LIC & LIT Listed Investment Companies (LICs) Q3 2018

Yeah, it can dilute but what the heck? Those who don't take up the full Entitlement, or only partially do so, are diluted. Happens all the time with SPP's. I'm not going to lose any sleep over it.

By taking up the Entitlement Offer the various portfolios I'm involved with will have enough. Don't want the numbers to get too much out of whack.

 

Re PIC, it appears at least Perpetual is paying all costs unlike BKI’s recent raising.

 

Seems to be the case which is nooice plus the shares will be entitled to the dividend of $0.033c franked @ 27.5%.

For those who may participate in this company's DRP, note it will be temporarily suspended due to the capital raising so it may be an idea to ensure the share registry has correct banking details.

Some further info. Unlike a number of offers, the personalised application form doesn't seem it will be available via the share registry but applications can be made online through the company's website.

 

https://www.asx.com.au/asxpdf/20180820/pdf/43xgndtg2w8pdx.pdf

 

In regard to PIC the only criticism I’ve had is in regard to how true to label they are. This is their stated objective:



And here’s the portfolio’s top holdings at 31 July 2018. The major holdings are all large cap and only 7% is invested in International. They’re a value Mgr of course so this plays a role but not exactly what one would expect if they chose the Mgr based on their mandate of typically mid cap exposure and a decent chunk of International:

 

Ooh I missed that so thanks for the heads up, very nice indeed at good discount.

 

Sold this morning around the $1.19, will look to buy back around the $1.12, worked with BKI and others.

Or may end up buying back at $1.19+

 

Thanks for the information. No doubt the large cap exposure played a big part in increasing dividends. The ex date for the entitlement offer is Wednesday 22 August. For someone who doesn’t own any PIC shares, would a small purchase made today entitle them to participate in the Entitlement and Shortfall Offer? T+2 settlement would also be the 22nd.

 

Interesting stuff.

CSL has just taken over Westpac today as the third largest company on then ASX with a market cap of $97.6B versus Westpac at $96.6B.


BHP is sitting at $104B so it’s would only take another few good days to get to the number 2 spot.

Our four top companies used to be the four big banks.

But now the top 3 are from different sectors. That’s a positive development I think

 

On that basis, go DUI, with CSL it's top holding, and WHF where it's one of its top holdings.

 

I talked myself out of DUI a couple of years ago not convinced on the way they have been adding international exposure via sector ETFs, still thinking on that one.

 

One of indexing greatest strengths to be fair. From memory BKI for example generally thought CSL overvalued for quite some time so has avoided it. The index didn’t care. Positive skew at work!

Then again if you buy DUI perhaps you get CSL at a discount?

Just to be sure I own both the index and LICs.

 

Been thinking about this a lot recently. Not just because of CSL but the general point.

I’m coming of the view that I don’t want to miss out on some of the best dividend growth stocks because the LICs were maybe quibbling over the multiple.

I don’t hold it against them to be cautious and somewhat value oriented. But I just think some of the best companies over the long term always look overvalued, yet the business keeps delivering and goes on to justify the valuation.

So while I still prefer the LICs I’ll be adding the index to my portfolio as well to capture this effect.

 

@Snowball @Nodrog the thinkers always come around given enough time....

MwahaahahahhaHHAAAAAA *cough* *splutter*

 

You’re very evil.

 

@Snowball if you haven’t already seen it this previous post of mine in relation to positive skew might be of interest. It’s probably one of the main reasons active Mgrs struggle to beat the index even “before fees”:

Listed Investment Companies (LICs) in 2017

I still choose to own both index ETFs and LICs as each have advantages / disadvantages. My allocation to index ETFs has increased noticeably over time however.

Might be a good topic for your blog? I’ll be expecting payment of course preferably not in Bitcoin.

 

CSL is never a stock I would have bought if it wasn't for VAS.

The various ASX accumulation indices always just keep going up and up and up.

Imagine a scenario where you are only allowed to pick one stock for 30 years, that has to withstand recessions, financial crises, bad management, regulation & government policy, competition etc etc. What stock would you pick that will not go bankrupt and is virtually guaranteed to go up, and will still be there unceasingly carrying out its one consistent and proven philosophy and purpose that has withstood the sands of time?


Fortunately, you can pick one. A basic index ETF.

 

lol give me long enough and I’m sure a couple of other nuggets (well known by others) will sink in!

 

Thanks @Nodrog I hadn’t seen your post but read that paper and similar articles elsewhere.

Mustn’t have been paying attention! See, you should repeat yourself more

Yeah it’s a good idea mate, I’ve previously noted it down since its such an interesting topic that perhaps not many people know.

And this is the factor that stuck out for me as a major reason for indexing that doesn’t usually get much mention (I don’t think?).

Besides, by tainting my portfolio in this way I’ll have some explaining to do

 

Interesting. ALI final dividend of 2.5c and it's franked as well at 27.5%