The article has too many holes in it but some points.* Some Lics...

The article has too many holes in it but some points.


* Some Lics do pay dividends out of capital and that is fair criticism. But returning a small percent of capital gains along with dividend earnings seems fair to me to give unit holders a smoother hold.

* The Likes or Arg or AFI 80-90% of their assets are blue chips banks, miners etc and hold miniscule amount of small caps so no ramp buying of illiquid small caps will make much difference to their NTA

* The larger LICs have no performance bonus policy and even if they did the bonuses would relate to the underlying portfolio ie NTA not the LIC share price.

* He talks of unsophisticated shareholders I would like to see him say that to Robert Rich, Bob Patterson in ARG or Bruce Teele or Terrence Campbell in AFI take a look at their personal holdings in these 'ponzi schemes'.

* Cash flow (no mention of earnings I noticed) Well lets have a look ARG Cashflow earnings and dividends look something like this (source commsec)
2011 Earnings 2011 Cash Flow 2011 Dividends
28.1c 29.1c 26c

2010 Earnings 2010 Cash Flow 2010 Dividends
26c 26.7c 25c

* His criticism of LIC Management fees seems odd good luck finding manage funds with fees under .20%

I noticed Michael West was reading directly from this guys sheet and got egg firmly planted in his face from DJW
http://www.smh.com.au/business/beware-the-endofyear-share-buyback-20120625-20xd8.html