BKI Announces payment of another Special Dividend

Discussion in 'Shares & Funds' started by Synergy, 18th Jul, 2019.

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  1. Nodrog

    Nodrog Well-Known Member

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    BKI took over Huntley’s LIC some years ago so that’s how Huntley ended up on the board and with a truck load of shares.
     
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  2. Nodrog

    Nodrog Well-Known Member

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    Bear in mind a number of us here already have a lot invested in LICs. Add to that the franking credit scare prior to the election which highlighted some structural issues with LICs (alternatively an advantage in other ways) some of us felt it prudent to be more diversified across structures ie LIC and ETF.

    Hasn’t stopped me still investing in LICs, added a couple hundred K’s to ARG just recently.

    Like SK I wanted to reduce the number of holdings for admin simplicity, this is the reason I sold the likes of BKI and spread proceeds across the remaining handful of holdings. No great thinking in selecting what to keep, simply big and old so AFI / ARG / MLT and PMC which we’ve held for a very long time.
     
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  3. Burgs

    Burgs Well-Known Member

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    Thanks SatayKing and Nodrog for your kind words and wisdom.
    True with all the BKI banter I was feeling guilty owning it.
    You are both right about Huntley Investment Company being a subsidiary of BKI, its in the annual report.
     
  4. Ariyahn2011

    Ariyahn2011 Well-Known Member

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    BKI is my largest holding personally. Followed by MLT, then AFI.
    I hold quite a lot of LIC's relative to my share portfolio, I too intend to move into ETF's just to spread the risk if one day look at franking credits again!

    Enjoyed the sharing your thoughts Nodrog and TF ..
     
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  5. dunno

    dunno Well-Known Member

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    Opinion is all that matters – If you like BKI It will surely be all sunshine and lollipops.

    Just don’t try to reconcile this chart from their latest presentation to achievable reality (especially the reality of a pre-existing shareholder)

    upload_2019-7-20_17-54-4.png



    My number one guideline is to only invest with candid managers

    My number two is only invest with managers who demonstrate diligent custodianship of their ability to issue shares.

    Those two principles have been worth many millions to me in my direct investing journey, so I’m not about to abandon them. I Wouldn’t touch BKI as they fail two of my most important considerations.

    Probably being overly cautions in relation to a LIC manager but why settle for something that has a whiff about it when there are better options?

    My 2c opinion.

    End of the day we all invest according to our beleifs/opinions. In investing however, some opinions will make you much wealthier than others.
     
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  6. Synergy

    Synergy Well-Known Member

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    can you elaborate on your considerations and bki
     
  7. dunno

    dunno Well-Known Member

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    Take the above chart as just one example.

    The people who rely on management presentations as their sole means to understand the company are being told and hence believe.

    upload_2019-7-20_19-36-21.png

    The reality if you can analyse the price data and the audited and regulated financial reports you will see the return claimed is unachievable fiction even if you were a new holder and didn’t suffer any dilution as a pre-existing holder.


    In summary - they don’t communicate with shareholders candidly. A major red flag for me.

    They alo failed to act in existing shareholders best interest in relationship to shares on issue. Another major red flag for me.
     
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  8. Burgs

    Burgs Well-Known Member

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    Hmmmm at the end of the day the older "General LIC"s" depending on time frames all seem to have roughly the same total return performance.
    dunno I respect your valuable input, but for the average investor trying to do their best, it is hard to make decisions on where to put our well ought dough.
     
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  9. The Falcon

    The Falcon Well-Known Member

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    @dunno is doing an extremely valuable service for nought but will annoy many.

    I’ll save you some time mate.

    AFI, ARG, AUI look ok. MLT is a question

    Buy VAS
     
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  10. Observer

    Observer Well-Known Member

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    @dunno Thanks for sharing your thoughts on this. Real wisdom there.
     
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  11. The Falcon

    The Falcon Well-Known Member

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    There is a whiff of near enough is good enough around here of late, the refrain of the content. I think we need to push things along however, otherwise what is the point? What are we even talking about?

    MLT’s relatively recent removal of ASX TSR benchmark from its monthly NTA performance is a real concern, once you open that door - essentially denying underperformance because it’s inconvenient - what else do you decide to withhold, frame differently or guild ? Doesn’t meet the fiduciary standard for mine. Others will be happy enough. But can you trust the numbers any more?

