LSG - Lion Selection Group

[RichKid]

LSG: I first saw this in a Fat Prophets mining report, they seem to be very bullish on it and there is a large bullish triangle forming with a minor bullish EW wave count recently as well. Some huge volume yesterday has me wondering what is happening (see short term chart, last bar). That near resistance level at 2.30 is the next issue. Apparently you get tax free dividends at times as they invest in other gold co's and metals projects ('pooled development fund'). Once this breaks to the upside I'd say it'll double in price based on measurements. But that resistance level at the all time highs, although within range, is very strong imo. With gold doing what it's doing now I have a feeling will see it broken this year (might even be this month if gold keeps going). Just my views, I hold.

 

[Sean K]

Re: LSG Lion Selection Group- Gold stock exposure

That was big volume yesterday! The last spike it had like that was in March when it shot up from $1.90 to $2.10. Although, I think this was just after FP put out a another buy reco on them. I've been watching this for a while waiting for the next decent correction to jump on. This has failed to materialise, but as you would agree, it's probably just around the next corner. So, I'll wait till then I think.

 

[coyotte]

Re: LSG Lion Selection Group- Gold stock exposure

Have held LSG since 1999 (was into PDFs @ that time)

like most PDFs this stock usually trades @ 8-10% below NTA (updated monthly)
but if you go to their web site you can obtain the current holdings and do your own current NTA (but it has not been updated this month)

most of their holdings are not doing all that great technically
but there is a big div in the wind
current NTA is $2.42 ----- take 8% off that and U will be in the ballpark

this is not really a trading stock in the sense of LHG it more of a inv stock

cheers
Coyotte

 

[kerosam]

Re: LSG Lion Selection Group- Gold stock exposure

why 8% off?

I was holding it for a couple of months and then sold it off..... didn't know about the tax-free thingy as well.

 

[coyotte]

Re: LSG Lion Selection Group- Gold stock exposure

why 8% off?

I was holding it for a couple of months and then sold it off..... didn't know about the tax-free thingy as well.

Well generally if you check out ANY stock that is a holding vehical you find over the long term they allways trade 5--12% below NTA
Basically I presume this would be --- after-tax/profit----management/fees--- loss of direct control.

Before trading became reasonably available in Oz I used hang around these stocks ---- (pre 1995) the only way to trade was to pay $100 per visit to a broker then at least $200 in & out--- NO online trading like today ---- WOW have you guys got it easy --- INSTANT TRADES -- CFD (for Shorts)--- $10-$20 a trade --- Trading Software-- (used to use lotus 123)

But back to LSG "GREAT STOCK" Long term ---- has the "well managed juniors" --- if you can pick these better, good LUCK --- BUT NOT a Trading stock.
You will find no OXR or SBM here.


Cheers
Coyotte
(after this post I will defintely be proven wrong --- so go for it!)

 

[Dan_]

Re: LSG Lion Selection Group- Gold stock exposure

Here's my attempt at drawing an ascending triangle. Hopefully this is done correctly and LSG is a stock I keep my eye on.

 

[RichKid]

Re: LSG Lion Selection Group- Gold stock exposure

Have held LSG since 1999 (was into PDFs @ that time)

like most PDFs this stock usually trades @ 8-10% below NTA (updated monthly)
but if you go to their web site you can obtain the current holdings and do your own current NTA (but it has not been updated this month)

most of their holdings are not doing all that great technically
but there is a big div in the wind
current NTA is $2.42 ----- take 8% off that and U will be in the ballpark

this is not really a trading stock in the sense of LHG it more of a inv stock

cheers
Coyotte

Coyotte, thanks for the good oil on PDF's, I've started a thread on the topic, would be glad to see your input: https://www.aussiestockforums.com/forums/showthread.php?t=3627

As for the LSG div, is it just a rumour? I understand that they pay only 15% tax but we can claim a 30% franking credit.

Eitherway LSG is going the wrong way atm.

 

[Kruegs]

Re: LSG Lion Selection Group - Gold stock exposure

Hi there,

LSG has taken a real hit the last week or so, particularly today where it has declined another few percent into the $1.50's. I gather this is due to the underlying prices of the companies that LSG are invested into? Correct... or is there another factor at play.

