MGF - Magellan Global Fund

[System]

The Magellan Global Fund seeks to invest in outstanding companies at attractive prices, while exercising a deep understanding of the macroeconomic environment to manage investment risk.

Magellan perceives outstanding companies to be those that are able to sustainably exploit competitive advantages in order to continually earn returns on capital that are materially in excess of their cost of capital.

While Magellan is extremely focused on fundamental business value, it is not a typical ’value’ investor. The Magellan Global Fund will invest in companies that have relatively high price-to-earnings and price-to-book multiples, provided that their businesses are outstanding and their shares are trading at an appropriate discount to their assessed intrinsic value. Equities that appear undervalued on the basis of a low price-to-earnings or price-to-book multiples will often prove to be poor investments if the underlying business is fundamentally weak and exhibits poor returns on capital.

Magellan focuses on risk-adjusted returns, rather than benchmark-relative returns. As a result, the Magellan Global Fund's investment process is designed to generate an unconstrained, concentrated portfolio of high-quality companies.

Magellan believes that an appropriately structured portfolio of 20 to 40 investments can provide sufficient diversification to ensure that investors are not overly correlated to any single company, industry-specific or macroeconomic risk.

It is anticipated that MGF will list on the ASX on 30 November 2020.

Our Investment Funds

Magellan investment funds invest in high quality global companies, including global equity, global infrastructure and sustainable investment strategies.

www.magellangroup.com.au

 

[Dona Ferentes]

The first big capital raising by an Australian fund manager in 2021 is full of innovations that will set the standard for those trying to earn the loyalty of retail investors.
The Magellan Global Fund partnership offer, which opens on January 18, has the potential to raise a maximum of $4 billion.

....and if it gets the full amount, it will be the 20th largest listing on the ASX.

The Partnership Offer enables Eligible Unitholders in the Magellan Global Fund the opportunity to subscribe for up to $1 of Closed Class Units for every $4 of Units held. In partnership with Magellan Group, investors who take up their entitlement under the Partnership Offer will also receive valuable benefits comprising:
• additional Closed Class Units worth 7.5% of their subscription; and
• One MGF Option for each Closed Class Unit allotted under the Partnership Offer.

Each MGF Option will be exercisable into one Closed Class Unit with the exercise price set at a 7.5% discount to the prevailing net asset value per Closed Class Unit at the time of exercise. The MGF Options are intended to be quoted on ASX under the ticker MGFO and will have a three year term.

Importantly, these Partnership Benefits will be funded by Magellan Group and not by the Magellan Global Fund or Unitholders.

The Partnership Offer is open to both Open Class (ASX: MGOC) and Closed Class (ASX: MGF) Unitholders who were registered holders of Magellan Global Fund units on both the Record Date (8 December 2020) and the Calculation Date (8 January 2021)

 

[Moose_]

I subscribed to the partnership offer and picked up the options as part of the deal.

I know nothing about options.

Any comments?

 

[Belli]

First, all the bumph from Magellan is convoluted and could give someone the impression what they offered is magic. It ain't.

What has actually happened is those who applied were allocated a certain number of units at a price equal to the Net Tangible Assets on a set date and in addition were given what are effectively bonus units which has the overall result in lowering the average purchase price of the units (bear that in mind if or when selling for GST purposes - especially if partial sale).

In addition applicants were allocated options which is an option to buy further units at a price determined by a reference rate of a small discount to the NTA on the date you hand your money over to the fund. If you don't buy any further units within three years, they expire and you get nothing. If you have enough units you can sell them on market and get some proceeds. They are probably worth only a few cents each. Again bear in mind CGT if you do this.

A number of FP's I have spoken too, didn't suggest to their clients to take up the offer. The general reasons being as the offer was worded in almost an obscure way, many would not have understood it and there was only a small benefit for the majority. Way easier simply to buy on market if a client wished to increase their holdings in the product.

 

[Belli]

If you have enough units you can sell them on market and get some proceeds. They are probably worth only a few cents each. Again bear in mind CGT if you do this.

Sorry. In the above quote I meant to say options not units.

Say if you have 10,000 options and want to sell them, they may be valued at $0.05 each so you'd get $500 less brokerage.

Alternatively if in a few months time you would prefer to exercise the options and us them to buy additional units from Magellan (not on the market) and, when you apply, the NTA was calculated to be say $1.681, you would need to fork over $16,810 of your hard earned. You can probably also do this in small lots e.g. 1,000 at a time but the NTA, and so the price you pay, will likely be different each time you do.

