Where Does The Next Dividend Come From?, page-34

Well I think the real test is $1.00 as I understand it that was the opening IPO price. many may well sell before that - I like charting but not sure if it isn't just a view on management if they under-perform the market. Not sure its got the same signals. I should have sold when it breached $1.50 on the way down. I did sell a few but thought that $1.25 was a floor.

I may give him a ring. I am uncomfortable that they feel confident in mining - they must be the only guys feeling confident. No-one here or overseas has got a handle on commodities and the impact of the mining boom is not the way I see it - Its supply that has increased too much by overshooting - as I understand it China is taking more iron ore but there is more supply as well - Its the increased supply in many commodities that is driving the price for me. This was because every man and dog believed that all you had to do was find a resource and you could make money on it. My concern would be if they are long resources as I think it needs to complete its re-balance before you can trend it.

As regards the double sided approach - I am happy with that - I think stock pickers have to trade on their wits. It must be easier to spot the dog vs the better run company. Logically I would be long BHP and short FMG any day and that would be a logical play as I think that in a price war BHP will drill FMG. Conversely I would have BHP long and no short if the market was balanced in supply and demand. In a rising price market with demand outstripping supply maybe then I would have FMG long as well but probably never short BHP.

Really I am not the expert and I don't get the insight and research that he/ they get so his unit should be substantially better placed to bet on both shorts and longs but he has to accept that if they cannot do a better job than they have done it has no real value to the investor. Running away at the meeting has me worried - does not in fact help you have to face the music and get the problem sorted.

Easier to bring people with you if they can see that you have changed the game - I must say I get worried by the stance taken as I have seen teams get locked into a play they think has to work. Remember the "Crowbotics" ( Adelaide Crows) of a few years ago - maybe Carlton would have that tag today - you cringe at the play unfolding before you as the teams seem to have worked you out. I am concerned as an investor because in looking at his charts he had.

Its almost like he has said we have entered a low growth environment so we cannot beat the market easily anymore. I am not sure I agree there must be miss priced equities in all sectors. Its the skill I invested in the ability to pick the winner and the loser. That is why I have always worried about them believing that the market they must compare themselves against is interest in the WMK fund. I could not see why you would not track say the All share as even in the neutral fund the winners should outperform the ASX and the shorts should actually improve your return.

Then I looked up the ALF performance chart - then thought wow it makes sense why his interests switched on and around 19 December from ALF to WMK as he could see that the net long strategy was not working and that the premium would not hold. I misread that thinking he was just seeing WMK as a bargain so switched and later did not look at the switch again. Now it has become evident that there is nothing presently different between ALF and WMK in this market as they are both neutral and both have suddenly sprung a leak and are trading below NAV.

Then I turned to what would make me stay in this stock - well its monthly performance better than the ASX. that was working in April but May was a shock. They disclosed a 1% swing against the market. So the market gained 0.58% and they lost 0.44% - If my logic is correct that is just bad stock picking - if you are neutral then you should at least mirror the market before costs , fees etc. So do we have a team digging a bigger hole?

Then I looked to WMK to see if they had any difference. They lost more than ALF 0.49% vs 0.44% but the hurdle they measure against is lower as it is interest. That leaves me to believe that even in a neutral state they have issues and that both funds look very similar and probably the only difference is the International stocks as I dont think WMK mandate includes international stocks ( could be wrong)

I am only going to hang around for a few months more - logically if this doesn't improve the discount to NAV will still be there but your value would have dropped. Really disappointed as I thought these guys were a really switched on team. The under-performance the last fully franked dividend ... they are playing on my mind. I expect a divergence when you get it wrong but really is it not getting a bit long now - even in market neutral they are not tracking the market.