    The list of investable LICs gets shorter each
    year and leads to an almost inevitable conclusion.
     
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  12. orangestreet

    orangestreet Well-Known Member

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    I noticed that in the MLT preliminary end of year report too. How long before BKI will take to calling themselves index unaware? After all, BKI’s performance hardly makes for good comparison with the index - both short and long term. You can only spin the data so much; the charts make it really hard to hide the real story. So just get rid of the comparison and the reports start looking good again.

    I am nearly 4 years into the LIC business and the enthusiasm of reading the bi-annual financial reports, monthly NTA statements and keeping tabs on what my fund managers might be up to is already wearing thin. Also, the more l read J L Collins and the like, the more and more I like broad based low cost index funds. In a few short years, I suspect I won’t have it in me to check if Anton sold his entire QVE holdings overnight or if Tom still has alignment with BKI or decoding WHF’s weird annual report banging on about some proprietary quantitative method.

    Still hold the LICs and will continue to hold them. If I went into a coma and woke up after 10 years, I still think the outcome will be just fine. But more and more of my money will go towards indexing is what is suspect. Not necessarily because ETFs are faultless; it is just easier.
     
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  13. Nodrog

    Nodrog Well-Known Member

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    Yes @dunno certainly is doing an extremely valuable service. As for the “annoy” bit in the past in particular I’ve been so so guilty of falling victim to this bad behavioural trait. And yes I’m still far from perfect but getting much better hopefully. Importantly when you know the messenger is highly skilled / knowledgible and only trying to help others I now know that any resistance / annoyance is simply an alert that I should pay extra attention and see this as an opportunity to continue to learn and improve my investing and behavioural skill.

    As for BKI I was an investor in it and HIC (Huntley’s) when they merged and I did well with this for a time as Tom Milner grew and promoted the LIC. Hence provided the product is sound it’s the same old story of the “discount” can be your friend. I could have done even better if I’d stayed with BKI longer as the NTA discount continued to close but having been Thornhillised (anti-resource sector) I was unhappy about BKI’s high exposure to New Hope so sold BKI.

    I suppose all I was trying to suggest in my earlier post is that although BKI certainly has not been optimal in it’s behavioural or it’s performance for that matter in recent years I would not be losing sleep if we had money invested with them. Like the vast majority of fund Mgrs most of what one hears from them is crap, smoke and mirrors. It’s typically a case of if some do it others will follow suit in order to minimise loss of FUM or in the case of LICs avoid NTA slipping into discount territory.

    As for the capital raising I do think it was more in the mgr’s best interest rather than some existing investors. Contact is trying to grow their fund management business having increased the number of analysts etc, is under pressure to keep their MER low so I gather they proceeded with the recent capital raising with their interests in mind more so than their investors. Hardly a rare case in this industry.

    So perhaps I think there is some validity in the following:
    Importantly however there’s also great validity in the following:
    I personally would have zero concern about losing our money with BKI and honestly believe like in the past we would continue to do well over the long term if we still owned BKI. But @dunno is likely correct when he says there are better options. When consolidating our portfolio I chose to stick with the older internally managed LICs.

    With plain vanilla index ETFs persistently outperforming the vast majority of active fund Mgrs, offering such low fees and no surprises it’s impossible to argue against the positives of index funds. However I do still personally have a place for LICs in our portfolio but choose wisely. Perhaps the simple LIC rule of low fee, internally managed and having been around for decades is a good place to start. And importantly given the attractiveness of indexing nowadays and difficulty in competing with it, if LICs are still of interest then another rule to add to the previous is to take advantage of the one unique attribute that LICs offer “being able to buy $1 worth of assets for a lot less at times”!
     
    Last edited: 21st Jul, 2019
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  14. dunno

    dunno Well-Known Member

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    Hi @Burgs

    Important question you ask.

    My opinion is capitalisation Index funds are best for the "un-engaged". Either listed as an ETF or run as a managed fund.

    For Aust the listed ETF’s IOZ or VAS (STW if they can respond to expense reduction pressure). Would be the no brainer selections. A200 is still at “challenger brand” stage so slightly higher risk.

    The older general LIC’s you refer to “were” once best of bread because they were the nearest to passive and lowest cost available. Pure passive options are a disruption to their business. How they respond is the key for their future, and some of the response haven’t been encouraging. As @The Falcon posted, the no-brainer investable LIC universe seems to be shrinking. If I listed my current preferences today, that list could be outdated tomorrow.


