IFT - Infratil

[Basil]

BP mentions rerating and loungelizaed mentions valuation gains

Then Price/Book maybe an appropriate metric

March 2016 IFT share price $3.30 and Book Value $3.42 share ....ie P/B .96

Now Book Value $8.45.

If P/B was still 0.96 share price would be $8.10

As share price $11.70 could say $3.60 is the reward for being brillant.

Book grown by 147% since 2016 ...share price by 254%

As BP says who long the rerating continue ...ie will share price match book value gains ...or might even be a rerating down

Morrisons run IFT like a managed fund with just a few concentrated positions.  Very rare for managed funds to trade at a huge premium to NTA isn't it ?  It would be interesting, not sure if you have the time or inclination mate, but to see a plot of the last 15 years of price as at balance date relative to NTA. 

[LoungeLizard]

Morrisons run IFT like a managed fund with just a few concentrated positions.  Very rare for managed funds to trade at a huge premium to NTA isn't it ?  It would be interesting, not sure if you have the time or inclination mate, but to see a plot of the last 15 years of price as at balance date relative to NTA. 

If, as BP pointed out, Fisher Funds have returned 10% per year on average for the last ten years and IFT have returned 21%, which "managed fund" would you rather have had your money with, regardless of NTA?

[Basil]

If, as BP pointed out, Fisher Funds have returned 10% per year on average for the last ten years and IFT have returned 21%, which "managed fund" would you rather have had your money with, regardless of NTA?

No question Morrisons have done a good job of managing IFT's assets up to now and they've also been paid very well to do it. Whether IFT is worth the current premium to NTA is another thing ?  Notable in recent months they've sat out the global rally in tech.  Worth noting too that the two alternatives have a different risk profile with KFL having a more diversified range of investments, (although, not as diversified as I would like).

Everyone thought RYM and ATM were the absolute ducks' guts and couldn't put a foot wrong and you simply couldn't lose holding long term...until it all went wrong.  I wonder how shareholders who paid twice or three times the current share prices of those companies are feeling all these years later? (RYM were ~ $9 a whole decade ago and ATM got to nearly $22 at one point).  Just as well there's no risk whatsoever of IFT losing market darling status...or is there ?

Sure, you can still make the case that early investors in RYM and ATM have still done exceptionally well, just as early investors have in IFT, but that doesn't mean paying elevated prices now is a sure-fire recipe for outperformance going forward as the above examples clearly illustrate.

[Mos]

Bit of a mind bender comparing IFT's NTA and KFL's NAV. IFT is KFL's second largest holding (14%) and is included in KFL's NAV at market value i.e. $11.62. KFL's largest holding (19%) as we know is FPH which has a share price of $39.12 and an NTA of $3.05 but from a KFL reporting point of view the NAV is $39.12. KFL's third largest holding (10%) MFT has a share price of $70.26 and an NTA of $15.79 but from a KFL reporting point of view the NAV  is the $70.26. So KFL has plenty of premium baked in to its "NAV".

[Basil]

Hi Mos.  You've rather conveniently overlooked the fact that that all other assets in KFL's portfolio, apart from IFT, are not funds management companies per se so they trade on their earnings metrics.  The simple case I make is that what amounts to an asset or fund manager, which is what IFT ostensibly is, should be measured by its NTA rather than its earnings like all other companies are.   I guess holders would prefer to value IFT's on its lumpy earnings and try and say the shares are a great hold based on that.  If that's the case then again, I struggle to see the current share price as being an attractive entry point.   At least with Kingfish they have the disclaimer that past performance is not a reliable indicator of future performance.  Perhaps something for IFT shareholders to keep in mind.

[LoungeLizard]

Hi Mos.  You've rather conveniently overlooked the fact that that all other assets in KFL's portfolio, apart from IFT, are not funds management companies per se so they trade on their earnings metrics.  The simple case I make is that what amounts to an asset or fund manager, which is what IFT ostensibly is, should be measured by its NTA rather than its earnings like all other companies are.   I guess holders would prefer to value IFT's on its lumpy earnings and try and say the shares are a great hold based on that.  If that's the case then again, I struggle to see the current share price as being an attractive entry point.   At least with Kingfish they have the disclaimer that past performance is not a reliable indicator of future performance.  Perhaps something for IFT shareholders to keep in mind.

If you think that IFT should be considered a "fund" rather than a company  and therefore "measured by its NTA rather than its earnings like all other companies are," then that does explain why you choose to ignore it. But by doing so you end up ignoring the "fund" (IFT) whose 10 year return is twice that of KFL, simply because it trades above it's NTA And KFL below it.
I would ignore the whole NTA red herring, and then one can then see IFT as simply being an over-performing company and  KFL an under-performing fund.

 

[Mos]

Hi Basil, interesting perspective. I don't regard Infratil as a fund. I see it as a corporate with a collection of high value businesses (albeit with an expensive management team). Agree it is priced at a level that requires continued strong performance - but not the same extent as FPH which is 19% of KFL NAV.

[Basil]

Agreed.  FPH is an acronym for fully priced holding

[Mos]

Agreed.  FPH is an acronym for fully priced holding

Very good!

[Left Field]

IFT's future AI energy growth plans may need revision as a result of China's new AI chip that requires less power compared to USA chips....

https://edition.cnn.com/2025/01/27/tech/deepseek-stocks-ai-china/index.html

No need to panic (thanks to IFT's 10 year contracts) ....... but well worth watching....... always good to dance near the exit!

[KW]

Its fun being a tech investor, no?  

[Basil]

Its fun being a tech investor, no? 

Some good debate on the other channel.
Interesting article posted over there.  https://www.marketwatch.com/articles/vistra-constellation-talen-ai-data-center-stocks-e2e0f706
My cautionary posts about paying premium prices for stocks that are priced for perfection, assuming perfection will go on indefinitely were very timely.

[LoungeLizard]

IFT's future AI energy growth plans may need revision as a result of China's new AI chip that requires less power compared to USA chips....

https://edition.cnn.com/2025/01/27/tech/deepseek-stocks-ai-china/index.html

No need to panic (thanks to IFT's 10 year contracts) ....... but well worth watching....... always good to dance near the exit!

Yep, one can't be complacent but also not to over-react to every bit of news that hits the wire. Will see how it pans out - could be a time to sell down a bit or buy on the over-reaction.

[Left Field]

A series of lower high's and lower lows in recent months looks pretty ominous.

Looks like the imminent demise of IFT has been postponed......lol.

IFT back to its 5yr trend line and onwards and upwards from here.

Good news on this front possibly the catalyst today......... https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02909949-2A1576611

[Basil]

Back to 5 year trend line, really ?
Coincidentally I was looking on their website last evening and they boast of a 23% CAGR in the last 5 years. That has turned every $1.50 of capital pre covid into $4.20 now. That fantastic result given 5 years of turmoil from Covid and the almost endless recession post Covid no doubt leaves Morrison and Co executives with a very contented feeling about their investment efforts as well as IFT shareholders. Feels marvellous especially if you can do that without paying egregiously high fees, ask me how I know lol

However, I note the share price was $10.95 at the start of April 2024 so despite booming tech markets worldwide  last year, the share price in the last 10 and a bit months is up only 2%.

Bump in the road or the start of an era of lower returns?...only time will tell but I'd be absolutly gutted with myself if all I could have done so far this financial year was 2% plus a modest divvy or two.