Marlin

[Billy Boy]

"MLN listed in October/November 2007".... yup
Then came the big financial crunch 2008.
MLN, KFL,BRM took a hit as did most other coy's
The LPT's did also. Those who got in on the low levels
are Smiling today, Divvies in the 9 -10% (PIE)
I think Percy we are not on the same wave length.
You are talking mainly growth stocks, while I follow
divvy stocks, mainly.
I think these ETF's will hold in until overseas markets find
their feet. Those holding at 72 -74c will be in a nice position.

"In the meantime look what other companies' share price have done; EBO from $4.82 to $9.60,TUA from $1.12 to $1.80,POT from $6.76 to $14,RYM from $2.07 to $6.76,SKL from.96 to $1.38."
Nice going for a bit of hind sight and I would make the point.
(no offence) You are a trader and as such do not make your money until you sell.
I am an invester, I hate selling shares. And do so only as a portfolio management tool.
Therefore my portfolio returns 10.43% over all (mostly PIE) and , oh yes there is
quite a cap gain in there. But if i was to sell, then I would only have to put the
money somewhere else. And in this market climate ??. No I will just keep pulling
the interest and reinvesting into divvy stocks, my style you see.
You off course make a lot more money than me coz you trade Short/ medium term
and you understand the market forces much better than me.
so all in all.... each to their own
BB
MLN.... SShhhh else they will all know

[zigzag]

Totally agree BB, especially the SShhhh part. ZZ

[percy]

"MLN listed in October/November 2007".... yup
Then came the big financial crunch 2008.
MLN, KFL,BRM took a hit as did most other coy's
The LPT's did also. Those who got in on the low levels
are Smiling today, Divvies in the 9 -10% (PIE)
I think Percy we are not on the same wave length.
You are talking mainly growth stocks, while I follow
divvy stocks, mainly.
I think these ETF's will hold in until overseas markets find
their feet. Those holding at 72 -74c will be in a nice position.

"In the meantime look what other companies' share price have done; EBO from $4.82 to $9.60,TUA from $1.12 to $1.80,POT from $6.76 to $14,RYM from $2.07 to $6.76,SKL from.96 to $1.38."
Nice going for a bit of hind sight and I would make the point.
(no offence) You are a trader and as such do not make your money until you sell.
I am an invester, I hate selling shares. And do so only as a portfolio management tool.
Therefore my portfolio returns 10.43% over all (mostly PIE) and , oh yes there is
quite a cap gain in there. But if i was to sell, then I would only have to put the
money somewhere else. And in this market climate ??. No I will just keep pulling
the interest and reinvesting into divvy stocks, my style you see.
You off course make a lot more money than me coz you trade Short/ medium term
and you understand the market forces much better than me.
so all in all.... each to their own
BB
MLN.... SShhhh else they will all know




I have held EBO since 1991.
The other stocks I have held for over 4 years.I think I posted those companies a few years ago on thread "where would you put you money."So it is on record.
I think you should look at EBO and HNZ,for dividend and share price growth.

[Billy Boy]

EBO. used to hold & sold... mug me
HNZ. .... tks for the tip I will put on watch list and do some study
cheers BB

[Lizard]

MLN listed in October/November 2007.NTA at time was .9721 cents, and the SP was about the same..
Now nearly 6 years later the NTA is 89cents,and the SP is 73 cents.
In the meantime look what other companies' share price have done; EBO from $4.82 to $9.60,TUA from $1.12 to $1.80,POT from $6.76 to $14,RYM from $2.07 to $6.76,SKL from.96 to $1.38.
While MLN SP has gone from .97cents to .73cents.
They have destroyed shareholders wealth.Your money is better invested elsewhere to obtain dividends and SP growth.
I repeat avoid MLN,as they are a serial under performer.

Percy, your points are valid for a knowledgeable investor. Less so for an inexperienced retiree with a limited sum of capital from which they require income and don't want to have to regularly liquidate small parcels of shares to get it.

