re: 6 dollars for first time in its life, page-10

re: 6 dollars for first time in its life "CK, Why do you hold the various LICs (AUI for the kids?) when you have all those other individual holdings?"


Several reasons.

I own *each* of ARG, AUI, DUI, MLT, CHO, BKI in *each* of the various family accounts (self, wife, joint, SMSF, 3 kids, and two special purpose). This gives me more than 50 distinct opportunities to participate in SPP's, Rights etc. There is always a need to commit capital to investment and I can pretty much allocate a fair amount this way on favourable terms automatically, without too much thinking.

Why those particular 6 LIC's ?
I have said before that most other LIC's are a waste of space (although you can talk me into agreeing that AFI are OK now).
The plain fact is that those 6 LIC's have good quality portfolios and very small management expense ratios 0.1 - 0.3% and getting smaller.
They are also run my people whom I respect. I have always held the belief that people from operational business backrounds make for better investors than those who only have financial backgrounds (like stockbrokers, analysts, financial planners etc).

Also bear in mind that I make most of my LIC purchases at times when they trade at substantial discounts to NTA. I am pretty much *live* on NTA's, I dont have to wait for the monthly updates to the ASX. I probably have as current information as the officers of the LIC's themselves.

Therfore, my aim with those good quality LIC's is to get all of the long-term returns which the underlying portfolios will deliver (and as we have already discussed the historical performance compares more than favourably with the market and all other LIC's), plus the initial discount as a margin of safety.

As for the kids, I decided early on that they would get from me :

a) A good education
b) Practical investment advice. This is why I got them involved with AUI. I want them to see what this saving / investment caper is all about.


As I said earlier, this LIC stuff gives me immediate exposure to the market and allows me to specialise in those direct investments where I can get an edge over the rest of the market, through superior research and analysis. This allows me to bet big and clean up when opprtunities arise. Obviously, because there is only one of me and only 24 hours in a day, I need to be very selective and focused with my direct investments.

This pretty much covers what I do.