Company has now declared total grossed up dividends of 77.53 cents per share”.

 

[Value Hunter]

❖ Generated annualised net investment returnsii of 10.8% per annum

Given its a global fund 10.8% per annum is not good enough. You could have bought an ETF representing the MSCI global index

https://www.msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb

or an ETF representing the S&P 500 and done better

 

[divs4ever]

Given its a global fund 10.8% per annum is not good enough. You could have bought an ETF representing the MSCI global index

https://www.msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb

or an ETF representing the S&P 500 and done better

looked at it a couple of times , but it didn't scratch an itch for me , so i moved on