LIC & LIT Listed Investment Companies (LICs) in 2016

Discussion in 'Shares & Funds' started by The Falcon, 1st Feb, 2016.

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  1. OscarBravo

    OscarBravo Well-Known Member

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    Yep, all valid points and I probably should have elaborated a bit more on how I use debt and why I think it is less risky early on in investing then later on.

    Without writing an essay, long term timeframes in equities appear to heal all wounds. Holding everything else constant, a longer timeframe is more beneficial for a leveraged strategy than a shorter timeframe (or at least, less dependent on return sequencing), and over 30 years investors tend to get average equity returns, regardless of when they commence.

    Appreciate your view though and certainly has given me something to think about.
     
  2. Nodrog

    Nodrog Well-Known Member

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  3. Nodrog

    Nodrog Well-Known Member

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  4. Nodrog

    Nodrog Well-Known Member

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    A little information on Forager's new listing of it's existing managed fund:
    See here for more information and performance history:
    http://www.asx.com.au/asxpdf/20161220/pdf/43dvrzc9xg2f09.pdf (broker presentation)
    Australian Shares Fund - Forager Funds

    Seems to be less greedy and more shareholder friendly than many other new breed LICs / LITs out there. Although I haven't looked into it in detail yet.

    Like most of these new listings I'm unlikely to be adding it to our holdings but just follow this stuff out of interest.
     
  5. Nodrog

    Nodrog Well-Known Member

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    Like Thornhill this is one of the reasons I'm not that keen on LICs that rely on the skills of a hot shot stock picker (traders) who won't be around forever:

    Peter Hall in shock exit from Hunter Hall (HHL).

    http://www.asx.com.au/asxpdf/20161228/pdf/43f0rfhnwfq9x7.pdf

    Peter Hall in shock resignation from Hunter Hall role

    Now I wouldn't be surprised if Wilson is in there meddling with his usual activist nonsense.

    Happy to avoid all this rubbish. Traders (not investors) can try to make a buck out of most of these new breed LICs and activist activities etc. After over 30 years of watching these things I'm happier than ever to stick with old and boring!
     
    Last edited: 28th Dec, 2016
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  6. BingoMaster

    BingoMaster Well-Known Member

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    A very good example of your / Thornhill's mantra of avoiding hot shot traders / key person risk.

    In Hunter Halls defense, even if you lose some money now that Peter Hall has left, if you held their flagship trust for the last 20 years, you would have done far better than the index. Far, far better.
     
  7. Nodrog

    Nodrog Well-Known Member

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    Being a LIC thread I'm referring to his LICs here. HHL has been going 12 years. The following link shows it's performance and I haven't confirmed if this excludes fees. I don't think far, far better than the index over the longer term would best describe it's performance:):

    Hunter Hall - Hunter Hall Global Value Limited - Performance

    And according to Bell Potter Research (30 Sept) over a ten year period HHL had outperformed the index by a tiny 0.2% after fees.

    But that's not my point. As a long term passive investor I don't like surprises that can easily be avoided. Hence why as time goes by I'm becoming increasingly adverse toward hot shot trader(s) driven LICs vs longer term investment, low fee process driven LICs.

    Each to their own of course.
     
    Last edited: 28th Dec, 2016
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  8. pippen

    pippen Well-Known Member

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    Ok here is a different theme, what is the longest time frame you people havent bought into the market (be it for lack of funds, no real value in buying opportunities, excessive premium etc etc)

    Ie 3 mths , 6mths or even a year without topping up or getting new holdings?
     
  9. Nodrog

    Nodrog Well-Known Member

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    Without going back and checking records from memory I've avoided buying for up to two years or more at times due to lack of value.
     
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  10. pippen

    pippen Well-Known Member

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    Wow didnt expect that at all! I was thinking 6mths max for most people!
     
  11. BingoMaster

    BingoMaster Well-Known Member

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    Yeah I wasnt referring to the LIC, but their flagship trust - value growth trust. You'd have roughly 3.6 x as much capital after 20 years vs the msci.
    Hunter Hall - Managed Funds - Value Growth Trust - Performance

    Just giving them some credit where it appears it could be due. Might be wrong. If those numbers arent after fees (i think they are), then it's probably not that great. Some of their other funds have gone quite badly. One concentrated fund has gone incredibly well recently, up 100% in a year or something stupid. Some, like the LIC you mentioned, just pretty average.

    I don't think I'd invest with them myself. The reasons of a hot shot investor, recently highlighted, certainly being one of them.
     
