LIC/LIT Monthly – September 2021

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Capital raising announcements over the month that may raise up to a maximum of approximately $975m and several more de-listings. Partly a portent of the way the sector will likely move, with a number of the LICs/LITs that raised capital being very much ideally suited to the closed ended structure. They have utilised that structure well, and they are...

5 Myths & Unknowns about LICs

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“The LIC Sector Underperforms Unit Trust Peers”. Verdict: Impossible to Determine. “All Investors in a LIC get the Same Performance”. Verdict: False. “The Sector Trades at a Discount to NTA”. Verdict: False. And other common misconceptions. Please click link below for article 5 Myths & Unknowns About LICs

New Capital Raisings – a Buoyant Period

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It remained a relatively buoyant month in relation to capital raisings. In fact, there were some potentially large licks of additional capital raise announcements, notably the FGX 1 for 1 Bonus Options announcements. The sum total of the maximum amount of capital that could be raised based on announcements over the month is approximately $975m. Of course, given the largely...

KKC – Further Discount to NTA Control Initiatives

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On 15 September, the KKR Credit Income Fund (ASX: KKC) provided details on its discount control initiatives for at least the next 12-month period, on which is a new development. Specifically, KKC announced the resumption of its buy-back program for the FY22 period as well as fact that it is currently sounding the market out about launching an unlisted...

Cadence Capital – I’m Confused

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On 20 September, Cadence Capital Limited (ASX: CDM) issued a presentation proposing a possible hiving off a specific international investment into a separate LIC - Cadence Global. The proposed demerger would encompass moving CDM’s entire holding in the The Metals Company Inc. (NASDAQ: TMC) into the Cadence Global entity plus $15m in cash. This development occurred after the NASDAQ listing...

PM Capital & Wilsons

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PGF and PAF Proposed Merger On 15 September, PM Capital Global Opportunities Fund Limited (ASX: PGF) and PM Capital Asian Opportunities Fund Limited (ASX: PAF) announced it had entered into a Scheme Implementation Deed to merge the two LICs. In effect, PAF is to be acquired by PGF, with PAF share holders receiving PGF shares. Under the proposed terms, PAF share...

LIC / LIT Yield Surplus

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It is well known that LICs, as a company structure in contrast to a trust structure (LITs, ETFs, Unlisted Unit Trusts), have a structural advantage in the ability to manage / smooth income as well attach a higher and more consistent level of franking to that income. In short, as the analysis in this article illustrates on the basis of...

L1, Thought it wasn’t about Income. If Regal Could Buy Back Time

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L1 just banked a mere $500m to its dividend profit reserve, the equivalent of 83.24 cents per share. Future dividends guaranteed. Gees, if Regal could have their time again, I reckon they'd go LIC over LIT (that was a lot of money for Regal to pay out).

Antipodes – when you Lose a Champion & When Metrics Loses . . .

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The next RRM LIC/LIT Monthly will delve into how good Antipodes is as a (pragmatic) Value manager. While RRM covers ETFs, the loss of APL is indeed that . . . .a loss. Not only are Antipodes the smartest guys in the room (to their detriment??), they are perennially great communicators. And that mattters! Like all Pinnacle products, communications have...

We Need to Talk about Magellan

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Shock, horror. The horror being the last 18-months, a period in which there was a (blind??) endeavour to repeat the downside mitigation moves Magellan made in the GFC and set its history . . .  to recent date. It was these moves that made Magellan – going into cash. Fast forward circa 20+ years – “Don’t fight the Fed” –...