LIC & LIT QV Equities Limited (QVE)

QVE Fact Sheet:

http://qvequities.com/files/1606_QVE_factsheet.pdf

 

QVE has been an interesting experience for me recently as a test for my income focussed investing.

It's a large holding of mine, and has gone up a lot. This both makes me happy on first impression, but actually annoys me slightly because I will have a bit more money soon and would like to buy a little more. Now, the yield is quite low. That's fine really because I've sort of put it in the "low yield, income growth" part of my portfolio.

I'm tempted to sell a little and buy some more PMC, and chalk this up to "rebalancing". But it's not time to "rebalance" and i haven't even laid that out as a strategy of mine! Also, I already have plenty of PMC, having been buying more recently.

Im just rambling here, so I can learn from my emotional reactions and maybe someone else might as well.

 

Oh and I should say - I haven't sold any, and don't intend to. That's not my strategy. Just noting my temptation to do so...

 

Someone once said, take 2 aspirins and have a lie down and wait till the urge to sell goes away.

 

Like @austing says, just because it has had a bull-run recently, does not mean it will continue on forever. I am going to wait for the small(ish) caps to complete their bull-run. There will come a time in the not too distant future when the small caps will be out of favour and the big banks and TLS will be all the rage. Time to load up on these bad boys then (QVE & MIR).

Till such time, I just look at the green next to QVE everyday, smile and look elsewhere for opportunities.

Not advice.

 

I have similar mixed feelings. I would like to have another bite, however after its last run I don't want to pay the price/premium.

 

QVE has a rocket under it at the moment was up 3.25% today at one point. Don't know if newbies are forgetting to set a price limit on their orders or what?

QVE are intending to get their yield higher than where it is at the moment. It generally takes a few years to accumulate sufficient reserves etc and get to their desired dividend level. I recall Anton saying he'd like it around 4% or higher plus franking.

I've been researching more into the new IML Equity Income LIC (QV Income) by looking at their existing unlisted version of this. I keep changing my view on this one. Yes, then no then maybe yes again now. Must be geriatricism setting in. The IML Equity income fund has done very well. Looking at the "total" return it is a great performer with higher income and low volatility. Perfect for retirees and those seeking income. And now QVE has taken off this bodes well for interest in their new LIC. Given the much poorer quality DJW at a steep premium I do think QV Income may also eventually develop a significant premium. Really looking forward to seeing their prospectus next month.

So @bingomaster perhap keep your cash on the sidelines for the new QVI LIC. QVI being high income and "potentially" lower growth would nicely complement QVE with its higher growth and relatively lower yield. Remember PMC can be erratic with their dividends and have cut them at times. The new QVI LIC once it's established should be a much more reliable and higher dividend payer than PMC. Just an idea.

Anyhow I'm personally keeping cash aside for the QVI IPO if I determine it's a yes after seeing the prospectus etc. if I don't like it over the longer term I've got a feeling it won't be sold at a loss given DJW's history. And there are options which if in the money can be sold or used to double one's holdings around 18 months down the track. Options don't concern me if the LIC looks like it will do well. I saw your post on options the other day. They're not always a bad thing, it just depends on the situation. But no guarantees of course.

I'll start a new thread here for QV Income as soon as IML announce the ASX stock code and final name.

Cheers

 

@orangestreet I was referring more to MIR (ex-50) and WAX in particular which have been at significant premiums. QVE has been around fair value and it is only Ex-20 which means it can still hold quite a few larger stocks in their portfolio if they choose. Just not the top 20. So I'm not sure QVE will come back as much as the other two but anything's possible.

 

Cheers for the reply @austing. Your views on QV Income + QVE mirror my own (unless you're currently at a "no" for QVI haha. Mine is a "maybe", leaning towards yes). I think potentially together they should go very well. I saw somewhere that QV Income will be mostly large cap focused, and am hoping it will be so it will complement QVE well. QV Income's option strategy along with IMLs stock selection should help me feel better about investing in the concentrated top end of the market.