  12. Nodrog

    Nodrog Well-Known Member

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    More goss in relation to the above:
    Wilson has a 10% stake in HHL from memory so interesting times ahead for shareholders. Fortunately being invested in boring old things I can watch from the sidelines whilst they play their silly games.
     
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  13. Jack Chen

    Jack Chen Well-Known Member

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    What are your views on the market now? Any value to be had?
     
  14. Nodrog

    Nodrog Well-Known Member

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    Hard to know really. Many suggest there's little value to be had. But markets have a tendency of surprising. I can only roughly tell two things in the market the more obvious one being fear / gloom and the other not so obvious one being euphoria / greed. It would appear that the market is somewhat venturing into the later. Political and military issues are looking increasingly worrysome. Seems to be no shortage of potential triggers for a market shock(s) in the coming year.

    That said there always seem to be excuses not to invest. Probably for most it's best to just keep nibbling away as no one really knows what's going to happen. When buying LICs you're eliminating stock specific risk so then it comes down to what's the best value when choosing between them. Importantly they're dividend focused so should capital take a hit due to a market downturn income continues to flow to the investor.

    Note also that I'm a retiree now. We've achieved our income goal so topping up our holdings is optional. Hence why I can choose to sit on the sidelines if I desire and patiently wait for a gloomy market. Accumulators don't necessarily have that luxury.

    I've mentioned previously that I've been out of the market for up to two years at times. But that's typically been after a monumental buying spree when the market tanked. When share prices started rising again the focus then turned to repaying LOC(s) and rebuilding cash buffers. But even prior to the GFC crash I was still nibbling away at some LICs including discounted SPPs etc. When yields sank below 4% for the major LICs I lightened up noticeably.

    As for me now there seems to be a bit too much enthusiasm out there in the market. Hence given our circumstances I'm not really looking to buy anything. As a result I haven't been looking at our portfolio and LIC NTA etc. Given the question I just had a brief glance. One LIC that appears to look cheap relative to the market (and often does) is WHF.

    Finally as always our LOC(s) are at the ready should the **** hit the fan. And speaking of the use of debt for buying dividend paying shares my following post (in particular Thornhill's attachment) in the Thornhill thread might be of interest. Some here will be familiar with the strategy:

    Peter Thornhill
     
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  15. johnpendlebury

    johnpendlebury Well-Known Member

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    FGG looks like it's trading at a discount to its NTA
     
  16. johnpendlebury

    johnpendlebury Well-Known Member

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    How come WHF have not increased their dividend per share since 2009? it was 17c/share in 2009 and remains so in 2016.

    Seems unusual for an LIC whose goal is to "grow dividends over time".
     
  17. 158

    158 Well-Known Member

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    2007 and 2008 WHF had huge gains: 34.9c and 53.9c per share earnings. Since then their earnings have been: 16.5c, 1.5c, 13.8c, 8.5c, 13.5c, 15.8c, 16.7c, 16.6c per share. Cant grow dividends if you aren't earning them. Eventually, if they cant increase their earnings per share, allocated capital for dividend return will diminish completely....and you may see dividends fall.

    pinkboy
     
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  18. johnpendlebury

    johnpendlebury Well-Known Member

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    I see. So basically they haven't performed well enough to grow dividends.
     
  19. Nodrog

    Nodrog Well-Known Member

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    Been discussed previously. I like to look at NTA growth in addition to the dividend as the publicly reported accounting result summary doesn't always tell the full story. See page 10 (NTA accumulation performance) of the following Bell Potter Research report. In particular the NTA performance comparison over 7 years when the other older style LICs (AFI, ARG, BKI, MLT) started increasing their dividends after the GFC whilst WHF didn't:

    https://cuffelinks.com.au/wp-content/uploads/LIC-201609.pdf

    The static dividend seems to be the main focus of investors. If that or a potential fall in dividend concerns you then perhaps avoid WHF as one needs to be comfortable with what they hold. In my case I'm quite comfortable holding it just like the other above LICs mentioned. The smaller market cap of WHF and higher fee compared to the others means I demand a greater discount when I buy.
     
    Last edited: 29th Dec, 2016
  20. johnpendlebury

    johnpendlebury Well-Known Member

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    As it should be given that this strategy is about providing an income stream. Ideally, this income should be built over time with additional accumulation as well as growth of the dividend pay out. The compounding effect of growing dividends is large.

    It seems unusual that proponents of this strategy talk about not worrying about the share price and only to focus on the income flow, and yet in your post above you are trivialising both the static dividend as well as a potential dividend cut?
     
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