LIC & LIT Listed Investment Companies (LICs) in 2016

I, Thornhill and numerous other oldies whom I know have held WHF for a very long time. During the GFC WHF didn't cut their dividend whilst others did. Others then started to raise their dividend whilst WHF stayed static. WHF may or may not cut their dividend in the future. So could the others. Trump might declare WWIII tomorrow.

LICs are unusual beasts. Dividend smoothing and trying to maintain a growing dividend in difficult times through drawing on reserves etc will always be reflected in total return NTA.

But I don't profess to be an expert in these things by any means. I can understand new investors having concerns about such issues but for those of us who have held these for a long time, experienced good and bad times and have faith in the strategy we continue to hold and add to our holdings.

So no I'm not trying to trivialise the dividend issue. It might seem that way but realise that I'm looking at these things from a very long term perspective, previous experience and that WHF has been a rewarding holding for us. Many view the long term as 7 - 10 years whereas to me that's considered short term. WHF is the oldest LIC out there having been around since 1923. I like to think they've done something right to have survived and prospered over that time. Finally it needs to be kept in perspective. WHF is about 8% of our portfolio from memory. Hence it's not something for us to lose sleep over. MLT our largest holding is significantly more than that.

I think I'll refrain from mentioning WHF in the future as it always seems to draw fire.

 

@austing is it too much trouble to ask what % of your portfolio is tilted toward MLT, just curious thats all.

 

Thanks for the explanation.

No need to be so sensitive. You have provided a lot of very useful information in this thread.You have clearly achieved your goals with your strategy. don't interpret questions/pushback as a personal attack on you. If WHF draws fire, then you can simply answer the questions/arguments against it and it's up to the poster to accept your explanation. Should be no skin off your back really whether or not they agree with it.

 

Please don't There are many of us quietly reading these very informative threads, learning a lot though the various comments

 

What he/she said ^^^^!

 

@austing maybe now that the thread is so long, we can have a "FAQ - read this first" section. And one of the questions at the end can be "Why hasn't the WHF dividend gone up?"

 

Of course I'm going to be sensitive, trying to answer all these questions (especially a repetitive one) is keeping me from my afternoon home brew session on the deck.

 

Probably easier to agree and say WHF's crap. Everyone would be happy then. Note that others like @jhmtaylor who have performed in depth analysis of genuine "statutory" profit for WHF consider it to be one of the better performers over 5 years based on total return NTA after fees:

Listed Investment Companies - Fundamental Analysis (WHF)

As you can see everyone has differing views.

Anyhow I tried to ring WHF today to let them know that defending their performance is interfereing with my quality home brew time. Away on break of course. Will be demanding a detailed explanation when they're back after the break. I have a number of questions.

 

A small discount there. Seems to be behaving like many new LICs which have outstanding bonus options. Performance generally (but not always) tends to be lacklustre until the options have expired. Dilution concerns always at the back of many new investor's (who didn't participate in float) minds. Slow build of dividend, very low currently and no interim dividend won't excite many typical LIC investors (SMSF's and retirees). They get excited about the float, jump onboard a couple of percent worse off (listing fees) from day one then lose patience waiting for the dividend and price to build. Want to unload but new investors concerned about options equals potential weakness. Occasional buying opportunities pop up also due to options concerns and weak demand especially when market shocks occur. I took advantage of this awhile back. It's always worth watching these around option expirary date especially if the price is near or below issue price. Some nice buying opportunities can occur at this time.

I hold a decent stake in FGG (multi-mgr) given that active Mgrs seem to go through good and bad times and particularly because this LIC is one way to get these quality Mgrs without the hefty fees which can be a significant drag on performance. Overtime the expectation is for a modest ff dividend. Wilson knows the importance of dividends to LIC investors so will be keen for FGG to deliver on this overtime.

So VGS for passive, FGG for all things active and PMC an old holding but with a heavier tilt toward Asia and a relatively reliable dividend round out our International exposure.