On dividends and PMC, I have been wanting to write them an email, actually. PMC has been erratic in the past with dividends, but I believe the change in dividend policy only happened recently - creation of a dividend profit reserve to distribute dividends even when results are weak or negative. As I'm sure you know, the last dividend was paid out even when the return to June was negative. So im reasonably confident the dividend shouldn't go a lot lower.

They also mentioned a policy of "dividend smoothing." I want to ask exactly what they mean by this "smoothing" and if it means they will try give a progressive dividend policy, like for example WAM. Anyway i should save this for the PMC thread.

 

I replied to your PMC comments in the PMC thread.

Very cheeky comment, oldies are allowed to change their minds whenever they please. Be kind to mature types, you'll be one at some stage.

One major difference between PMC and QVI is fees. PMC is 1.1% plus 15% performance fee. I'm guessing if QVI has the same fee structure as QVE it'll be around 0.9% if FUM are sizable with NO performance fee!

 

Good point on the fees - I hadn't even thought what the new IML fund would be charging.

Haha well I think its clear from my posts I change my mind an awful lot, so I'm hoping some more stability comes with age....

 

Taken from the QVI Offer Summary.

Proposed ASX Code: ASX: QVI
Minimum Amount of $100 million
Fully paid ordinary shares at $1.00 per share
1 free option per 1 share (exercisable at $1.00 per share)

Portfolio Managers - Anton Tagliaferro and Jason Teh
Number of Stocks - 20 – 40 ASX listed securities
Minimum Market Cap for Investments - Invest in companies with a market cap of at least $200 million
Capital Deployment - Up to 6 months from listing to invest at least 50% of funds
Benchmark - S&P/ASX 300 Accumulation Index
Objective - High Income - Greater yield than S&P/ASX300 yield +2% (pre-franking)
Lower Risk - Lower standard deviation of returns than S&P/ASX300

Dividends - Seeking to deliver a growing and consistent dividend paid quarterly
Fees (ICR):

0.90% p.a. (plus GST) of the NAV of the portfolio up to $150m;
0.75% p.a. (plus GST) of the NAV of the portfolio above $150m

Performance Fees - None

They plan to also use a very vanilla option strategy, selling puts / calls where appropriate.

 

hi @mikeyman123 -- do you mind posting the link to where you got the above info from? Thanks!

 

Got the PowerPoint presentation directly from Justin B - State Manager Vic, Tas & WA. Contact the relevant guy in your state and he will definitely be able to send across

Word document of the press release..

Investors Mutual Limited (IML) intends to launch a new ASX-listed investment company, QV Income Limited (QVI). IML will be the investment manager of QVI.

QVI’s investment strategy will replicate the Investors Mutual successful Equity Income Fund with an investment objective to deliver shareholders a dividend yield of 2% above that of the S&P/ASX 300 Index with lower levels of volatility to that of the S&P/ASX 300 Index. QVI expects to pay dividends on a quarterly basis.

The initial public offering of securities in QVI (Offer) will seek to raise a minimum of $100 million.

IML has already received indicative commitments in excess of the $100 million minimum and anticipates QVI and the Offer will be well supported.

Further details on the Offer will be announced in due course. It is expected that a prospectus for the Offer will be lodged with the Australian Securities and Investments Commission during the fourth quarter of calendar 2016.

IML is an Australian equities fund manager founded by Anton Tagliaferro in 1998 that manages funds in excess of A$6.0 billion as at 30 June 2016. The IML investment team is well recognised for its true-to-label investment style and conservative value-based investment philosophy with the aim of delivering consistent returns for clients over the long term.

 

Thank you very much @mikeyman123. I've created a new thread for QVI and copied your posts to there.

 

Executive Series - QV Equities (QVE) Investment Director, Anton Tagliaferro
Tom Piotrowski speaks with QV Equities (QVE) Investment Director, Anton Tagliaferro about the June quarter economic growth data (VIEW LINK)

 

Some interesting history on IML / QVE / QVI 's Anton Tagliaferro:

QV Income Limited (QVI)