Listed Investment Companies

[ghotib]

Does anyone have an opinion about these, compared with other financials companies and with ordinary managed funds? Seems to me that if you can find one that matches your investment strategy then buying into it is a way to increase the diversity of your portfolio (assuming diversity is part of the strategy that is). You should also get better information and lower costs than most managed funds provide.

Comments?

Disclosure: I hold Clime Capital Ltd.

 

[kooka1956]

Listed investment companies are probably the best way to diversify your portfolio . They basicaly have portfolio managers that spread their monies into say 50 or 100 stocks , invariably blue chip and second line stocks . Gambling on penny dreadful stocks is not in their constitution. So if your happy investing in the sharemarket but can,t be bothered doing all the homework yourself take a look at something like Argo Investments which has been around for decades . Their return is normaly more than the share indices,even allowing for their fees . Regards KOOKA

 

[Bingo]

Over the years listed investment trusts have gone through periods of trading below NTA per unit and periods of trading above NTA per unit.

I have bought them, but always when they are trading below NTA per unit. Most of them publish a unit value before and after tax on unrealised capital gains. There was a period that some of them were so far below NTA that liquidation was the only way of realising a fair value.

They are a fashionable investment. If the market is going up they tend to popular and go above NTA. When the market falls they drop below.


Bingo

 

[ghotib]

Listed investment companies are probably the best way to diversify your portfolio . They basicaly have portfolio managers that spread their monies into say 50 or 100 stocks , invariably blue chip and second line stocks . Gambling on penny dreadful stocks is not in their constitution. So if your happy investing in the sharemarket but can,t be bothered doing all the homework yourself take a look at something like Argo Investments which has been around for decades . Their return is normaly more than the share indices,even allowing for their fees . Regards KOOKA

Thanks again Kooka.

I can be bothered and I can apply a lot of time to investing directly. What I can't do is apply a lot of money, and even if I could a market that keeps breaking price records offers limited scope for buying by the strategy I'm trying to learn. I bought Clime at the IPO because (a) <ahem> I've heard the principal on the radio a lot and he makes sense to me </ahem> (b) I expected to use similar investment strategy so I thought it would be useful to compare their record with mine (c) it was a way to get diversity in my portfolio early.

To date I'm happy with what they're doing, and I'm considering buying some options to add to the freebies that were part of the initial offer. I'm considering a couple of other things as well though - I'm not due to make my next trade for weeks yet ;-)

 

[ghotib]

Hi Bingo

Over the years listed investment trusts have gone through periods of trading below NTA per unit and periods of trading above NTA per unit.

I have bought them, but always when they are trading below NTA per unit. Most of them publish a unit value before and after tax on unrealised capital gains. There was a period that some of them were so far below NTA that liquidation was the only way of realising a fair value.

They are a fashionable investment. If the market is going up they tend to popular and go above NTA. When the market falls they drop below.


Bingo

The fashion aspect worries me a bit, but I guess everyone finds themselves in fashion occasionally.

I went with a company rather than a trust. I didn't think that out at the time, but I think now that a company is a better vehicle for me because franking credits are significant in my overall plan. Does that make sense? Did you have a particular reason for choosing trusts over companies?

Thanks,

Ghoti

 

[IrishDigger]

I reckon Argo won't be the only LIC on the look out for bargains.

"Argo as a long-term investor remains ready to take advantage of selective buying opportunities as they present themselves in the share market," chief executive Jason Beddow said in a statement on Monday.

Click Here For Report

I hold a few AFI and I reckon they will be out shopping.

IrishDigger
Digging and Dealing

:aus:

 

[davede]

Considering ARG and AFI.

Read a Bell Potter report a month back stating AFI, ARG and PMC are all trading at discounts to NTA. They also noted AFI as the key standout over the long to medium term.

 

[makybe04]

Digging up an old thread but was wondering if an LIC is still a decent investment option. To add some context, I am beginning to create my long term investment portfolio. I want to buy some blue chips and add some diversity with a LIC.

 

[Dona Ferentes]

Things may be hotting up. There are quite a few (usually smaller, usually newer, usually thematic) LICs on the ASX, both those with a domestic focus as well as international, that are trading at a discount to NTA AND have been for quite a while. Some of these take action to try and reduce the discount with buybacks, enhanced communication and the like.

And now, sparks may fly. As reported in the media:
Geoff Wilson .... has seven listed investment companies under the Wilson Asset Management (WAM) banner [and] is understood to have an eighth in the works. No.8 will be called "WAM Strategic Value" and is expected to list on the ASX via an initial public offering this side of June 30.

