Re: Octaviar MFS Premium Income Fund PIF
RE Investor Update: 31 December 2009
No show: No mention of the Sheraton Mirage Gold Coast transactioon.
Cash Payments:No mention of the form of the 3c 'cash payment'. Answer me this WC: how am I going to get tax advice as recommended by YOU in the Explanatory Memorandum?
Reducing Costs/Expenses/Outgoings/Fees/etc/et/etc: No mention about any efforts by WC to reduce the costs of operating the fund. Big issue don't you all think. I mean, the Annual Report listed expenses of around $3 Million to lawyers and $1 Million to Perpetual. Am I the only one who thinks that's a HUGE expense. Is WC comfortable with that? I think WC may need a (in management mumbo jumo speak) paradigm shift.
Instead we get this one sentence under 'Asset realisations' on page 2 "These sales ... allowed the Fund to
implement its strategy to
secure strong operational deals which will
maximise the longer term value of other parts of the Fund's portfolio." I.e. the fund is cannibalising itself.
Business Plan Ahhh! There it is on page 2 under 'Cash Payments': "After that payment is made, the Fund will focus on the rebuilding of unit value. This will be achieved by a combination of
further development of selected existing assets,
selected realisations and with
measured new investments aimed at rebalancing the asset class allocations of the Fund."
First 2 sound like more of the same self cannibilising. Where's the transparency on how well this is managed? Or do we just have to
trust WC?
As for the 3rd: rebalancing to what? To that on the webpage:
http://www.newpif.com.au/pifoverview.html Anyone know where that benchmark came from? How old is it? WC have used every Investor Update to remind us of the great changes that have occured through the GFC. So is that benchmark as out date as the net asset backing of 45c at the top of that webpage? And who would decide on new benchmark? We
entrust it to WC.
Just a thought but wouldn't it be a great 'investment' for PIF to engage a measured buy back of its own units? I mean, if the fund value really is above 30c per unit then isn't 9c a unit an absolute bargain? Of the 4.75million units traded on the NSX so far more than 10% (510 thousand) have exchanged hands at or below 9c. More than 20% exchanged at or below 10c. According to WC's last asset valuation of PIF, buyers face huge potential gains at those prices. And that's without the potential cash flow into the fund from the ASIC action. Or would a share buyback be morally wrong? At those prices, why isn't the RE seriously considering it? Is there any downside to such a policy?
"Rebuilding Unit Value" and "Regular Distributions": Who are WC rebuilding unit value for? Us unit holders or to maximise the $ value of WC's 0.7% fee?
What's that noise Skippy? Sounds like the screeming of a shot-up propellor plane heading straight for the dirt. No, its our share price after the WC update that "It remains unlikely that the Fund will be able to return to a situation where regular distributions are a feature of the Fund". Another failed-to-deliver for WC. Who's going to buy units in a fund that only benefits the RE? There's no more commitment to distributions. And market confidence in the fund was already poor with the NSX trades at a small fraction of the net asset backing and never at a respectable volume.
No returns, no way out and an RE that is inherently motivated to maximise their profit by increasing the 'value' of the fund as much as possible? You can check out at any time you like but you can never leave. This is the investment equivalent of serfdom. My capital can buy its freedom but at a very high cost. In the meantime it's put to work indefinitely for the benefit of WC and it's house filled with lawyers, Perpetual etc; with no other rights to being freed. All the power is with WC to free my capital whenever or if ever it chooses to. Again, all we have is
trust that WC will be a fair and true master.
Maybe I'm seeing this wrong. With NSX trading at rock bottom WC have seen that it can't get any worse and chosen to use the opportunity to clear the decks of undeliverable commitments. Either way, I'll be sure to pray for our capital with the rest my family tonight. Pray that our capital's new master is a good master. For without it, certainty of a comfortable retirement is less certain. Let's pray the crops don't fail, for such will bring on a vengeful master.