NSC - NAOS Small Cap Opportunities Company

[So_Cynical]

Contango MicroCap is a LIC specialising in the Micro Cap end of the market and is part of the Contango Group.

Contang’o (-ngg-) n. (pl. ~s) implies that prices will be higher in the future than today. [orig. unkn.] The market is said to be in contango when the forward price is higher than the spot price.

• Market Cap 188 mill
• listed Mar 2004
• Consistent interim and final FF dividend history (except for 2009 )
• Gross yield about 5.1% (I'm factoring the last divy forward)
• No debt and lots of cash

I think that when the market really gets going and risk is less of an issue, its the quality small and micro caps that will make the biggest gains, and i reckon CTN is a great way to get a little exposure to that end of the market....as you can see below there weighted towards the resource and industrial sectors.

Im thinking they would roughly follow the small and micro caps index like an ETF if there was one....anyway im in today at $1.02 and will top up a little if they substantially dip, looking to do my usual and establish a small free carry position to hold for the longer term. I suppose i should put...please do your own research and don't consider this post to be advice of any kind, just my humble opinion.

Weightings from there September 09 quarterly http://www.asx.com.au/asxpdf/20091026/pdf/31ll0283gt9s26.pdf
.

 

[So_Cynical]

im in today at $1.02 and will top up a little if they substantially dip, looking to do my usual and establish a small free carry position to hold for the longer term.

Had another bite of the Contango cherry on Friday at 0.89 ~ its more of a repositioning than a average down, as i only increased my holding by 20% looking to improve my long term, free carry - cost per share, after i take profit from the first entry.

Contango like most of the sector it invests in was hit hard by the recent market pull back so its fair to say that while Contango offers instant diversity it also reflects the volatility of the microcap sector....still interesting to note that according to the Contango January NTA.

"Over the last 12 months the Contango investment portfolio has returned 66.54% compared to the All Ordinaries Accumulation Index return of 38.25%" I know its a bit like comparing apples to oranges but still clearly shows the out perform potential of the microcap sector.

http://www.contango.com.au/images/stories/ctn_nta310110.pdf

 

[So_Cynical]

Contango MicroCap half year report out yesterday...highlights include

• The investment performance was 40.2% exceeding, the All Ordinaries Accumulation Index by 14.2%
• Over the six months to 31 December 2009 Net Tangible Assets increased by 21.2%
• Total liabilities 8 mill
• Total assets 176 mill
• Profit attributable to members of Contango MicroCap Limited 35 mill
• Diluted earnings per share 29.8 cents
• Dividends received by contango 1.5 mill
• Cash flows from investing activities, Proceeds from sale of investments 56.5 mill

http://www.contango.com.au/images/stories/chairman_ltr_dec_09.pdf
http://www.contango.com.au/images/stories/ctn_-_dec_09_half_year_accounts_-_final.pdf

 

[venger]

Are the CTN fund managers that good to justify the managed fund like MER of 1.5% and the performance fees?

For a microcap fund, they seem to dabble in quite a bit of derivatives like futures..

 

[So_Cynical]

Are the CTN fund managers that good to justify the managed fund like MER of 1.5% and the performance fees?

For a microcap fund, they seem to dabble in quite a bit of derivatives like futures..

Well if your gona beat the All Ordinaries Accumulation Index by 14.2% then you have to be operating somewhat out side the box...these guys are taking risks for sure, other wise they just couldn't do as well as they have been.

There's a few nice safe LIC's out there, behaving very conservatively and predictably, Contango is a little different...once iam out of the build phase of my trade, CTN will be about 5% of my portfolio, so a quite acceptable level of risk for me going forward, long term.

 

[So_Cynical]

Contango MicroCap up over 5.7% today on news they have decided to change there dividend policy, CTN management have decided that in the future they will pay 6% of Net tangible asset backing (NAT) per share prevailing at the beginning of the financial year...or more if market conditions allow.

CTN have also decided that if its not possible to pay this amount completely from profit, capital will be used to maintain this policy via a capital return payment making up the shortfall in profit....anyway read all about it

http://www.asx.com.au/asxpdf/20100416/pdf/31pt3h3pr6hq69.pdf

This dividend policy change is affective immediately, so its proposed to pay a 5 cents per share dividend on June 30 payable in October 2010...all sounds pretty good for a dividend yield builder like me, so glad im still in this trade.

 

[So_Cynical]

im in today at $1.02 and will top up a little if they substantially dip, looking to do my usual and establish a small free carry position to hold for the longer term.