Wilson's team set up the holding company, WAM Strategic Value Ltd, as an Australian public company last week in a sure sign there's a new LIC brewing. Stockbrokers are also lining up for roles selling the deal; Wilson usually taps Hamish Nairn at Taylor Collison and Morgans, and he is not one to change a successful formula without the need to.

The big question is what will WAM Strategic Value target? Wilson already has Australian large caps, small caps and microcaps covered, as well as global equities, a relatively new alternatives strategy and an active fund that trades like a small hedge fund. Any new vehicle's unlikely to overlap with the existing strategies.

If the Wilson watchers are to be believed, "strategic value" will be about trying to buy $1 worth of assets for 80¢. That's one of Wilson's favourite catchcries.

And if history is any guide, it could be about buying stakes in listed investment companies. There's dozens of LICs on the ASX boards trading at steep discounts. The worst (or best, for an activist investor) definitely fit into the $1 of assets for only 80¢ category.

Wilson's funds already have stakes in a bunch of LICs. WAM Capital, the biggest vehicle in the family, owned shares in at least a dozen LICs at June 30 last year. Its holdings included Charles Goode's Australian United Investment Company, Euroz's Westoz Investment Company, Sydney's Spheria Emerging Companies and NAOS Small Companies, and Templeton Global Growth Company.

 

[Dona Ferentes]

Things may be hotting up. There are quite a few (usually smaller, usually newer, usually thematic) LICs on the ASX, both those with a domestic focus as well as international, that are trading at a discount to NTA AND have been for quite a while. Some of these take action to try and reduce the discount with buybacks, enhanced communication and the like.

And if history is any guide, it could be about buying stakes in listed investment companies. There's dozens of LICs on the ASX boards trading at steep discounts. The worst (or best, for an activist investor) definitely fit into the $1 of assets for only 80¢ category.

Maybe not dozens, but quite a few....out of the 36 Australian focused LICs
discount ..... Market Cap ..... Code and Name
-23% ............ $723 million ......... CIN ...... Carlton Investments
-22% ............ $105 million ......... TOP ..... Thorney Opportunities
-22% .............. $75 million ......... OZG ..... OzGrowth
-21% ............. $47 million .......... NAC ...... Naos Ex-50 Opportunities
-17% ............. $121 million ......... NSC ...... Naos Small cap Opportunities
-14% ............. $139 million ......... TEK ....... Thorney Technologies
-11% ............. $127 million ......... SEC ...... Spheria Emerging Companies
-11% ............. $225 million ......... QVE ...... QV Equities
-10% ............. $154 million ......... WIC ...... WestOz
-9% ................ $98 million .......... SNC ...... Sandon Capital

Not that Mr Wilson can claim perfection; while WAM, WLE WAX and WMI are trading well above NTA, the newly minted (ex BAF) WAM Alternative Assets Private Assets (WMA), with $192 million in FUM, is under, at -10.5%.

In the International Equities space, the LICs tend to be newer, smaller and with higher MER cost structure. And a higher proportion are significantly under NTA.

The full list is updated by Bell Capital and can be easily found at

https://www.firstlinks.com.au/uploads/Education/2021/LIC-Weekly-Report-Indicative-NTA-26-Mar-2021.pdf

 

[Dona Ferentes]

Ha ha

In response to significant interest from shareholders, we are excited to confirm that we are preparing to launch an IPO next month. WAM Strategic Value will focus on identifying and capitalising on share price discounts to underlying asset values of listed companies, primarily listed investment companies (LICs), listed investment trusts (LITs) and other closed-end investment vehicles.

I look forward to serving shareholders as the Lead Portfolio Manager of WAM Strategic Value. All members of the Wilson Asset Management family will receive a priority allocation in the offer. Full details will be contained in a prospectus that will be issued by WAM Strategic Value when the IPO is launched. We expect to lodge the prospectus with ASIC in early May 2021 and the offer to close in early June 2021. Once lodged with ASIC the prospectus will be made available on our website.

