Fisher Funds stocks

[Basil]

Awesome work Winner, thank you.

[Mos]

The 15% discount to NTA is about right to reflect the NPV of the high fees/costs in my view. Especially with KFL holdings which are easy for NZ investors to hold directly with no fees and minimal tax admin.

[snapiti]

here's what the discount/premium has looked last 10 years

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thank winner could you please post SAME chart for BRM

[snapiti]

so KFL now offering the highest discount to NAV it ever has, interesting, BRM offering about 12% @ 70cps, also fairly high historically

[Mos]

Buying BRM warrants provides about 15% discount to NTA at warrant price of 4 cents plus exercise price of around 63 cents. Buybacks driving up head share price but not the warrants.

[Basil]

The 15% discount to NTA is about right to reflect the NPV of the high fees/costs in my view. Especially with KFL holdings which are easy for NZ investors to hold directly with no fees and minimal tax admin.

Some have made that argument in the past and it's an argument that's not without some merit.
I think the starting point for any consideration around that is that if you want to invest in a PIE or managed stock picking fund that picks stocks, (rather than an index tracking fund), there are always going to be costs that go with that.  Discovery fund for example has a 1.2% annual base management fee plus a 20% performance fee for performance over the index, which seems egregiously high, but I have put serious money there based on the obvious skill level of the fund managers and their performance to date.

Yes you certainly can replicate their holdings quite easily, absolutely no argument with that whatsoever but that presupposes you have the patience and internal discipline to not want to engage in manipulating their stocks picks at least to some degree and also to hold each and every one of their picks over the long term.

Here's how I look at it.  I have done a deep dive 120 point monthly 10 year statistical analysis on Barramundi which shows an average level of discount of only 0.5%, and that minor discount figure may be somewhat overstated due to the shares frequently carrying slightly dilutionary warrants on a regular basis, so I am just going to go with its normal for them to trade at NAV.

I see this group as income investments.  The 8% tax free PIE distributions are extremely attractive and appear to be sustainable.  If you crop out the dramatic loss initially incurred by BRM just after they launched before the GFC, all these share prices of this group have at least held their capital value.

Buying at a large discount, (I will stick with the 12% on offer at present with KFL for the sake of this comment but also note attractive discounts on offer with Barramundi and Marlin at present), confers not only the higher chance the level of discount will normalize over time leading to outsized capital gains but also confers, while holding, an outsized dividend return.
Dividends are paid based on 2% per quarter of average NTA not the share price so 8% if bought at a 12% discount becomes an effective net yield of 8 / 0.88 = 9.09%.  That can be further enhanced by the 3% dividend reinvestment discount to become 9.37% net (9.09% / 0.97)

For taxpayers on a 33% marginal tax rate 9.37 % net is worth 13.99% gross, (9.37 / 0.67) let's call it 14% gross.
For those on a 39% tax rate its worth 15.36% gross.  These are extremely lucrative gross effective yields in anyone's language.

Sure, there's other ways to skin a cat but those gross yields are extremely attractive, especially in a falling interest rate environment and especially also in conjunction with the prospects of outsized gains with the level of share price discount normalizing over time.

You also get a very good feed at the annual meeting, for what that's worth but I enjoy it and catching up with some people there.  (Yeah I know shareholders are in effect paying for it and there's no such thing as a free lunch, but I still enjoy it whenever I have the spare time to attend.)

The other thing I noticed in my 10 year deep dive analysis on Barramundi share price relative to NTA is that interest rates are very low, the shares are more likely to trade either at a premium to NTA or at least at par.  We're headed towards are much lower interest rate environment over the next 2 years in my opinion.

Look, to be fair, I do acknowledge that this group traded at an unprecedented premium to NTA within that 10 year analysis I did when interest rates dropped to unprecedented level's.  Retired investors confronted with 1% term deposit rates at banks were in effect forced to consider alternatives and that's possibly what drove that period of premium.  That highly unusual event may never recur so I guess you could argue my ten-year analysis encapsulating that timeframe somewhat understates the level of normal discount.  Maybe excluding that highly unusual "premium" period a 3-4% discount is normal and about right.  That's how I see it and my 2 cents worth.

[Mos]

Some good perspectives their Basil. Thanks for sharing. For me a 15% discount to NTA when it comes around balances out the fee/cost structure, with BRM and MLN of interest for the easy international exposure. For NZ stocks I prefer to invest direct.

[thedabsman]

I think 2-3% felt pretty typical so I'm sure you are about right saying 3-4% from your analysis excluding a very outlying period of time. I like these for the PIE status, 2% a quarter based on NAV but issued at 3% discount to price and the regular warrants that you can play, hold, sell or exercise depending on your holdings needs. I have not really thought about the true effect of buying at a deep NAV discount price and returns at your tax rate. 15.36% is a nice return!

[Basil]

Quite right thedabsman, the warrants add quite a bit of spice and opportunity.

[Minimoke]

KFL release their first Climate Statement today.

WOW!!!

70 pages of mumbo jumbo gobbldy gook corporate speak.

And not one single word that will make one bit of difference to the climate.

What an utter waste of holders funds.

[Untamed]

KFL release their first Climate Statement today.

WOW!!!

70 pages of mumbo jumbo gobbldy gook corporate speak.

And not one single word that will make one bit of difference to the climate.

What an utter waste of holders funds.

As I have explained before, they don't have a choice. Complain to the government because they are the ones mandating it.

[Mos]

All this extra meaningless compliance bumpf is unfortunately a deterrent to listing small and medium sized companies on the NZX.

[Minimoke]

As I have explained before, they don't have a choice. Complain to the government because they are the ones mandating it.

I wasnt talking about choice. My point was the last sentence.

[Waltzing]

20 PERCENT IS THE old global investment MODEL. normaL.

DOS reports are a TOTAL wASTE of FUDS... FUNds....

[Untamed]

I wasnt talking about choice. My point was the last sentence.

Yeah I understand that. Which is why, the only option any of us have as shareholders, is to point that out to the powers that be. I agree with you.