I got my kangaroo forecasts very wrong. Australia is very far away even if they do speak English, and its CB, the Reserve Bank of Australia, did not cut interest rates as I expected it to do. Because our table shows the huge payouts we got from Aberdeen Asia-Pacific Income Fund (FAX) over the years, it may not be obvious that from a tax standpoint we are down from our original purchase price, which was $6.1304 per share. In a year when I have piled up capital gains I need some losses, especially long-terms, so FAX will be half sold.

My other reason is that FAX this year paid out as distributions return of capital for 40% of the monthly payment. That is not taxed, because it is your own money coming back, but I resent paying the fund managers fees based on the sum they have under management when it is not under management.

Our other sale is of half our PT Semen Indonesia (no snickers; it means cement). PSGTY was tipped by a former correspondent in South Africa who left the fold, lured into a rival service by higher fees I couldn't match.

We are adding to our funds portfolio a new position tipped by two expert stock pickers. One is a former contributor who is coming back on board and knows South Africa well. He cannot yet be named.

The other is "The Stock Gumshoe", Travis Johnson, who runs a lively daily blog of that name which reveals the 'secret' shares being promoted to lure people into subscribing to heavily marketed newsletters. We share a handful of savvy subscribers.

They both approve of Africa Opportunity Fund Ltd., a UK investment trust incorporated in the Cayman Islands in mid-2007, the equivalent of a closed-end fund. Some Europe-based readers may want to buy it in London as AOF, its London US$-denominated trading site, on the AIM. But we are buying the unsponsored ADR, traded as ALOFF in the USA. Its ISIN is KYG012921048, if your broker asks for it. I put in an order today with E-trade.

Its current net asset value is unknowable but it trades in US$ in both London and the US. On Friday it was $1.15 bid, $1.16 asked. Its net asset value cannot be updated, not as awful for a UK IT as for a US CEF. The Telegraph, a British newspaper, reported in early Sept. that AOF net asset value had risen 17.1% in some period, presumably in a year, but I cannot find the article even in Reuters. With all caveats, if it was over the prior year, the NAV in September was $1.50 and the stock is trading at a huge discount.

However the fund itself says it closed September with a appraised net asset value per share of $1.31 which means the discount is more modest.

There are 42.63 mn shares out. Its 52 week high is $1.18 and the low is 75 cents, so we are late to the party. ALOFF cut its dividend at the start of this year to 20 cents twice a year from 26 cents paid 4x last year, why the share was very low early this year.

As its name indicates, ALOFF invests in Africa, and it is diversified, as no position can exceed 15% of the total under management. It can buy securities issued by non-African companies which conduct significant business in Africa.

ALOFF is self-managed by investment advisor Africa Opportunity Partners Ltd. It invests "opportunistically" according to its statement, and can buy in a wide variety of vehicles: real estate, equity, quasi-equity, and debt issued by African companies, governments, or hybrids (quangos). It invests where the asset managers think the price is at a material discount to the intrinsic asset value.

As of its last quarterly report, of Sept. 30, ALOFF was 25% in debt securities, 69% in equities, and the remainder in cash. By country, its largest stake was 28% in Ghana, headed by a 20.1% of NAV stake in Enteprise Group Ltd., a P&C and life insurance firm with property assets. Its second largest country stake was 18% in Senegal where it had 12% of assets in Sonatel, the mobile phone company. Its Senegal holdings also include a non-local bond from Tizir Ltd, a mineral sands investor grouping Eramet (France), Mineral Deposits (Australia) and Tyssedal Titanium (Norway). Its 9% of 2017 accounts for 6% of holdings by the fund.

Third comes Zambia where 16% of assets were placed, without any company names given. South Africa is mysterious in the ranking, accounting for only 4% while two companies from there, Shoprite Hldgs, Old Mutual plc, and African Bank Investment Ltd (a troubled consumer finance firm) account for 9%, 3%,  and 8.5% of total placements. Either the managers have sorted out where the money is really going or they are taking account of the 50% drop in ABI shares during the course of H1 after it overpaid for a furniture retailer and took hefty provisions and write-downs.

South Africa is even with two other countries: Zimbabwe and Nigeria, also at 4%. Ivory Coast was at 3% and Botswana at 2%. Others accounted for 21%.

There was then no overlap with any of our shares but ALOFF had 3.8% of its NAV in IAM Gold's 6.75% bond of Oct. 1, 2020. The would count as a multilateral placement because IAG has mines in several West African states and South Africa plus Quebec.

ALOFF top 10 produces a weighted average yield of 4.6% and a rolling p/e ratio of 8x earnings according to the managers as audited by Ernst & Young. Its return on assets is 8% and its return on equity is 21%. These are very powerful metrics.

ALOFF's top 10 positions in September accounted for 74.4% of its portfolio. It runs a concentrated portfolio of 10-15 positions. Bonds accounted for 17%.

In its September report ALOFF also noted that Elemental Minerals which mines potash in Republic of Congo got a takeover offer from a Hong Kong outfit which boosted return on investment of this position to 32%. So there are M&A gains to be made. 

Apart from our gang, there are no analysts covering this stock. Its September report was filed with the UK regulators. It is of course not a member of the US Closed-End Funds Association.