AllFuelledUp In vino veritas aside, you provide a "sober"...

AllFuelledUp
In vino veritas aside, you provide a "sober" analysis of CTN shareholders’ predicament.

Naos’s claims for their capabilities, juxtaposed with their avowed disinclination to disclose what their various LICs are investing in reminds me of an anecdote in Burton Malkiel’s famous book, “A Random Walk Down Wall Street”.
The events that Malkiel describes occurred around the time of the South Seas Bubble in the 1720s, but the lesson is timeless.

‘The prize, however, must surely go to the unknown soul who started "A Company for carrying on an undertaking of great advantage, but nobody to know what it is." The prospectus promised unheard-of rewards. At nine o'clock in the morning, when the subscription books opened, crowds of people from all walks of life practically beat down the door in an effort to subscribe. Within five hours a thousand investors handed over their money for shares in the company. Not being greedy himself, the promoter promptly closed up shop and set off for the Continent. He was never heard from again.’

In the Q&A part of the recent introductory teleconference call by Naos, it was confirmed that they have no intention of disclosing their specific portfolio holdings as was previously routine with the CTN portfolio. Evidently, because of their preference for large positions in a few stocks, such disclosure would hamper their trading.
(In fairness we were probably not going get specific information on stock holdings out of the now discarded OC Funds Management either.)
It is a case of, trust us, we are great investment managers.
Um… where have I heard that before? Wasn't that the spiel we got from CGA prior to the EGM in March this year.

The only hope CTN shareholders have of regaining control of their LIC is to Vote AGAINST all the AGM resolutions. Otherwise the management of CTN funds will be effectively handed over to Naos for 15 years, and CGA will be paid a bunch of money that, if the arrangement is to proceed, ought instead come to CTN in exchange for handing over that management right.
If the AGM resolutions are voted down, that will inevitably precipitate an EGM, at which new directors can nominate, in which case there will be some chance of getting directors on the CTN board who are actually on our side.

We need directors who have significant holdings in CTN, and more importantly, NO holdings in, or allegiance to, any related entity such as CGA or Naos.
These criteria would likely rule out the current and currently proposed directors of CTN.
It would also be handy if the CTN directors have some experience in running an LIC – now there is a novel concept.

Oh… I just remembered, we actually had a couple of directors who met all those requirements, but they were replaced by the usurpers at the EGM on 27 March 2017.
And what have the usurpers achieved? As of last Friday’s close, the CTN share price has fallen 8.1% since the EGM, while the XSO has risen 11.4% over the same period.

I presently have a mid five figure holding in CTN. It was larger but I sold after the EGM.
I have sympathy for the passive CTN shareholders who thought they were doing the prudent thing by investing in a well-established, well-diversified LIC, only to now discover that their funds are held hostage in this mess.
And all of that not through their own choosing, save for not having paid forensic attention after the usurpers called the EGM last year.

My sentiment is to vote AGAINST all AGM resolutions, then, hopefully, the motions will fail, and that will precipitate an EGM and then the opportunity may arise to vote for replacement directors who might actually have CTN shareholders interests front and centre - another novel concept. The test should be:
Do the candidates have significant skin in CTN’s game and no interest or allegiance with any related party?

If you have already voted in the AGM, you can still change your vote. Contact the registry.

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.