The last half of my HHV shares I bought at 1.22 a couple of months back were sold at 1.40 today. Surprising to see HHV higher early on as SBM & DRM corrected substantially down. Continue reading “HHV sold and Dow short”
Recently I wrote that I had some shorts in the US indices that in part gave me protection to pursue some more compelling opportunities on the long side. Continue reading “Simplifying the portfolio & raising cash. Small market inefficiencies in the LIC space.”
I have been posting about more general themes of investing styles of late so now I wanted to get up to date in terms of providing more detail about recent trades, or news on companies I own. Continue reading “COMMENTS ON RECENT TRADES – AAC, MVT, CYB, HHV, GVF, EVN, KBC, AGF, SSM, WCB, RNY.”
I would have to admit I am quite staggered by the moves we have seen since Brexit. I am not surprised that the market found some support given the initial panic, but to post new highs so quickly together with highs in bonds and in the gold price was a shock to me. Continue reading “Various recent portfolio changes”
HHV – I purchased some at $1.22 last week as the discount seemed to be getting to around 18% pre-tax, having sold shares over a year ago when the discount was less than 5 %. Some points in their favour are that performance has improved greatly over the last year or two. They have quite a defensive portfolio with large exposures to some gold holdings, cash and Sirtex, and largely the portfolio is in foreign currencies. The large cash balance could be used to aggressively buy back shares soon. They could take some profits in large exposures in SBM, SRX, DRM and pay out large fully franked dividends. Since they made two capital raisings that arguably did not treat all shareholders fairly Wilson Asset Management has increased their stake from about 6% to 13%. Since then the shares understandably have been a bit on the nose but now WAM have more of a stranglehold on the register and the fund is much larger we should expect to see the end of them greedily tapping shareholders, and more likely major share buybacks down the track when the discount is this large.
S & P 500 PUT OPTIONS – September 1775 puts. Buy level was at 21. Please refer to post under the Asset Allocation category about volatility and portfolio protection for my thoughts.
In 2010 I had a very large percentage of my portfolio in Listed Investment Companies (LICs). Stock markets had already had a huge bounce from the financial crisis lows yet some LICs surprisingly still traded at very large discounts to NTA. MFF & TGG spring to mind as these traded at discounts to NTA in the order of 20-25%. The Wilson asset management funds the same or even larger. MFF & TGG appealingly had portfolios of large multinational companies on undemanding multiples listed in major exchanges in the world, unhedged at a time when the AUD was very overvalued. It was almost like paying 75 cents and receiving a $1 instantly. HHV also was at a big discount although their portfolio was not as clean.
I bring this up as I noticed TGG and HHV seeing bigger discounts of late. I remember selling both stocks very close to NTA (less than 5% and TGG may have even been at a premium). Once they get close to the NTA or premiums it is normally far too tempting for them to conduct a capital raising and boost the AUM fees so it is wise not to fall in love with them. This occurred with TGG and HHV on more than one occasion. Now these recently have seen discounts again nearing 15%. Not yet tempting enough for me to buy as the underlying holdings I am also not as bullish yet, however I’ve began to watch them a little closer. I know WAM is a major holder in both and likely to pressure for more active stock buybacks and larger franked dividends. If the AUD rises again to recent highs in the high 70s and these discounts further widen they may soon appeal to gain some offshore exposure.
Another quick example to highlight the fickle nature of these vehicles is TOP. Early December it amazingly traded at a 7% premium to NTA. Their investments have done very well since yet this week traded at an 11% discount. In other words you could have bought TOP back then, patted yourself on the back with regards to the underlying portfolio rising by about 6%, yet be down 11% on your investment!