LIC & LIT Listed Investment Companies (LICs) 2019

{Note from mods - this thread continued from here: Listed Investment Companies (LICs) Q4 2018}



@Ianvestor enthusiastically kicking off the new year with a new blog entry:

Playing Games with LIC Performance Reporting.

Happy New Year PC’ers ...

 

Post tax figures are next to useless in my view.

Some ok prices recently. I think Milton is around 3% discount or so, I bought some last week along with some Argo at a small premium.

Evens out I guess dunnit? Lol who cares anyway...more income regardless

 

Yep at current prices milton is around the 3% discount range not the 6 to 7% i quoted earlier! Must of been the strong european beverages!

 

Happy New Year to all!

When do we start LIC 2019 thread and bid this thread good bye.

Cheers
Oracle

 

But as an index investor I didn’t think you’d be reading LIC threads.

Happy New Year.

 

Any thoughts on following the Morningstar/Westpac ratings available on Westpac trading platform. At the moment, I see MIR, QVE, WHF are undervalued. BKI was undervalued until last night.

Since it's my first trade, I am focusing on something which has a good discount/ undervalued and scheduled pay the Div in Q1 2019.

Hope I am heading in the right direction.

 

I tend to ignore the data you mentioned. Not sure how they’ve arrived at their valuation on MIR?

Unless you’re investing a significant lump sum is it really that much of a concern if the LIC is only around fair value? What are you wanting eg broad market diversification such as AFI / ARG / MLT or mid / small cap focused such as QVE / MIR? Hopefully you’ve thought about this first.

MLT seems to have gotten the interest of a few here lately but with it and other LICs up today but the index down around 1% at the moment not sure whether it’s at a premium / discount. I’m guessing it’s still at a discount. More enthusiastic others might like to comment. Or you can do a quick calc as per the usual formula provided earlier if interested. Then again by the end of the trading day the market might be up 1% given recent volatility. Such is the nature of the beast.

If your luck is like mine it’s almost guaranteed the price will nosedive soon after you buy anything. So might as well start getting used to it. But income (dividends) on the other hand generally increases that bit more each time I buy and that’s all I’m really interested in.

 

Thanks for enlightening me on the topic. Agree with you, it's only 10K so doesn't matter if its fair or undervalue. I thought of diversification, but since it's my first trade, I am not much worried at the moment whether its small/ mid/large caps as I can balance in the next couple of trades.

In regards to the discount/ premium calculation, I have tried the calculation in the attached excel file, it shows MLT is selling at 0.0025 prem. Not 100% sure if my interpretation of various terms is correct in the formula. Appreciate if someone can comment on my calcs.

How about etfwatch (MLT-Milton Corporation – ETF Watch) for the latest MLT discount and it shows 2.24% on 30th Dec. Is it a reliable source for the discount/ premium.

Agree with you, LICs are safe/ less risk bet due to their regular dividends irrespective of how the market performs.

 

@San2018 can you answer me this question.

If you intend to buy and hold and resist the siren call to trade, in 20 years time or greater are you going to look at "today's" purchase and regret you bought the holding at a small premium or not quite the discount you were hoping?

it's mostly a mindset.

 

Analysis paralysis might be a risk in the market at the moment. Not only are the daily but the intra daily swings can be many points. @Nodrogs comments above summarises the current market situation. It is almost impossible to work out the current value of LIC at any one point in time during a trading day - the underlying shares are being live traded

 

I intend to buy and hold, but if I see the right opportunities in the property market, I might also sell them if there is no loss. Agreed that these fraction of percentages doesn't matter if we look at the dividends, fundamentals of the LIC and if we intend to hold them for long.

I was just curious to learn how to do the quick calcs on discounts and source of reliable information for reference for my future trades.

 

If this is the case you may be better off waiting - getting into and LIC and out for property won’t be beneficial short term.

 

Ah, those days of creating elaborate excel spreadsheets to calculate discount/premium etc. I had a massive checklist as well that I was supposed to go through before I bought anything. Have not used it once. Always ended up buying whatever looked reasonably good value. Also, usually have very little time during office hours so if it is in a reasonable range and I have the cash, I hit go.

That is one of the reasons why I like SPPs; if I have the cash, I often end up participating even though recent history suggests I would be better off waiting. 10 more years of this and I suspect I will be even more jaded and just buy the index and forget about it all.

Disclaimer: I still track end of month NTA and read every report that the LICs that I hold release. I pay careful attention to the commentary in particular. Let us see how long that lasts.

 

To balance out the low-ish yields of the LIC's I'm purchasing, I'm also going direct shares.

The banks are good value at the moment and trading at attractive PE ratios (for a reason, but they may have been oversold). Could be famous last words though. DYOR.

 

Just committed 10K worth of MLT at $4.32.

I have $ 30-40K buffer funds which I don't think I need them for at least next couple of years.

I understand the importance of the long-term investment but let's say if we receive 7- 8 % returns (dividends with the franking credits and any increase in LIC value) in a year and sell, is it a bad strategy as long as we can hold them in dips not selling for losses?

 

That all depends on your documented investing plan surely - what does your investing plan state? Do that.

 

Maybe the management of the LIC's I hold are thinking the same and buying or maybe not and they're selling.

Thing is they have the time do do all that assessing stuff while I do other things.

No guarantee that will actually occur is one viewpoint.

 

I guess so. The defining diff to me is that there's no guarantee an LIC will pass on 100% of any benefit (or loss). Whereas, if I cut out the middleman....

Of course, the risk goes up with the potential return.

Either way, the intent is to have 70% LIC and ETFs, 30% direct shares.

 

Unless you are already set on a LIC, an ETF (like VAS) pays their divs quarterly (you'll have missed the one that is just about to be paid though - I'm pretty sure you had to be holding it at opening today )

 

Hmm, no documented investing plan ATM.

I might hold for long term

Since I am looking to take the benefit of low income , I think100% franked dividends from LICs make sense.