RYM never paid a high % yield. SKL fell a long way from its $1.15 issue price and stopped divs completely before things finally turned around for it. And, if we are talking of an investor with just $50k- $200k in savings in retirement, who wants to add $3-5k in income per year to their super, how many shares are you going to suggest they take a risk on to get some diversification? Especially if they only plan to review their portfolio once or twice a year...

I guess I should probably have started a new non-MLN-specific thread re suitable investments for this type of "challenging" portfolio.


You should have thrown XRo in just for fun.

The constant dividend masks their performance. Unlike normal companies, the dividend is not paid from income but is a set amount, regardless of income or asset value.

I know that the dividend comes out of capital and that it is debateable whether 8% of NAV is sustainable without eroding NAV, as it requires them to achieve at least 8%pa net return - a difficult level for most funds to average through good and bad. However, if they can achieve a 6% return, they will still erode capital relatively slowly and will be returning a better income than a term deposit presently does... and if the NTA gap closes, there is some capital gain to be had as well. There are also some possible macro winds in their sales as NZ currency has been trading at historic highs and now trending back down. That means, that for now at least, they appear to be achieving returns greater than div payout, as the last series of ex-div NAV read as follows:
Dec 2012: 0.8068
Mar 2013: 0.8627
Jun 2013: 0.8815

[percy]

Lizard,I have been trying to find the thread "where would you invest" where I stated about 6 stocks,can't find it.
So here is a new list of 6 stocks [plus a spare] which will give growth and dividends,which should not need any adjustments for 5 years.
EBO $9.65 , CEN $5.36 ,HNZ .82cents, POT $14.01, SUM $2.92, TUA $1.80 and spare one SKL $1.29.

[zigzag]

Lizard,I have been trying to find the thread "where would you invest" where I stated about 6 stocks,can't find it.
So here is a new list of 6 stocks [plus a spare] which will give growth and dividends,which should not need any adjustments for 5 years.
EBO $9.65 , CEN $5.36 ,HNZ .82cents, POT $14.01, SUM $2.92, TUA $1.80 and spare one SKL $1.29.

All good stocks Percy, in fact I own a couple myself. But they are mostly exposed to NZ economy. Marlin is about investing outside of Australasia, so you really are comparing apples with pears. If you get my drift.

[percy]

All good stocks Percy, in fact I own a couple myself. But they are mostly exposed to NZ economy. Marlin is about investing outside of Australasia, so you really are comparing apples with pears. If you get my drift.

Well they haven't done too well.!!!!
May be a lot safer [and wealthier] with my Apples.!!

[percy]

EBO. used to hold & sold... mug me
HNZ. .... tks for the tip I will put on watch list and do some study
cheers BB

You are not alone.Over the years I have listened to too much noise and have sold down my EBO.!! Mugs together.!!
Now trying to add to them!!

[zigzag]

Well they haven't done too well.!!!!
May be a lot safer [and wealthier] with my Apples.!!

"Haven't they done well" Big round of applause. But purely as a matter of risk management / diversification, shouldn't you pop a few pears in the mix.

[percy]

"Haven't they done well" Big round of applause. But purely as a matter of risk management / diversification, shouldn't you pop a few pears in the mix.

I used to invest in both USA and UK.
I am more than comfortable with the diversification available in NZ and Australia.

[Billy Boy]

Welcome gorn! :)

One of the most challenging positions in investment is those people who rely on their portfolio for income, but whose portfolio is relatively small and who struggle to generate an excess of income - may even need to erode capital.

These people cannot afford to lose capital or erode it too quickly, as they have very few good options for rebuilding that capital and therefore require a low risk approach. Normally, that would mean diversification or safe low-returning investments such as term deposits. However, these folk also rely on the income (preferably spread across the year) and the lower the return, the higher the likelihood they will need to eat into capital. Their portfolio is probably also too small to diversify at a stock-specific level. I am guessing there are quite a few retirees with $50-$200k in savings on top of the family home who would be in such a position.

