STUCK IN THE BIN
LIC activism snippets from July 2020 BHD, CIE, CVF.
BHD – Like 8EC, I became a shareholder in the tiny remains of BHD. The board has done a great job restoring around 30 cents of NTA. To continue such good work, shareholders should be able to realise very close to the NTA in the next year or two. After all, they could simply pay it out of cash now, and those shareholders who have suffered from the early days deserve to see some cash in their hands. The board was elected on a mandate to return capital to shareholders as per ASX announcement on May 8th, 2019. Shareholders can perhaps then choose to roll some of it into GC1 perhaps or all of it if that is what they feel like doing, but still get the NTAs worth in the process.
CIE- A similar point probably exists with CIE in a way. I missed getting filled on this in mid-June but am watching it and thought it was worth a comment. That is, Lanyon have made some excellent points here in their campaign. Yet CIE shareholders probably deserve the chance to exit at least a good portion of their investment via a cash return, should they prefer that to going into a Lanyon run LIC.
The writing was kind of on the wall here as I suggested in an old blog post here.
CVF – Reading the updates on the strategic review here, to me it seems a simple solution to most of the issues are for a scrip takeover from GVF.
AYS – Some interesting points in the below livewire article.
The strategic value of amaysim – Hamish Carlisle | Livewire (livewiremarkets.com)
APW – Shareholder return needs to be the focus, not size through related party transactions.
I have made numerous posts on this, first being back in mid 2016 here.
FRUSTRATED HOLDER OF APW (AIMS PROPERTY SECURITIES FUND)
ALI – Fees could be cut; shareholder buyback should be more than token words. Where is the marketing boost promised a year ago?
Seeking Alpha Cohen & Steers and Argo Global Listed Infrastructure.
Update July 1, 2019 – In the last week I have sold more than half my ALI in the high 2.20s. Discount has narrowed a lot since my buying. Thanks to falling bond yields and AUD, rather than the board’s strategy to narrow the discount. A year or so ago no one thought bond yields could go down and now no one thinks they can rise, so I am taking some profits here.
Further update 11/11/19 – sold the rest so no longer a holder.
YBR – Perhaps someone needs to be fired there?
WQGO – I only hold options here in case US markets keep going up. “Supervisory” fee should be fairer, the board hardly owns any stock. (As of April 2 I have now sold nearly all my exposure here. I’ll be an interested observer mostly from the sidelines to see if they play any underwriting games like EAIO if the options finish barely in the money). Update – surprise surprise they did act on their bias to always increase locked in AUMs!
WTP – Should be more proactive selling the civil & mining business and a share buyback. (Reluctant seller into takeover, will be remembered as a sin bin stock.)
TGA – This company looks likely to change its ways thanks to a fresh looking board of directors. The CEO is out and major shareholders Somers and Forager will be pulling the strings to see the best strategic direction for shareholder return. I became a holder just prior to the big rights issue. I took up my entitlement so my average cost is about a couple of cents above the rights price.
Am comfortable now that the largest shareholders have made this a much bigger bet for them and have significant skin in the game. They should be open minded about the future of the company and whether it should even continue in the medium term. At a minimum I suspect they might at least be more aggressive on store closures at Radio Rentals.
POTENTIAL GRADUATES
TGG – A strategic review is to take place early 2021 regarding the ongoing structure and operations of TGG. Let’s see what happens there.
EAI – This used to be in the graduate section when they seemed to start to understand what it takes to run a LIC. E.g. strong buyback and improved marketing efforts amongst other things and even performance was improving a little for a while.
Now I think their underwriting of the options (admittedly minor extra supply and dilution) was still not the correct way to handle things. If they had of actually managed to perform in line with their benchmark (not even beat it), they would have seen most of the options exercised. That should have been the chance for them to lock in future guaranteed management fee income in the closed end structure.
A warm welcome to City Of London Investment Management becoming a substantial holder in Oct 2019.
RECENT GRADUATES
PAI – Improved performance, strong communications on future dividends. The premium has got too rich in mid 2018 so now my holding is near zero.
REF & TBR- Credit to management of these companies for releasing significant franking credits from cash / gold sales respectively to shareholders. Reportedly the sudden announcements came after many months of deliberation.
OMN Update Sep 30 – https://www.smh.com.au/business/companies/lowy-s-onemarket-start-up-to-be-wound-up-20190930-p52w6d.html
8EC – Appreciate the board working fairly on this one throughout the wind up and returning as much cash as practical prior to moving forward with the Lanyon proposal.
BAF – Good work by the board here with the WAM proposal. Miles Staude setting a good example working hard on this for no remuneration from BAF shareholders.
ALF – Board were dragged kicking and screaming into doing something here. As good a result as I could reasonably expect in the circumstances. Albeit with IMA termination fees / exit costs which are arguably unfair.