I saw the stock as a fairly good way to gain exposure to 'potentials' in mining and underlying Gold price movement, with some diversification. Any thoughts as to whether the stock is effective in offering this opportunity?

Regards,
Mark Krueger

 

[coyotte]

Re: LSG Lion Selection Group - Gold stock exposure

Hi there,

LSG has taken a real hit the last week or so, particularly today where it has declined another few percent into the $1.50's. I gather this is due to the underlying prices of the companies that LSG are invested into? Correct... or is there another factor at play.

I saw the stock as a fairly good way to gain exposure to 'potentials' in mining and underlying Gold price movement, with some diversification. Any thoughts as to whether the stock is effective in offering this opportunity?

Regards,
Mark Krueger

You have got to understand what LSG is, it's a Pooled Development Fund Stock --- Because of the TAX break they receive they are only allowed to hold developing Co's (on and off market) these are mainly for highly taxed individuals.

I doubt Gold Bugs would high on the register -- its more of a tax lurk.


Follow the Gold Market long enough and you will begin to understand that in any long term bull move it's the juniors that are always last out the gate and first to take a dive in a bear move --- actually when the juniors start to make up ground it's generally time to start tightening Stops.

The juniors have the best $$$ %%% potential BUT it can be a looong time coming.


Cheers

 

[scotto]

LSG is about to be merged with AUS (provided the merger get shareholder approval early April). One consequence of this merger is that LSG will lose its Pooled Development Fund status, and hence its dividends and capital gains will become taxable like a normal company.

On the plus side, the merged company (New Lion Group) should have a capitalisation big enough ($360m) to make it into the ASX 200 (smallest is about $310), which may compensate for this tax loss due to forced buying by index/super funds.

Not sure why it is being hammered so much though - NTA is (was?) about $1.88 / share, so recent trading is at a significant discount. I have a couple of theories:

* Underperforming value of underlying assets (I have not looked into this).

* Sellers discounting the PDF changes and factoring in the influence AUS (which has historically sold at a discount to NTA) will have on the new valuation.

or the conspiracy theory:

* Smart money selling down the stock prior to the valuation period in order to influence the relative ownership percentages of existing shareholders in the new stock.

Comments?

 

[56gsa]

Re: LSG Lion Selection Group - Gold stock exposure

You have got to understand what LSG is, it's a Pooled Development Fund Stock

LSG is de-registering as a PDF - and merging with AUS - to become Lion Selection Limited with an estimated pre-tax NTA of $361m ($1.90 per share - LSG get 1:1 + 63options for 1000 LSG shares)

they claim this could lead to a re-rating of the combined company, and possible inclusion in ASX200, attracting institutions, also larger more diverse investments (AUS owns and operates Sedimentary), enhanced access to new investments as no PDF restrictions

largest investments in IRN and the sedimentary operation, other larger ones AGM HAV IAU LAF PSV WEZ - not sure which of these has copped a flogging to send the price south? table below suggest LAF and WEZ are well off their yr highs

Symbol Trade Chg from Yr High Pct from 50d MA
AGM.AX 0.605 0.120 -7.07%
HAV.AX 1.440 ? -3.56%
IAU.AX 0.550 ? -8.46%
LAF.AX 0.082 0.068 -14.74%
PSV.AX 0.400 0.095 +3.59%
WEZ.AX 0.140 0.105 -5.59%

Perhaps also those in LSG for the tax-breaks are selling out?

 

[56gsa]

* Smart money selling down the stock prior to the valuation period in order to influence the relative ownership percentages of existing shareholders in the new stock.

scotto - our messages crossed! -can you explain the above? if the deal for LSG holders is 1:1 + 63 oppies for 1000 shares how does a drop in sp affect this?

 

[coyotte]

After many years I finally dropped out LSG last Sept --- so I can not comment on the latest developments .

But keep in mind that as a rule of thumb a " Holding Company " will trade at around 5% to 12% BELOW the NTA.-- (cash on hand comes into play - a big no no )

Your probably have the high margin tax players dropping out to be replaced by newbie Gold Bugs at the moment --- on the surface LSG looks a great gold play but do your home work on how the miners moves relative to POG -- the only real miner/pog in Oz imo is LHG -- grossly overvalued BUT thats where the play consistantly is --- NEM could also be coming into play now their CU hedges are all but gone .