 

[Dona Ferentes]

Maybe not dozens, but quite a few....out of the 36 Australian focused LICs
discount ..... Market Cap ..... Code and Name
-23% ............ $723 million ......... CIN ...... Carlton Investments
-22% ............ $105 million ......... TOP ..... Thorney Opportunities
-22% .............. $75 million ......... OZG ..... OzGrowth
-21% ............. $47 million .......... NAC ...... Naos Ex-50 Opportunities
-17% ............. $121 million ......... NSC ...... Naos Small cap Opportunities
-14% ............. $139 million ......... TEK ....... Thorney Technologies
-11% ............. $127 million ......... SEC ...... Spheria Emerging Companies
-11% ............. $225 million ......... QVE ...... QV Equities
-10% ............. $154 million ......... WIC ...... WestOz
-9% ................ $98 million .......... SNC ...... Sandon Capital

and there are a few more candidates. One very likely candidate, because of size and companies held:
-25% ............. $34million ........ GC1 ..... Glennon Small Companies

There are a few "alternative" and International funds but they may be hard to unwind (and some are big)
-9% ................ $95 million ........... AEG ..... Absolute Equity Performance
-18% .............. $462 million ........ PGF ...... PM Capital Global Opportunities
-14% .............. $53 million .......... PAF ...... PM Capital Asian Opportunities
-15% .............. $879 million ........ VG1 ...... VGI Partners Global Investments
-14% .............. $505 million ......... APL ..... Antipodes Global Investment
-16% .............. $120 million ......... TGF ..... Tribeca Global Natural Resources
-23% .............. $23 million ........... LRT ...... Lowell Resources Fund

I doubt there would be success with Platinum (PMC and PAI) or Magellan (MGF and MHH) funds as these are aligned to unlisted funds.

 

[finicky]

As a WAM shareholder, got this email yesterday. Thinking if subscribing ti the IPO if eligible but maybe a better move would be to dip into a couple of those LICs you've listed.

Dear Fellow Shareholder,​

This week, the Australian Financial Review published an article referencing the upcoming initial public offering (IPO) of shares in a new listed investment company, WAM Strategic Value Limited.

In response to significant interest from shareholders, we are excited to confirm that we are preparing to launch an IPO next month. WAM Strategic Value will focus on identifying and capitalising on share price discounts to underlying asset values of listed companies, primarily listed investment companies (LICs), listed investment trusts (LITs) and other closed-end investment vehicles.

I look forward to serving shareholders as the Lead Portfolio Manager of WAM Strategic Value. All members of the Wilson Asset Management family will receive a priority allocation in the offer. Full details will be contained in a prospectus that will be issued by WAM Strategic Value when the IPO is launched. We expect to lodge the prospectus with ASIC in early May 2021 and the offer to close in early June 2021. Once lodged with ASIC the prospectus will be made available on our website. Shareholders who wish to participate in the offer will need to read the prospectus in full and complete the attached application form.

If you would like to receive updates about WAM Strategic Value, please register your interest. We look forward to providing updates on WAM Strategic Value, the prospectus and further details about the opportunity. If you have any questions, please call me or Corporate Affairs Advisor Olivia Harris on (02) 9247 6755 or email info@wilsonassetmanagement.com.au.

 

[Dona Ferentes]

As a WAM shareholder, got this email yesterday. Thinking if subscribing to the IPO if eligible but maybe a better move would be to dip into a couple of those LICs you've listed.

Dear Fellow Shareholder,​

This week, the Australian Financial Review published an article referencing the upcoming initial public offering (IPO) of shares in a new listed investment company, WAM Strategic Value Limited.

Hi @finicky , I am having a bit of a conversation with a mate (who likes Wilson and has enthusiastically taken up previous floats) about this very thing. We're thinking along the same lines, but there are a few conditional issues.
1. The WAM style (Asset Management not WAM Capital) . Having seen GW in action for years, he has loyal followers. This is reflected in sticky, though usually elderly, shareholders not selling; hence the trading above NTA for most of the WAM LICs. But a lot of earnings are from trading, deivdend pass through less so.
2. How much will WSV raise? Probably a couple of hundred mill,
3. The template has been WAM taking out WDE, CIE and CLF, and even the AYS play for the franking credits.
4. Less instructive was BAF into WMA. It emerged the Geoff Wilson personally (in his SMSF) sold down his 'above NTA' WAM holdings and bought up big in BAF.... More than 7 million shares, $6M acquired when he could. Self interest (and a clause to csh out WMA within 5 years in it doesn't get above NTA)
5. What will Wilson’s approach be? Buy and hold in the new fund, or use it as a ‘gateway’/ cashbox; get control of the LIC, then once in Strategic Assets (WSA?) sell off a few that don’t make the Wilson process cut ... and/ or (off market) transfer to some of the other Wilson funds the appropriate strategies. And then use the new cash to nibble away at the ones below??

Anyway, we sort have decided likely LIC targets would likely be at a significant discount and also not too big. Sub $120M M/C and >14% discount brings up OZG, TOP, TEK?, NAC, NSC, GC1, PAF, TGF and LRT