LIC & LIT Listed Investment Companies - Fundamental Analysis

@jhmtaylor 's blog

Followers of Property Chat may recall that I previously performed a "granular analysis" of MIR over one 1, 3 and 5 year period and to put it bluntly, the result did not put the investment in good light, particularly because the stock sells at such a large premium to NTA. There were issues about accounting for timing, what was the profit, income and revenue.

The simplification of investment performance (NTA gain + Dividends) now used plus the use of rolling 5 year investment periods I believe creates are far more accurate narrative.

From 2009 to the present over all but one 5 year period, MIR.AX has out performed the index, which is exceptional. So the investment managers have been doing a good job.

However, from an investors perspective, it is worth noting that the out-performance has been declining steadily since 2009 to the point where the last 5 year period is slightly less than the index.

The stock is selling for a premium of 22% to pre tax NTA, which I think is high. If I had owned this stock for a long time I would probably be continuing to hold, but certainly would not be looking to buy. If the premium to pre tax NTA dropped to say 8%, I would consider buying.



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Posted By James Taylor to Distilled LIC Fundamental Analysis on 8/11/2017 05:35:00 pm

 

This one is a shocker. DJW sells at a huge premium to NTA because it pays a big dividend. There is an important lesson here. The investment manager is under performing by any measure, the dividends exceed earnings over a long period and the portfolio is cannibalizing itself by paying out un-sustainable dividends.

I do not own this stock and cannot envisage a scenario where I would ever would want to.




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Posted By James Taylor to Distilled LIC Fundamental Analysis on 8/14/2017 06:09:00 pm

 

Previous LIC darling Australian Leaders Fund (ALF) is also under pressure from investors. ALF plan a 20% buy back of shares at NAV in order to attempt to reduce the discount to NAV. Investors however are not happy, with many calling for a wind up of the fund, as it continues to trade at a 20% discount to NAV. Its been a phenomenal turnaround for ALF, who previously traded at close to a 20% premium to NAV and shows how the market can punish LICs who underperform.



ALF NAV 5 year Premium/Discount. Source: ETF Watch

Pressure rises on underperforming LICs as discounts persist

 

Hi @jhmtaylor, I'm just learning about LIC and have been reading your posts with interest. May I get an access to your blog too? I tried pm-ing you but couldn't do it for some reason. Thank you.