Faced with such a situation, I personally would try to put 60-80% in rolling term deposits and then look for opportunities with the potential for some capital growth for the remainder, aiming for a lower risk end of spectrum and good liquidity. Right now, I would probably choose a selection of secondary market bonds with resettable rates, property trusts and share funds. This is where I think MLN has a niche - providing exposure to offshore markets and currency movements while still paying regular, large dividends in a tax-favourable structure. It is also liquid, has low exit/entry costs (brokerage) and covered by local regulation. At 20% discount, the downside seems capped to a degree.

I would be interested in hearing from posters who can identify other investments that meet these criteria.
You have described me and my Family Trust very well.
I do nearly all my fiscal transactions through my Family Trust,
and use this income source to top up my pension.I search for
Divvy Stocks for the above reason(s). The years excess is returned
back into divvy investments.
Must admit I bought heaps of FBU when they were ~$6.00 , still have them.
Cheers and Thanks for your posts
BB:)

[Lizard]

MLN have more than recovered the NAV lost in paying out a 2% dividend last month, despite turbulence in global markets. They are still trading at a 20% discount to NAV (at 71cps). I think they make a logical addition to a diversified portfolio at current prices, particularly for those requiring regular income from their investments.

MLN have put on a pretty good showing in recent months, with increased NAV, divs and s.p.

Currently trading at 78cps and has paid a 1.77cps div since July post, for a total shareholder return of 23.5% in 4 months. Next div 1.81cps (up 8.4% from the 1.67cps in Dec 2012). Discount to NAV has dropped back to more typical levels of 16-18%, but could still close the gap further if they can convince the market that they have improved their form.

[BlackCross]

Discount to NAV has reduced considerably in the last few weeks and is now around 10 or 11%. I suspect buying in their own shares is a major part of the reason.

There's lots I don't like about the way this 'share' is run but do like its exposure to Europe at the moment and did like the discount to NAV when it was around 18% - I have to say though that if the discount gets below 4% I'd sell and move the money to a properly run overseas European Investment Trust.

[see weed]

Was I the only STer at Marlin AGM yesterday? They put on a good lunch. Roast beef & pork etc.It was a mirror lunch to Brm Lunch a week before. Nice view of Ellerslie race course. A very relaxed meeting and not too many questions asked.

[see weed]

Was I the only STer at Marlin AGM yesterday? They put on a good lunch. Roast beef & pork etc.It was a mirror lunch to Brm Lunch a week before. Nice view of Ellerslie race course. A very relaxed meeting and not too many questions asked.

inception.
Their total return is down from 28.5% last year to 14.6% this year, but total return is up 51.5% since

[smtrader]

Whats the thoughts on MLN lately?

[tim23]

Continue to trade at discount to asset backing, bit like BRM & KFL good dividend yield play though.
Whats the thoughts on MLN lately?

[Balance]

Continue to trade at discount to asset backing, bit like BRM & KFL good dividend yield play though.

Paying dividends from capital described as good dividend yield play?

[smtrader]

Paying dividends from capital described as good dividend yield play?

Waaaaa? they pay dividend from capital?? isnt the portfolio held generating dividends?

[777]

Paying dividends from capital described as good dividend yield play?

Distributing capital gain along with dividend income. The same as all unit trusts and in Australia a requirement to so.

You are just scaremongering.

[smtrader]

Distributing capital gain along with dividend income. The same as all unit trusts and in Australia a requirement to so.

You are just scaremongering.


That sounds better!


Capital gains and plunged in capital are quiet different.


777, what about your thoughts on the effect of fx on them? I haven't looked at unit trust in depth and don't know if they hedge their dividend income streams or even if they can? My only thought is that as the nzd is low, naturally these securities value denominated in NZD would be high and vice versa?

[777]

That sounds better!


Capital gains and plunged in capital are quiet different.


777, what about your thoughts on the effect of fx on them? I haven't looked at unit trust in depth and don't know if they hedge their dividend income streams or even if they can? My only thought is that as the nzd is low, naturally these securities value denominated in NZD would be high and vice versa?

Not sure whether they hedge or not. With the number I hold I should probably know.

