LIC & LIT Listed Investment Companies (LICs) 2021

Haven't gone back through previous years but this gives some indication.

 

Realised Capital gains are accounted for through the balance sheet not the income statement. That is why dividends can be higher than reported income. From memory they have reasonable turnover and are running some sort of systematic approach.

The extra dividends above earnings are simply paid from capital gains.

The placements are replenishing the capital gains paid out to keep FUM growing.

 

Interesting...so it's the systematic approach generating capital gains that is sustaining the dividends and not industrial shares (no resources) that usually generate better dividends that they promote on their website.

Cheers,
Oracle.

 

It’s all a bit pea and thimble trick as far as I’m concerned but hey it’s been trading at a higher premium to NTA than the buyout premium on MLT, so somebody’s buying it.

 

That makes sense and explains the regular LIC capital gains from WHF. Hmmmm, desicions, decisions.

Same for MIR (regular SPP raisings and LIC capital gains), but that's probably more reasonable given the necessity or a more active approach for small caps. At least that's what I'm expecting from a small cap manager. From memory raising has been limited to a SPP, and not a discount to insto mates though.

 

A big wack of sales last year at $160m and over $200m of purchases as well.

The alteration to the dividend policy over the last couple of years is interesting.

I suspect WHF know the share price is over the top as the insto placement was at the estimated NTA which is why the discount appears large.

The forthcoming dividend will use $20m from the LIC Capital gain account.

The previous SPP was in November 2015 by the way.

Mirrabooka Investments | Security History

 

Re MIR SPP, including the most recent in Jan 2021 that isn't too bad then. Thanks for correcting me. For now Im happy with the role MIR plays in my portfolio and how they operate.

 

In the past I was OK with SPP's but now I am more in favour of renounceable rights issues. That gives those shareholders who may not be able to, or don't wish to, participate in an SPP some form of compensation as a shareholder through selling the rights.

I was thinking about that aspect with the WHF SPP. It has had SPPs in 2015, 2016, 2017, 2018, 2020 and now this one following the insto placement. Gives me pause for thought but I have until mid-August to mull it over on whether to participate or not. A few other factors need to be considered in my case (Home v International, WHF holdings v other LICs, etc.)

Angst, major or minor, is not what being a lazy investor is supposed to be about. Many cups of coffee will be consumed until then.

 

The placement is not a good look at all. Even a non-renouncable entitlement offer like WLE is doing at the moment would have been better, at least shareholders get the first opportunity before outsiders get a look in.

People would do well to compare the two current situations on merit without prior bias.

How management treat shareholders in relation to their power to issue shares is pretty much the first thing I look for in my active investing. Not putting your existing shareholders interest first is a huge red flag in my book.

 

Heck, I'm thick. I meant to include these from the 2019 & 2020 WHF annual reports. Note the change.

2019



2020

 

it has even received coverage here: AUI / DUI - When Old School goes New School - rrmetrics

 

Now the AUI/DUI websites have apparently been improved, I wait with eager anticipation knowing the level of dividends will also improve as a consequence. After all, one follows the other.

 

How do you interpret this?

 

Definitely a change from what was expected of a staid, boring LIC isn't it? I noticed it a few days ago and went back through a couple of annual reports to see when the change was made. It fits with @dunno's comment about a systematic approach. WHF would appear to be applying same to the dividend.

Not saying it is bad or anything of that nature but investors need to be comfortable with the concept before committing funds to the LIC.

 

So, potentially no dividend smoothing then.
If I appear to be a bit 'thick' getting this, then it's only because I am .

 

Sure there's dividend smoothing but not necessarily based on retained earnings as you'd expect.

My dumb interpretation is they'll payout all income plus realised capital gain. To keep appearances up of a steady and increasing dividend, if investment income is insufficient they'll realise further capital to make the difference. "Look at our perfect record increasing dividends, we must be investing geniuses.", Whilst at the back door selling tickets (including to mates and 'talent' at discount) to restock the drink fridge and keep the bar sales (MER) ticking over.

I recall @The Falcon signalling a warning some time ago. I'm thick but think I'm finally starting to get it


Thanks @oracle for the prompt, @dunno for pointing things out in a way only he can, and @SatayKing for sharing his detective work.

 

Thanks for spelling that out, certainly gives me pause for thought & understanding more the preference for index investing. Glad too I've been topping up VAS.

 

Curiosity got the better of me. For the information of BKI holders.

 

I need to buy some nails!!

 

And then..