5 Factors For Profiting From ASX LIC Takeovers And Wind Ups

Performance has been horrible over the last 5 years. A very long lasting LIC that got away with a long term IMA that these days is not possible. I believe this still has many years to run. Yet if performance continues to languish then management and the board may be willing to also transition this to unlisted. They seem a bit more sensitive to shareholder’s frustrations with the discount than I have seen with other LICs anyway.

As a shareholder here I’m somewhat underwhelmed by the capital management news. Feeling like voting against the remuneration report again and I suggest other holders give this some thought.

The way they report their pre and post tax NTAs is arguably a tad unconventional!

Fat Prophets Global Contrarian Fund Ltd (ASX:FPC)– One of many LICs in recent years that in my opinion is too small to warrant an IPO in the first place. Compounding the problems are very excessive fees and underperformance. There are many criticisms an activist campaign could point to so we may soon hear of some. Still relatively early days in the context of the IMA though.

Templeton Global Growth Fund Ltd (ASX:TGG) – Activists already applied pressure on this LIC a few years back. I think they have done a fair job in terms of corporate governance since and trying to promote the LIC. Yet the fact remains they have suffered further underperformance with value investing being on the nose, and the discount to NTA is still very wide.

TGG might be better off taking a leaf out of ALFs book although ideally make an even larger off market buyback. The size of the fund enables them to consider such capital management programs. Might be more effective than fiddling around with small on market buybacks.

A few weeks ago it was announced the portfolio manager Peter Wilmshurst is leaving. Staff turnover like this arguably not ideal as they try to justify keeping this very long standing listing going.

Blue Sky Alternatives Access Fund Ltd (ASX:BAF) – This is already playing out as recent announcements suggest we will soon see a change in manager. The door is also still ajar for at least a part if not full wind up potentially.

As a shareholder here, I’d probably like to see at least a good portion of the assets be very patiently sold to fund a capital return. If they can get Wilson Asset Management as the new manager that might be worth considering for some of the portfolio. They have the reputation and distribution / marketing reach to close a lot of the discount.

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Disclosure: At the time of writing, I own the following LICs from the above list – ALF, TGG & BAF.

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