HHY – I topped up on some HHY at 10.5 cents recently for a couple of reasons. They have a large investment in CSE which I have written about that should give a good kick to the May NTA when released and probably hasn’t been fully reflected in the stock.
The NTA was last at 11.95 cents and could move potentially close to 13 cents depending on other holdings. In fact, even the first few days in June CSE is up a fair bit so as I write 13 cents could even be conservative. If the discount on that basis is at least 19% or more that looks attractive given it is a likely target to receive a restructure similar to that of KBC recently. Wilson asset management and KBC both own nearly 20% each. Like KBC it is small and a cheap way to kick off another LIC revamped in some way and capitalize on tax losses within. It is worth keeping an eye on the battle for KBC when assessing HHY currently. If Wilson got control of KBC then he would effectively also control HHY. In this scenario we are at least investing in someone who has a track record of listing LICs and getting them to trade at and above NTA, yet my entry would be at a sizeable discount. Of course the battle for KBC could well get messy and Wilson may reach some blocks there and can’t implement his plans. In this scenario I believe there is a chance he may well then make a play for HHY to fulfil his needs. That also could get messy with the KBC stake however the share register is probably more open for him in this case. That is, he wouldn’t have to deal with Bentley Capital. So either way there is some potential upside. Also despite myself selling CSE recently, that stock could still go higher particularly if they sell their stake in SYR soon and release franking credits to distribute. HHY may well have further upside from this also.