Have a look back through this thread and you will see a consistent "anti Carmel" in all of Balances posts.

[tim23]

Well they are a good yield play as it turns out. I collect their dividends quarterly so I guess I might know.
Paying dividends from capital described as good dividend yield play?

[Balance]

Distributing capital gain along with dividend income. The same as all unit trusts and in Australia a requirement to so.

You are just scaremongering.

So Brian Gaynor was also scaremongering?

https://www.google.co.nz/search?q=marlin+fund+pays+dividends+out+of+capital&ie=utf-8&oe=utf-8&client=firefox-b&gfe_rd=cr&ei=lW9BV_XpFKfu8wegtrD4BA

Excerpt : "Marlin paid a 7.43c per share dividend in its June 2012 year even though it reported a loss of $12 million. These dividends were paid out of capital and the company now has an accumulated earnings deficit of $11 million. These dividends are counter-intuitive because one of the advantages of a closed-end fund is its ability to retain financial resources in a market downturn so that it can fully participate in a market recovery. Marlin's dividend payments negate one of the clear advantages of a closed-end fund."

The sp is well below $1.00 issued price so how can there be capital gain (losses obviously exceeds gains) to distribute from? Logic alone tells you that Marlin is creating dividends by giving back the punters their capital back!

777 sounds like a plant by Fisher Funds to keep the good times going by posting what are blatantly misleading comments - just as Fisher Funds create the illusion of profitability by distributing 'dividends'.

Actually, it's about management fees for eternity? Heads they win, tails you lose.

[winner69]

So Brian Gaynor was also scaremongering?

https://www.google.co.nz/search?q=marlin+fund+pays+dividends+out+of+capital&ie=utf-8&oe=utf-8&client=firefox-b&gfe_rd=cr&ei=lW9BV_XpFKfu8wegtrD4BA

Excerpt : "Marlin paid a 7.43c per share dividend in its June 2012 year even though it reported a loss of $12 million. These dividends were paid out of capital and the company now has an accumulated earnings deficit of $11 million. These dividends are counter-intuitive because one of the advantages of a closed-end fund is its ability to retain financial resources in a market downturn so that it can fully participate in a market recovery. Marlin's dividend payments negate one of the clear advantages of a closed-end fund."

The sp is well below $1.00 issued price so how can there be capital gain (losses obviously exceeds gains) to distribute from? Logic alone tells you that Marlin is creating dividends by giving back the punters their capital back!

777 sounds like a plant by Fisher Funds to keep the good times going by posting what are blatantly misleading comments - just as Fisher Funds create the illusion of profitability by distributing 'dividends'.

Actually, it's about management fees for eternity? Heads they win, tails you lose.

....and the discount to NTA is essentially the present value of future management and performance fees

[777]

Believe what you like Balance. Your negativity on most threads is boring. You can return to my ignore list. Bye

And no, I am not as plant by anyone. Just a happy shareholder who has done well out of these funds by buying at the right time and selling occasionally when they close in ion their NTA. The warrants have also been a successful play.

[Balance]

Believe what you like Balance. Your negativity on most threads is boring. You can return to my ignore list. Bye

Haha - facts are facts. Not nice being caught out?

And the fact is that Fisher Funds create the illusion of dividends by paying unit holders back their capital - meanwhile earning management fees every year, come sunshine or as in the case of Marlin and Barammundi, come hail as that has been the case with NTA still below IPO price.

[smtrader]

So Brian Gaynor was also scaremongering?

https://www.google.co.nz/search?q=marlin+fund+pays+dividends+out+of+capital&ie=utf-8&oe=utf-8&client=firefox-b&gfe_rd=cr&ei=lW9BV_XpFKfu8wegtrD4BA

Excerpt : "Marlin paid a 7.43c per share dividend in its June 2012 year even though it reported a loss of $12 million. These dividends were paid out of capital and the company now has an accumulated earnings deficit of $11 million. These dividends are counter-intuitive because one of the advantages of a closed-end fund is its ability to retain financial resources in a market downturn so that it can fully participate in a market recovery. Marlin's dividend payments negate one of the clear advantages of a closed-end fund."

