LIC & LIT Listed Investment Companies (LICs) Q2 2018

Bki is now trading at $1.5 so the offer isn’t even at a discount

 

I don't have much experience in these matters, but I would imagine this happens a lot after SPP offers. If it's possible to get the shares for $1.50, then the market will value them as such. The only advantage of the offer is you save a few bucks on brokerage...assuming the price doesn't plummet further. I'd be pretty much obligated to buy on market if it came in at $1.48 or something.

 

Does anybody know if the recent trip that Will and Tom took to Omaha (BRK annual conference) was paid for by BKI shareholders?

In previous years, they had a line within the report that they (Will & Tom) self-funded the trip and did not cost the BKI shareholders any additional costs. Not sure if it was the case this time as I could not find it in the report. But I will admit I was not looking close enough.

Interesting report nevertheless if you want to read about it. They even had a tour of an Amazon fulfilment centre in Seattle and a Boeing factory.

https://www.asx.com.au/asxpdf/20180521/pdf/43v5p0nm3dpjsn.pdf

 

Couldn’t find that info on costs either.

Must admit the report was mildly interesting but not great. Not much spoken of translating their findings to companies they like here.

They did speak of the (possible) opportunity in CBA currently likening it to Wells Fargo. I’m sure no-one else has thought of that stock idea

 

The fact that they referred to their trip overseas as “research” suggests perhaps Contact might pay for it?

 

Just been watching WDE from afar and it always seemed likely that the wealth protection strategy as it stood would be changed.


Never owned the shares. Was keeping an eye on it in the case it traded at a big discount and they could remove the protection at an opportunistic time. E.g. They make an announcement like this after the market has corrected by 10% or so. But I would also have hoped for more clarity of their strategy going forward. Possibly get rid of the protection altogether if the market slumped and also run it without a performance fee.

Obviously didn't pan out that way.


It is a bit of a worry that they may be removing the protection after the ASX has been strong the last month or so.


Now it seems more at the mercy of their "expert market timing" with regards to protection strategies. Despite the management fee cut the discount doesn't look attractive enough for me.


I think it was poor form from management as I felt they never gave any solid indication why the protection strategies were expected to add value in the first place. Just marketing spiel to seduce investors who love to think they can get all upside of equities and protect their downside at the same time.

 

Thanks Steve.

Activist opportunity aside, for longer term investors is WDE something worth holding anyway? Nothing overly attractive on offer. Probably better to buy something like FGX when opportunity arises. A decent slice of downside protection through absolute return and the like. Not much difference in base fee and NO performance fee.

 

Some food for thought. SOL holds about 10% of BKI and it is apparently going to take up its Entitlement Offer (it isn't an SPP by the way.) SOL also holds 20% of Contact, the management company for BKI. As I have indicated ages ago when there was all the brouhaha with Pengana Capital taking out HVV, SOL has a position in Pengana, so it could be an idea when in doubt to take a position in the "ticket clipper." Sometimes ya don't have to hold directly in order to get a cut.

And @oracle, regarding CSL this dummy here is a prime example of what not to do. I stopped buying the buggers when they were around $10 because I thought they were too expensive at the time.

Never, ever follow what I do. You could end up broke and in a state of regret.

 

Probably. I have spoken with a few who took up WDE at the float and I gained the impression they held the view it was designed to protect the share price. Never got to grips how that could be the case.

 

On Contact account.

 

Bloody mob of crooks. I’m going to report them to the Royal Commission.

Maybe they’re leading up to offering a low cost International LIC? Although based on URB rubbish it would appear they’re heading in the opposite direction fee wise.

 

Just a quick one - SPPs and entitlement offers (plus the general offer in this case) aren't the same thing.

Worth knowing the difference and how that affects things.

 

I think the actual management of the company has left something to be desired. I'm not sure the product was ever really appropriate but I can see why some bright spark launched it.

Having said that, I would have preferred them to keep the constant protection. Always felt comfortable owning that one at a discount because in the event of a pullback it would presumably hold up pretty well.

I've been in and out of this one a couple of times already and am probably going to start building a position again. Pretty sure all this one needs for the discount to close is some better performance from the equity manager.

 

I hear there will be no intl LIC. Too hard and no resources.

 

It's not beyond fixing but I was just underwhelmed with the changes announced. How are they are they going to implement their discretionary protection strategies from now, very light on any detail. Who in the team has a track record in this market timing that justifies this?


I think they can be satisfactory enough with the stock picking on the long side.


Will be interesting to see if Wilson supports all this. If it traded at a 20% discount and I could see some further improvements in communicating the strategy or other changes it might get tempting.

 

From a longer term hold point of view I agree with how you summed it up there.

In the long term though I'm not sure WDE will stand in its current form. If their performance struggles in the next few years Wilson can argue it should be merged into his funds. I.e. He invests with plenty of cash on hand in the portfolios that give investors some protection in down markets anyway.

 

Regarding WDE I also wouldn't mind betting that in the future their reporting of performance figures will look different.


One day there might be a tiny asterisk that you need a magnifying glass to read and say something along the lines of..


"Performance numbers since strategy changed in 2018."


One day the terrible figures of the first few years will magically disappear from all of their reporting.

 

Agree with this

 

Story sounds familiar

How I saved and invested to retire at 28

No Idea why they put a photo of @Nodrog in there though

 

I think we know this bloke! Looks shocking for 28 though...

@Snowball ;

Our strategy? Simply don’t buy stuff we don’t need. And that turns out to be a lot of stuff!

can i get you to talk with my wife?