I asked about overseas. They do not hedge exchange rate...

I asked about overseas. They do not hedge exchange rate exposure, but buy two shares offshore in sectors they know. The example he gave was 2 Canadian gold miners one long one short.

He argued the track record was good and they had just made some mistakes and had a really bright team and would perform again as they had in the past. He did say what mistakes they had made, or how they had adjusted the strategy which I found annoying.

ALF had been say long Westpac and short ANZ, but it was not clear if they were hanging on hoping the view would eventually be right, or had taken different bets. It was "trust us". Many of the team shown (they were not there) seemed extremely young and inexperienced. They may be bright, but they had limited track records.

I agree with him that it is usually better not to buy shares at a large premium to NAV, but I don't recall him saying that previously!! You can argue ALF has a double market exposure compared with a long only fund with is exposed only to the extent of its NAV. ALF is exposed to both shorts and longs (which is double the NAV) and if they are any good they can make money on both. If they are not they can lose money on both of course.

The audience kept asking for yield and he kept saying he could not guarantee yield as it depended on future performance. A lot of the shareholders had clearly bought the stock for yield and I suspect many did not understand the strategy. His reply made the audience more restless and he was asked if they could not change the strategy to get some franking credits from dividends on longs. He then said that was not possible as they have to compensate the people they have borrowed shares from to short with franking credits. I suspect many there could sell if the poor performance is not righted soon. I agree income seekers may go elsewhere as long only funds can be more certain providers of franked dividends from shares held plus a top up from capital gains. ALF relies on capital gains alone.

The audience was very restless and he left quickly at the end so people could not talk to him afterwards. It was a poor performance.