The sp is well below $1.00 issued price so how can there be capital gain (losses obviously exceeds gains) to distribute from? Logic alone tells you that Marlin is creating dividends by giving back the punters their capital back!

777 sounds like a plant by Fisher Funds to keep the good times going - management fees for eternity. Heads they win, tails you lose.

Enjoy!

Well there is a bias when you are anti something all together. You have to give a full picture.

I cant be bothered in going into detail as to why for some (in my opinion everyone should have a percentage of their portfolio) should be in managed funds.. specially closed ones as well, but il just give a quick view as to why.

First - If you try to time the market (like in another post somewhere i saw someone mentioning Martin Hawes is selling down his portfolio), in my opinion that's stupidity, because timing the markets are for gamblers and speculators.. no one can claim that they have and won.. yeah you might get lucky, but luck isn't an investment strategy.

Second - I completely believe in being able to pickup on technical and fundamental analysis to have good trades and to change holding levels and composition, but if you think that alone is enough then also its a stupid move.. after all again and again it has shown FOR MOST (and im talking about atleast 95% of all sophisticated investors) that you can not beat the market, so don't rely on your awesome picking skills.

Not going to go into TONS of other reasons, but the point i want to make is this, you have to allocate a percentage of your overall holding to be dedicated to managed funds.. and if MLN isn't the greatest in your opinion, then should diversify that percentage of holdings into many funds, because during major events you would be almost certain the managers aren't going to sell down the shares at cheap price (the holders of the shares in the fund might) but you if you don't, unrealised losses won't occur..

So its not about beating the market, you have to think of it as an insurance policy. The key is to figure out the number of funds to hold in, the % of your portfolio in funds, the markets you are gaining exposure to and the levels of dividends paid as a % of your portfolio you wish to acheive..


finally though to get back to your main point.. MLN has been paying on average 7cents per share per year over the past 10 years.. so 70 cents Plus as off this week around 80 cents is the price per share.. that's 1.5 dollars per share total since inception.. if you look at any hedge fund manager, the number one rule is guard your capital first by tweaking this "ALL WEATHER PORTFOLIO" and then go ahead with perhaps 20% of your portfolio on "GAMBLING" or taking bets - A.K.A to pick certain stocks, do trades, or use your magic ball to forecast the next crash like Martin Hawes

:t_up:

[Balance]

Well they are a good yield play as it turns out. I collect their dividends quarterly so I guess I might know.

You are a fund manager's dream investor!

Give them $1.00 and they pay you back part of it every year as a 'dividend' while charging you management fees on what remains of the $1.00 - what a wonderful scheme!

[Balance]

finally though to get back to your main point.. MLN has been paying on average 7cents per share per year over the past 10 years.. so 70 cents Plus as off this week around 80 cents per share.. thats 1.5 dollars per share total.. if you look at any hedge fund manager, the number one rule is guard your capital first by tweaking this "ALL WEATHER PORTFOLIO" and then go ahead with perhaps 20% of your portfolio on "GAMBLING" or taking bets - A.K.A to pick certain stocks, do trades, or use your magic ball to forecast the next crash like Martin Hawes

:t_up:

just go into a global index fund in the DJI - you would have outperformed Marlin by leaps and bounds.

[smtrader]

just go into a global index fund in the DJI - you would have outperformed Marlin by leaps and bounds.

I don't disagree with you some funds are better than others.. principle is should diversify your exposure to funds as well, but its a complete mistake to negate them, and anyone who does will get bitten during a downturn.

[mfd]

I don't disagree with you some funds are better than others.. principle is should diversify your exposure to funds as well, but its a complete mistake to negate them, and anyone who does will get bitten during a downturn.

If you're after insurance in case equities crash, wouldn't you be better off with cash or bonds than a more expensive exposure to equities?

[smtrader]

If you're after insurance in case equities crash, wouldn't you be better off with cash or bonds than a more expensive exposure to equities?