If your going to play the minnows ---- wait for the majors to make a move UP
Just IMO

dropped all gold miners last Sept and just hold a small amount of Physical and ETF (ASX :GOLD ) --- Got feed up with the manipulation, dilution etc --- far more lucrative indexes --- just Short Term Trade LHG in the gold area now --- general consensus for POG is code for CRUDE :


Cheers

 

[scotto]

can you explain the above? if the deal for LSG holders is 1:1 + 63 oppies for 1000 shares how does a drop in sp affect this?

Sorry I got my facts mixed - a reduced share price does not affect the ratio between LSG/AUS shares, but it does affect the price of the 63 options (per 1000 shares) for existing LSG holders. My guess is that it would be in the best interests of large LSG shareholders to push the price down as much as possible before the calculation date (5 days starting 27th March) in order to keep the option price as low as possible.

But keep in mind that as a rule of thumb a " Holding Company " will trade at around 5% to 12% BELOW the NTA.

On the other hand, during the previous period where LSG was part of the ASX 200, it traded at a 7.7% PREMIUM to the NTA (no doubt due to forced index fund buying). This is one of the main reasons given supporting the merger.

 

[56gsa]

But keep in mind that as a rule of thumb a " Holding Company " will trade at around 5% to 12% BELOW the NTA.

latest NTA announced 190 / 179 (before / after tax) cf last month 200/188
so while NTA has dropped 10 cents, share price has dropped 16 cents and is now well below the % discount coyotte mentions (now 15-23% depending what you measure against)

Also the last NTA was based on Feb-28 prices - and most of the major investments are above those levels now - this makes reason for LSG to be below Feb-28 price hard to fathom and perhaps you're right Scotto that there's interests that are keen to see this drift until value period is over?

could be one to watch early april.... specially if merger with AUS results in ASX200 inclusion and value closer to NTA

 

[56gsa]

actually scotto - have just checked the scheme booklet and as far as i can work out options are based solely on NTA's, as calculated on average of 5 days pre-Tax NTAs starting 27 March - therefore share price of LSG doesn't come into it?

reading the section on dividends it seems New Lion will have trouble paying dividends out of current unrealised profits when they are realised - these will need to be distributed as capital distribution - thus i think a lot of people would have held LSG for tax-free divs and are probably now selling out given they are losing the PDF status and any chance of dividends in short term...

which means LSG is too heavily discounted atm imo?

 

[scotto]

have just checked the scheme booklet and as far as i can work out options are based solely on NTA's, as calculated on average of 5 days pre-Tax NTAs starting 27 March - therefore share price of LSG doesn't come into it?

Hmmm I havn't been monitoring the price of its holdings...I wonder if they have been falling in the same proportion to the LSG price? Gold stocks have been doing pretty bad lately so it could just be a reflection of a broader market trend. On the other hand, AUS is holding up well since this all started..

thus i think a lot of people would have held LSG for tax-free divs and are probably now selling out given they are losing the PDF status and any chance of dividends in short term...

Yeah I'm thinking that's probably the most likely reason...tax-free div's and capital gains really were the icing on the cake (although for some people it seems possibly the whole cake!).

which means LSG is too heavily discounted atm imo?

With today's falls it looks like the discount is approaching 20% to NTA. Considering the underlying long-term bull market trend in gold I wonder how long this will last?

 

[mark70920]

Hello

I've been lurking for a while , new to trading.

Is the LSG share price being manipulated as I notice there is buy and sell orders for very small parcels of shares (400@1.59)

 

[56gsa]

small parcels seem to have gone now mark - sometimes they can be 'left over' when a larger parcel does not get totally filled

LSG does however seem to have bottomed from what seemed to be a very high discount to NTA as discussed here above - previously the merger was mean a company with NTA of 1.90 which could enter ASX200 (ie will trade closer to NTA) - so I'm thinking these may continue to re-rate

 

[Kruegs]

Hi there,

With the recovery in Gold price and the recovery of the underlying stocks that LSG are covering, any thought of a recovery in LSG's price? It is still trading at a strong discount to its underlying value I would think and seems overdue for a more significant leg-up in price.

Regards,
Mark Krueger