the worst of about 20 lics, page-8

The Big M hi.

1) The share price is driven primarily by results, with sentiment on top. The only reason the share return is great at 19.1% is because share prices were significantly discounted early in that period. That discount has now reduced significantly.

……..I’m sorry
Friend, this is bizarre. You are telling me that you aren’t happy that the share price has delivered 20% pa / 3 years…because it only happened through the discount coming in?




2) This is not something you can rely on to continue further, and it won't. It's only a rare LIC that is priced at a premium, in good times.


…..If there is one thing I have learned the bad way, it is that the sharemarket wins.
What you are telling me is what I was telling my wife in 2004- no, don’t buy that house, it’s a bubble, they’ll come down. You are telling me that the discount can’t compress further, so won’t buy it.
Amongst other things, is this showing that maybe you don’t know why you are invested in an LIC? (you are buying future performance) Clearly, the market to the end of June said it believed the value of the portfolio was going to go up…and they were happy to be buying CTN at a discount in that time too.
Months like July and August giving 17% just proved they were right.
Again, I don’t get your problem here??





>>>>Now you might be overly optimistic and believe this is possible for CTN. However, this will only improve due to the figure you disregard, which is _management performance._Management performance is most apparent by achieving an increase in NTA. While you disregard this, this is actually their business. The results that you ignore in the Performance column show what their achievements were. Over 3 years, that a -0.1 p.a. loss. Now you might say that's a bad market, but that's what the second grouping is for: Value-Add.



………Let’s look at that -0.1% in context. hmm, 99.999999999% of people who invest in the sharemarket do not care about this. They can’t eat it, they can’t spend it they can’t pay tax on it or go on a cruise with it. NTA is irrelevant. Let me tell you what matter
SHARE PRICE GROWTH. If you are invcesting in the share
If you feel very strongly you can go to the AGM and stand up and express this to the board and portfolio managers and sales people.
Tell them that hey, even though Micro’s index did -8% over that 3 years, and even though Small Ords gave us -2%pa, (and these don’t include the reality of fees taxes or trading costs I might add…never mind the money they spent our of the NTA to squeeze the discount and get more return to shareholders.)
Yes, please stand up and tell them they should all resign because sure, the portfolio team smashed their relevant indexes, sure they company gave you 20%pa over 3 years, but hey, the NTA did nothing!
I mean really, how on earth can you complain?





>>>>>>That actually shows management selection lost a further -8.1% p.a. over 3 years. That's terrible! That means they've lost money compared to if you'd invested in an index fund, or their benchmark.


….Hang on, are you for real here? Can I ask how you can beleive what you just wrote?
That underperformance is to the All Ordinaries Index..this isn’t a large cap company, surely you understand how different microcaps are and how badly they have comparatively underpeformed?

I mean you have to know that surely? I’d expect most every single one of us are on HC because we trade micros and resource stocks and know how bad the last 3 years have been.

Also, the benchmark for them is only for their Outperformance Fee. That is the All Ords, and thank goodness. Could you imagine if we’d be paying that each year the last 3 years on their outperformance to Small Ords and Microcaps Index? We are lucky they benchmark to the All ords (not that I know why its not a real micros index) or they would have reamed us with $10m in performance fees



>>>>>>>With that trend, the discount will only _increase_ again if anything. Compounded with a negative return against the benchmark, you are more likely to lose money than gain in future, unless they lift their game.

You can have blind faith and optimism as you do, but the results to date from that table show they are a poor investment.


Seriously, you don’t know enough about microcaps and even less about LICs

Discounts and premiums. Big deal

If they deliver 40% NTA growth next year and only 30% Share Price Growth their discount will go wider.

I’m prepared to accept that misery

Or, Jerriwarrah is on a million percent premium, and imagine it does 5% NTA growth and gives you a whopping 7% share price growth, its Premium gets bigger

Can I summarise this clearly

Discount is simply an opportunity, but you can't eat it or spend it
Share Price is what we live off of
These guys have done an incredible job hanging their NTA in there over the toughest 3 years known since adam was on earth, and in giving us a good share price return.

My sentiment is None because I am just not sure where the market is going