It has been a busy week or so with some news releases for some of my holdings so thought I would write down some thoughts.

ELD – I can’t comment too much on the Elders result today as have only glanced at it but the result seemed ok. The shares are very weak but it may relate to investors preferring to own ELDPA now that they have hinted dividends so possibly some switching as I have noticed these were strong. They must receive distributions if Elders can get pack to paying shareholders dividends next year. Those who are more on top of this feel free to comment here! It is not a big holding for me so not sure when I’ll get the time to review.

AIK – The shares are a little stronger since the last announcement. They announced very strong lease origination figures. We await an independent valuation to its investments that is quite well telegraphed to substantially increase the NTA. In theory now that it is well flagged we shouldn’t see any share price reaction, however I expect it to show the shares trading at a sizeable discount now. We will watch in May how this pans out.

SSM – Becoming hard to keep up with their profit upgrades and last week there was another. I am thinking I may have been wrong on SSM. Previously thinking the sharp run up in share price may have resulted in a company at fair value now but more of a hold as a momentum play.
Seeing the upgrades come through so regularly and looking at what cash they are generating, the update seems to perhaps not only justify the recent sharp gains in share price but point to further upside. Am starting to think I want to hang on for some time yet. Imagine the dividends will look pretty good in the future. This was mentioned earlier this year on this blog in the 40-50 cent range a couple of times and I have owned this for almost a year now from around 26 cents from memory. It is consolidating in the low 80s now and my view is despite the gains I believe this stock is cheap even at 80 cents.

AIQ – I have written how I expect this to form an attractively shell company for a bidder previously and last week they received a proposal. So far the announcement is quite vague as it is a non-binding agreement. However, I remain optimistic anyway. The fund is shrinking so if they continue capital returns the expenses with the current investment manager get quite high. So the time is probably due soon to change strategy. My best guess, or maybe hope, is a new investment manager wants to subscribe for new shares at NTA and kick off a fund which has enough scale (as opposed to the current $15 mill or so fund), whilst also get some benefit of tax losses from AIQ prior.
With a bit of luck, the new manager does not impose outrageous fees or dilutive raisings on us smaller shareholders, and has a decent reputation, and if so this could be a good option from here. The major shareholders of AIQ are listed in the factsheet each month and I am hopeful they can negotiate something good for all shareholders. Am I being too optimistic? We shouldn’t have to wait too long to see what this is all about anyway.

KBC – Keybridge has done nothing since I first mentioned them here earlier in the year and trading weak. Finally, last week the scenario I outlined that needed to happen has been announced, with Wilson Asset Management proposing a restructure. Not a whole heap of info provided yet about the future direction. Feel though at this stage I will most likely try and stay the course with whatever Wilson has planned rather than sell shares on market or into a buyback. Maybe longer term they will try and merge this into WAA somehow which is a rather small absolute return fund in the Wilson stable? As to what the real NTA is now it may not be that clean. Aurora maybe needs more write downs and are there any other skeletons in the closet? On the balance of probabilities though today’s 17 cents might be on the cheap side still. Other key holdings for KBC include CSE, PTB, MEL, MPO. The first 2 look quite strong through this calendar year, especially CSE. Whilst MEL and MPO are at least stable or better I think. Of course the wildcard is Nicholas Bolton’s stake, as he can be quite the “character”. Common sense would say this restructure is also best for his large stake but who knows.

HHY – As I have mentioned CSE recently and the KBC proposal it is worth giving HHY a mention as WAM also owns some of this and they are also a small fund with tax losses to utilize that could be attractive as a vehicle for another manager to use to grow bigger. A lot of their portfolio is in CSE shares (which I recently sold too early!) and are going very well. As I write they have finally moved from 10 cents bid to 10.5 which seems overdue given their NTA after May should look better. I hold some HHY still.

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