Had another bite of the Contango cherry on Friday at 0.89 ~ its more of a repositioning than a average down, as i only increased my holding by 20% looking to improve my long term, free carry - cost per share, after i take profit from the first entry.

I've been stuck in this trade for about 10 months after it went against me early on, i took a small average down way to early so had to just kick back and take the FF dividends and wait for the inevitable SP comeback.

My impatience finally got the better of me today, i noticed the price jump associated with today's buy back announcement and took the opportunity to take some long awaited profit and cashed in 65% of my CTN chips at $1.10 for a profit (including 2 FF dividends) of about 16%

Contango is most definitely a stock i want to keep and build a position in, every balanced long term portfolio should have some quality exposure to good small caps and Contango is my main vehicle for this.

12 month chart below with my buys in green and todays sell in red.
~

 

[ParleVouFrancois]

I'm liking your many trades that are going on Cyn, to be honest have you thought about starting a blog and even just copy pasting your trades from your ASF posts? It'd make it easier for people like me to keep track of how you're going (because I'm awesome like that).

 

[So_Cynical]

One of the great benefits of having a large diverse portfolio of 25 stocks is the opportunities that come along simply because you have a large diverse portfolio...such as the bonus issue of options that Contango are proposing.

Contango will issue 1 free listed 'bonus option' for every 3 CTN shares held, with an exercise price of $1.20 and an expiry date of 28 February 2014, almost in the money with Contango's closing price of $1.19

Read all about it.

http://www.contango.com.au/data/docs/asx_announcements/Options_Announcement.pdf

The last time i held a stock (small gold stock) that did something similar to this i made a ridiculous profit of over 4000% on the sale of the options.

 

[McLovin]

The cynic in me thinks management is probably rubbing their hands at the 33% management fee increase they've managed to sell as a "bonus".

 

[So_Cynical]

The cynic in me thinks management is probably rubbing their hands at the 33% management fee increase they've managed to sell as a "bonus".

LOL shows how dumb i am, took me 3 or 4 minutes to understand what the hell you are talking about with the 33%. as long as i get my dividends and free stuff and im not diluted i don't care.

 

[bigdog]

CTN shareholders - your 1 option for 3 shares held were issued today
-- check your holding under CTNO

---------------------------------------------------------------------------------------------
Announcement of Bonus Options

The Board of Contango MicroCap Limited (ASX Code: CTN) is pleased to announce a proposed free Bonus Option issue under which one CTN option (Option) will be issued to shareholders for every three CTN shares (1 for 3) held by them at the relevant record date.

The Options will have an exercise price of $1.20 and are being issued at no cost to shareholders.
Options will have an expiry date of 28 February 2014.

3179

 

[magneto]

Hi, anyone still on CTN? I am a recent holder, after researching LICs, decided to venture into CTN to get more exposure to the small end of town.

Large volume today.

 

[magneto]

I guess I'll talk to myself . Dividend at 7.4% is above average. Sure beats bank deposit - I was getting around 2.5-3%.

In addition, I like to think, the Small Ordinaries is under valued at the moment. So if it recovers, that should translate to solid increases to micro cap focused companies.

 

[So_Cynical]

I guess I'll talk to myself . Dividend at 7.4% is above average. Sure beats bank deposit - I was getting around 2.5-3%.

In addition, I like to think, the Small Ordinaries is under valued at the moment. So if it recovers, that should translate to solid increases to micro cap focused companies.

I'm still holding CTN for yield and small cap exposure, small and micro caps are still struggling due to most of them being explorers so the CTN SP is lagging the bigger indexes and LIC's..buy em cheap and sell em when there not..right now CTN is in the middle of the bear range.

 

[Panaman]

Had my eye on this one for a few months since i spotted So_Cynicals post as these sort of stocks/funds/etfs are my cup of tea and today brought some for my SMSF after it released its latest investor update.

Seems odd to me that the value of the assets which was released today is way above the share price and many of the small stocks they hold are far from speculative and has a dividend yield of nearly 8%

 

[waimate01]

Recent franking erosion and small market cap makes me look elsewhere.

 

[So_Cynical]

CTN is a somewhat cyclical stock and as such one needs to wait for the right time and that time may be approaching once again.

 

[magneto]

Looks like CTN is on the move. Buy volume far exceeds sell volume. Early days yet, but so far so good.

 

[robusta]

The quarterly review often has something interesting to say.


http://www.asx.com.au/asxpdf/20140716/pdf/42qvg23mtq49bl.pdf