11 thoughts on “ASX LICs and Claytons Buybacks – Reviews of Argo Global Listed Infrastructure (ASX: ALI) and NAOS ASX LICs”

  1. Love the content mate. With the discount widening what looks more appealing to you, the old school LICs or cap weighted index?

    1. Thanks froxy,

      That’s quite tricky! Bare in mind I don’t normally invest in either. Yet if I had to choose maybe I would stick with ETFs still. I thought something like AFI being at a 5% premium was a bit silly in the past. To me it makes sense for the discount to widen to more than 5%. This older post of mine is a little related to the topic.


      It can though depend on which way the market goes. If markets head south AFIC tends to outperform. Also obviously a lot will hinge on what happens to legislation in regards to franking credit refunds. So gun to my ahead I say I’d rather ETFs but not advice of course. Take my comments with a grain of salt, I’ve been wrong plenty of times on the blog in the past!

      1. Thanks mate, just re-read the post. Also a reminder you owe us some reading links for March! 🙂

      2. Ah yes! Maybe I shall do a post like that later but with some links picked out from over a few months, then it will be extra special!

  2. I was staggered when GC1 (Glennon) announced a buy back recently.
    An already small fund – $40m – will just get smaller with all the disadvantages you mention.
    And these are supposed to be smart people, who we pay handsomely to make such ridiculous decisions!

    1. Yes I see they have had an early crack it with about $220k bought last week. Given the small fund size though I wouldn’t be surprised if this buyback falls away to just a little trickle with them only doing about 2-3% of the shares over the next year.

      The small fund size makes it tricky and I don’t have as strong opinion on what is the best option here. Different story though for something like ALI during 16/17 where their fixed costs expenses aren’t as bad. Probably some others in the same boat as GC1 contemplating how many shares to buy. FPC are also only $40 million for example with a buyback programme in place. Maybe MEC might announce a Clayton’s one soon.

  3. Fascinating article Steve – my appetite has recently been whetted for considering LICs, and this is an interesting perspective to consider. As a value focused investor, I usually salivate when I hear ‘discount’, and would probably be what I’d focus on for the LICs without further insights like this. I’ll delve deeper, but may just stick with my individual stock investing strategy for the time being…

    Cheers, Frankie

    1. Thanks Frankie. Yes too many get drawn into LICs because of the discount without considering that even a larger discount may be warranted.

      The best mindset to have I think is that even some LICs may trade at a 15% discount but deserve to be at more than a 25% discount for many reasons. I.e. a discount can sometimes prove quite expensive. Discounts are a good thing generally speaking, more as a starting point though to investigate other factors at play.

      Occasionally a large discount though can genuinely be a bargain. Hard to find though in recent years, compared with say 2009-2012. At least the latest trend in discount widening may boost the chances we once again see some widespread bargains in the LIC space.

  4. Hi Steve Interested in LIC,s and generally don’t buy unless I get at least 10% discount with a market cap minimum around $50m. I note FOR is now trading at a discount. I do respect Steve Johnson however has had recently terrible performance. Thoughts on this one?

    1. Hi Ed,

      I’m not that phased by the poor short term performance like others may be. Sometimes that’s what you have to wear in order to meaningfully outperform in the longer term with their kind of style.

      It traded at a premium for so long so I’ve never owned. But I think he does the right thing by shareholders. He could have made the LIT larger I think but hasn’t been too greedy with that or the fee structure.

      Despite the US market being at all time highs I think there are pockets in the ASX small cap area of opportunities in unfashionable areas. So this is probably a decent pick for that exposure longer term, just not sure about the timing though. I’m not looking at it very closely though yet. One reason for that is I’ve already chipped away at a few direct smaller company exposures myself in my portfolio in recent months. Also seeing all the discounts widen of late I suspect this can easily trade at a 10-15% discount given recent performance. All the best with it if you have a crack at it!

      1. Thanks Steve. I will take a small position in this one and average down as the discount goes out! You are right the small cap non mining industrials are really struggling suspect there is value there however I have had a few blow ups in that space so I am happier letting a fund manager manage this.

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