“We’re all worried about the direction of the share price if the...

“We’re all worried about the direction of the share price if the results go either way”

rothet5153

To some extent, I share your angst because I still have a middling five figure holding in CTN, but seriously, such concerns about the CTN share price are a bit late.

Just take a moment to review what has happened to the share price since Stevens, Ferres and Fowles were replaced as directors. To recap, Stevens et al evidently came under attack from folk friendly to CGA’s interests because they had the temerity to appoint another investment manager, OC Funds Management, who actually did perform, albeit for the short time that OC had the small fraction of the portfolio to manage.
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	Column 1	Column 2	Column 3
0	Date of event or announcement​	Event​	Closing SP on preceding day​
1	30 Jan 2017​	Notice of requisition of EGM to replace Stevens, Ferres and Fowles as directors.	$1.11​
2	27 Mar 2017​	EGM held and directors replaced	$1.00​
3	19 Oct 2017​	CGA announce that they a have assigned the right to manage our CTN funds to Naos in exchange for fees to be paid to CGA.	$0.93​
4	18 Nov 2017​	Now​	$0.925​

So with most of the funds being managed by CGA ,and latterly with all the funds managed by Naos, the CTN SP is down 16.66% over the period.
Meanwhile, the XSO is up from 2373.8 to 2657.8, for a gain of 11.96%.

That’s a difference of about 28.6%. The drover’s dog could have achieved XSO gain with a diversified small cap portfolio, but evidently not the folks who have been managing our CTN funds. (Without OC Funds positive contribution with the small part that they managed, the result would have been even worse.)

I am not entirely unsympathetic to Naos’s value investment approach.
Indeed I have made money by paralleling their investment in BSA.
But, as far as I am concerned, Naos's position with CTN shareholders is blighted by the way they have attained effective control of CTN’s funds.
It is hard to avoid the conclusion that the only reason that Naos got the gig of managing CTN’s funds is because Naos have a big holding in CGA and did a mutually beneficial deal to save CGA's bacon. CTN shareholders interests were immaterial.
Prudence precludes me from saying what I actually think about the CTN board’s motivation in acquiescing to the deal and the transfer of the management of CTN’s funds to Naos.

CTN shareholders need to prize Naos’s and CGA's fingers off our funds.
CTN shareholders need to boot out the existing CTN directors and replace them with directors who do not have any interests or allegiance with the investment managers or any other related party.

With respect to the CTN share price, in my opinion, the damage has largely been done.
The CTN SP is well below the NTA, and, as of the last NTA notice, much of our CTN portfolio has been turned into cash.

In my opinion it was ill judged of Naos to start managing the CTN funds before their appointment was, in some way, ratified by by CTN shareholders at the AGM.
In taking it on now, Naos have put themselves in a, dammed if they do, dammed if they don't, position. Arguably Naos's reported mention of Armageddon, if the AGM motions were to fail, could be seen as a tacit acknowledgement of the recklessness of Naos having embarked on managing the CTN funds before obtaining some sort of validation for the change at the AGM.

I might be wrong, but I think the only share prices that will suffer if the CTN AGM motions are voted down are CGA and Naos’s NCC. NCC evidently has the big holding in CGA.

Furthermore, because defeat of the motions conceivably could usher in the prospect of CTN holders being offered the possibility to cash out at something approaching NTA, the CTN share price might even appreciate if the motions fail. That is purely a speculation, but if a new CTN board wanted to regain any trust in the LIC after these shenanigans, that would be a step that they would have to seriously consider. .

I have voted my shares AGAINST all the AGM motions.

If you have already voted online you can still change your vote online. Otherwise contact Computershare.

Cheers

These are my opinions only. Nothing that I have written here should be construed as disparagement of any of the parties or entities involved. For all I know, all of the parties and entities may be completely convinced of the correctness of their actions and be acting from the highest possible motives with all due skill and care in accord with their various responsibilities and obligations. Any figures and facts are mentioned in good faith but I accept no responsibility for their accuracy