@johnpendlebury, sorry if earlier posts seemed a bit abrupt. Trying to answer too many questions at once. In regard to Peter's thread I got in touch with Peter again specifically because many seem to think you have to earn a huge employment income to get an outstanding result. Bit of frustration setting in. But have had my overdue home brew intake now so back to normal.

 

Not I, I need the constant reminders. I was a bit down on WHF a little while ago after jumping to incorrect conclusions.

Reread some of the bell Potter report has WHF 5 year NTA performance second only to MFF (which cheats for comparison with a low payout) and CIN.

Might need to admit myself to the dementia ward if I rant about WHF again.

 

CIN, now there's an exceptional performer in recent times. Rediculously low fee of 8 (10?) basis points from memory. A favourite of Daryl Dixon and other old timers. Trouble is the portfolio is around 47% EVT. A single stock heavily influences the performance of the entire portfolio. Which has been great in recent times. Strongly influenced by Alan Ridge who just also happens to be the chairman of EVT.

How Alan Rydge quietly amassed a $1.5 billion portfolio

Due to the EVT issue would only be tempted (maybe not) to consider this one in a down market when CIN is trading at a significant discount. There are others I know who would strongly disagree with me.

@Hodor, in relation to the dementia ward you're too late. I just got the last spot.

 

Around 17 - 18% from memory.

 

Bought a little SOL recently. Small holding, since it's not really as diversified as LICs. A bit like CIN in that regard, I guess. But in it for the sober, long term focus and performance, and long term dividend growth.

 

Wow, in a bizarre twist, and following on from both discussions on Hunter Hall and Soul Patts... SOL is acquiring Peter Hall's stake in Hunter Hall!

I just skimmed this, but it seems they're buying it for $1 per share! And HHL is currently over $3. Just on the surface, it appears that this is very good for SOL, and Peter Hall is taking a very low price? Maybe he just really needed to sell quickly, and knew SOL would be good custodians, and knew they wouldn't overpay?

As I said, just skimmed it, that's my initial reaction only.

Edit - just an addition - the market cap of HHL is ~90 million, meaning a 20% stake is under 20 million. Which is a tiny dent of SOL's market cap. So it might be a good deal for SOL, but a very, very small... good deal.

http://www.asx.com.au/asxpdf/20161230/pdf/43f260dmzymg9l.pdf

 

Something smells fishy.

Hall could have trickled sell down his stake @ +$3 all the way down to $1 if he had to, but struck a deal @ $1?

I dont think this is the end of the story just yet.

pinkboy

 

Party with neighbours today so no idea what's been happening in the world.

@BingoMaster, admit it you had inside info before buying SOL. And you didn't even let us in on the deal. Shame, shame, shame.

With Wilson holding 10% of HHL I'd be surprised if he doesn't feature in some deal.

Haven't looked at the detail but not sure what the heck SOL are going to do with the International component of the portfolio? They don't have expertise in that area???

Agree with @pinkboy, something more involved going on.

 

Re SOL,

Extract from AFR:

 

Don't apologise mate. I just wanted to make sure you also didn't interpret my questions/comments negatively. As others have said repeatedly, I very very much appreciate you taking the time to outline this investment strategy and then to also answer what must seem like very simple questions to you. You don't have to spend your time doing that and yet you still do, so thanks very much again.

 

interesting. it doesn't even occur to me that you can just contact them and ask questions. seems obvious though, you are after all a shareholder.

what sort of questions you keen to ask them?

 

No, I don't so. The question was put as to how he was able to put together a portfolio that initially was producing approx $1000/yr in dividends to one that was producing approx $400,000/yr (what he said he was earning in the video posted) in the space of about 15yrs.

I think if you do want a portfolio that produces those sorts of dividends over that time frame then you prob do need significant earning power to put away large $$. But 1) you don't necessarily need 400k/yr in dividends to retire and 2) you can do it over a longer time frame than 15yrs