    I actually don’t try to annoy (But I'm good at it:oops:) and I don’t have a problem with LIC’s per say. They just require a more extensive skill set (especially now, with disruption to their business taking place).


    @orangestreet post above is a brilliant first hand insight to how things are morphing in the LIC world, some becoming more active others changing their disclosure against index performance etc. If it’s a field you want to play in, go for it but go armed with knowledge to understand the developments and preparedness to spend the time to keep an eye on things Otherwise invest in a capitalisation index fund.
     
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  15. Nodrog

    Nodrog Well-Known Member

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    Yes true and given the very pro stance for LICs in the past (guilty as charged) having the other side of the argument being presented is important. However existing investors also shouldn’t be made to feel they’ve made a terrible decision having already invested in say BKI and that’s is not much of a step up from say investing in Crypto-currency:).

    But this is an investing forum so continuing to learn and improve should be at the heart of discussions.

    I don’t want this to be taken the wrong way but so others here who might be feeling disheartened for not getting everything perfect, in relation to the following comment:
    There are some of us here where “near enough is good enough” has also stood us in good stead and made us many millions.

    BUT as stressed this is not to be taken the wrong way, we should aim to continue to get better. If one can turn many millions into many many more millions in the same period of time by improving on “near enough is good enough” then hell I’m here to listen and learn:). Not always easy when older and having been more set in my ways. But the rewards are many if one can keep an open mind and focus on the facts rather than emotions.

    So thank you to all those here’s like @dunno, @The Falcon, @SatayKing and others who help me to continue to improve as an investor!
     
  16. Burgs

    Burgs Well-Known Member

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    What a great summary Nodrog your post has really helped me to understand LIC's and their place in my portfolio.
    Thankyou
     
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  17. Nodrog

    Nodrog Well-Known Member

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    Oh and my apologies to those who feel they’ve been led astray due to my very overly positive stance on LICs particularly earlier in the life of this Forum. I don’t feel the majority of LICs I’ve liked over time are by any means bad investments but as I continue to learn more and appreciate the huge benefits of simplicity my views have evolved somewhat and choices become more discerning. I suppose that’s the nature of life, we never stop learning no matter what our age provided we’re open to it:(.

    Time to crawl back into my hole:

    7451F5AE-A176-42C4-999E-DFBEB74D1A85.jpeg
     
    Last edited: 21st Jul, 2019
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  18. SatayKing

    SatayKing Well-Known Member

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    I don't believe I have contributed much of value to the issues. I read most of the posts, some of which are of astounding value and do generate thought. However, no way would I take action merely from posts in a forum. May as well act on those thoughtful media articles from, um, a well respected author who also happens to run a couple of funds.

    In any case, I'm only one person and while I can be an arrogant so and so at times it's not for me to call into question the wisdom what others choose as their investment vehicle. It'd be akin to calling all the share holders in, say, WAM, morons. That would be taking things way too far in my opinion.

    For me, while I may review my holdings over time, I am using the funds LICs spin off regularly to redeploy into either ETFs of my choosing or specific LICs I select as being appropriate to me and my approach because.......(no, I shan't say it but ya know what I mean. ;))
     
  19. Burgs

    Burgs Well-Known Member

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    Thank you dunno for taking your time to reply, much appreciated.
    I have slowly been coming to the conclusion that a simple ETF portfolio is the way to go such as VAS & VGS how simple !!!
    But as yourself and Nodrog have pointed out / eluded to, being a behavioural issue of being ignorant at times to accept new strategies/ideas.
    One major behavioural issue I have is the belief that LIC's should perform better than the index for the simple reason the LIC manager has control over what company is in and isn't in the portfolio i.e. dump the duds. My intelligence says why oh why is this not the case?
    Meanwhile the index is chugging along and all the LIC's / Managed Funds struggle to even match the index.
     
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  20. The Falcon

    The Falcon Well-Known Member

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    Needs to be understood that I will typically present views rather forcefully after partaking in a lot of good wine on a Saturday night. But I am particularly sensitive to any whiff of impropriety having been on the receiving end of it in private business. The slightest hint and I’m out. It’s a slippery slope.

    That said you are absolutely right, it doesn’t matter which horse you jump on (equities) you will do just fine in comparison to walking (cash).