 

[Dona Ferentes]

the options MGFO have been trading for 5 days. As @Belli said, they have a value .... just over 6c per oppie.

if you don't pay the amount by 01 Mar 2024, or sell prior, then they will lapse.

 

[Dona Ferentes]

Magellan of late has had a period of investment underperformance in the flagship global fund – it currently trails its benchmark on a one-year, three-year, five-year and 10-year basis – and this is weighing on investor confidence.

MGF is the listed version (similar but not a total replication) of the unlisted managed fund. Over one year, the Magellan Global Fund has lagged the MSCI World index by 14.5 per cent. Retail outflows rose from $260 million in the June quarter to $617 million in the September quarter.

the St James Place mandate, now lost, was siloed:

"SJP’s mandate, which was a separate account and not an investment in any of Magellan’s retail global funds, represents approximately 12 per cent of the group’s current annual revenues and is anticipated to have approximately a 6 per cent impact on the revenues for the year ended 30 June 2022," Magellan said.

while MGF is not MFG, the reality is that CONFIDENCE is slipping in the empire.

 

[Dona Ferentes]

rolling with the LICs.
.
Magellan Asset Management has announced its intention to convert the Magellan Global Fund’s closed class units to open class units in aid of narrowing its discount to the net asset value.

Magellan set a target date for the conversion meeting for the first half of calendar year 2024.

Magellan Global Fund (MGF) gained 4.2 per cent to $1.75 – to trade at an 8.8 per cent discount to the $1.92 net asset value.

Magellan Global Fund option holders have the right to convert the options into units at a 7.5 per cent discount to the net asset value – or $1.77 at the current net asset value.

The narrowing of the discount put a rocket under the value of the Magellan options, which spiked 66 per cent to 2.5 cents as the possibility the unit price could trade above the 7.5 per cent discount.
.
MGF has been the target of sustained action by opportunist investors to close that discount.

 

[Belli]

The narrowing of the discount put a rocket under the value of the Magellan options, which spiked 66 per cent to 2.5 cents as the possibility the unit price could trade above the 7.5 per cent discount.
.
MGF has been the target of sustained action by opportunist investors to close that discount.

My, my. Some touchy feeling fluff but the penultimate paragraph seems to be the crux of the matter. Given the bleeding of FUM, to possibly lose another few billion ain't ideal.

 

[divs4ever]

My, my. Some touchy feeling fluff but the penultimate paragraph seems to be the crux of the matter. Given the bleeding of FUM, to possibly lose another few billion ain't ideal.

View attachment 166806

i wonder if Keybridge Capital kicked a winner here , but Magellan is allegedly an experienced wealth and financial manager , surely they factored in risks like this a long time ago

i do not hold Magellan ( fund manager or any of their LICs ) nor KBC , but do hold some rivals who are possibly likely to do something similar

( maybe i should look at KBC with fresh eyes )

 

[divs4ever]

KEYBRIDGE CAPITAL LIMITED​

ASX: KBCShare: Financials, Financial Services

Last Price (AUD)$0.082
Today's Change Up$0.029 (54.72%)

OOPS !!

what have i done

( i have NOT entered an order of any kind for KBC into the market )

 

[peter2]

Activism works!

(AFR 071123)

 

[Dona Ferentes]

Bolton wasn't the only 'activist'. Others worked away behind the scenes.

Turning to the GVF investment portfolio, the company enjoyed a significant win during October with its investment in Magellan Global Fund (MGF), an Australian listed investment trust that owns a portfolio of international shares. Trading at a discount to its asset backing of greater than 20% a year ago, MGF has been one of the largest holdings in GVF for the past year. Our thesis since that time has been that the trust would likely restructure post the expiry of its outstanding options in
March 2024.

During October, the responsible entity for MGF announced that it would bring forward a unitholder vote next year to facilitate just such a restructuring. We now expect to exit our investment in MGF very close to asset backing during 2024, realising a significant uplift on GVF’s investment in the process.

 

[Dona Ferentes]

follow on from my earlier post : GVF Monthly update included this ..

So far this year GVF has held some valuable exposure to many of the top performing
AI stocks through its investment in Magellan Global Fund (MGF), a listed investment trust in Australia. Having bought into MGF at a substantial discount to its asset backing, we have enjoyed both the strong underlying performance generated by the MGF investment portfolio, and a significant contraction in the underlying discount, as the fund has set about restructuring itself.

We expect this restructuring to be completed during July, after which investors will be able to subscribe to, and redeem from, the fund near its asset backing.

To date, GVF’s total return on its MGF investment has been 49%, which equates to an annualised return figure of 24.2% over the life of the holding.

 

[System]

MGF delisted on 22 July 2024.