Bonds should be held all the time as a % of your holding.. so is cash precisely for a crash (assessed & adjusted from time to time depending on certain measures you take into account such as VIX etc. and your macro economic outlook) but you still need a % explicitly for funds (a combination of them to have a balanced exposure across continents, markets, industries, cycles & securities[including funds that primarily deal with bonds]) .. you need that for a balanced portfolio..

The point i was making earlier was that a specific allocation for funds is necessary if you want a to safe guard your capital and have modest balanced return with less hands on approach. A combination of a few is best for risk management. MLN or other funds should be part of a balanced portfolio.

I love making bets.. picking stock or using other instruments, i'll win some and loose some, but i'll be naive to think i know best. And it will be only part allocated for my betting portion.. i'd like to know the rest of my holdings is balanced out to give me solid steady income stream overtime, with the upside of gains and the peace of mind that i can go on vacation and shut down my computers and get off the grid whenever i want :D

[percy]

....and the discount to NTA is essentially the present value of future management and performance fees

Ecactly.!!!!!!!!!!!!

[percy]

You are a fund manager's dream investor!

Give them $1.00 and they pay you back part of it every year as a 'dividend' while charging you management fees on what remains of the $1.00 - what a wonderful scheme!

Right on the money,as per usual.!!
A lot of us have made a lot of money following your advice,and most probably more importantly, you have also saved us losing a lot of money.

[Sideshow Bob]

I held Kingfish for a reasonable while - mainly as a default holding for NZX and a place to park some money. Did quite well out of it between divvy reinvestment and market growth, however was always conscious that the divvy payout ratio wasn't sustainable, especially when look at the holdings. The divvies from these were not enough for the Kingfish payout - so coming from capital. Could argue whether capital vs capital growth is funding it - but essentially the same thing - as in the end it ain't from divvies received. A major downturn would see these majorly punished.....

[Balance]

Good case in point of what this fund is about :

Quarterly dividend of 1.72 cps.

https://www.nzx.com/companies/MLN/announcements/282841

But fund actually lost 6.2% in the quarter.

https://www.nzx.com/companies/MLN/announcements/282215

Dividend yield story? More like dividend yield fairy tale!

Amazing how many fall for this trick/illusion of 'performance' so manager can keep clipping the management fees etc.

[winner69]

Good case in point of what this fund is about :

Quarterly dividend of 1.72 cps.

https://www.nzx.com/companies/MLN/announcements/282841

But fund actually lost 6.2% in the quarter.

https://www.nzx.com/companies/MLN/announcements/282215

Dividend yield story? More like dividend yield fairy tale!

Amazing how many fall for this trick/illusion of 'performance' so manager can keep clipping the management fees etc.

Wonder how many shareholders reinvest their divies - Marlin TSR return calculation assumes they do

Balance - you understand this Adjusted NAV calculation

[BIRMANBOY]

Lol...following anyone's advice is just ludicrous and then you choose Balances advice ????....the poster who has yet to make any positive comment about any share anywhere at any time as far as I can see. I did look at one point but gave up after an hour.
Right on the money,as per usual.!!
A lot of us have made a lot of money following your advice,and most probably more importantly, you have also saved us losing a lot of money.

[Balance]

Lol...following anyone's advice is just ludicrous and then you choose Balances advice ????....the poster who has yet to make any positive comment about any share anywhere at any time as far as I can see. I did look at one point but gave up after an hour.

In other words, you have obviously missed out on great stories like Heartland, THL and Scales for examples. :D

Instead, probably in Snakk, Sea Dragon, Barramundi etc? Creatures and animals with slippery tendencies?

[Balance]

Wonder how many shareholders reinvest their divies - Marlin TSR return calculation assumes they do

Balance - you understand this Adjusted NAV calculation

Haha - you mean they pay the holders 'dividends' and then add back the 'dividends' to show 'real' returns?

Okay and acceptable practice if they pay dividends all out of gains and dividends but we know that's not what they do.

[BIRMANBOY]

I'm happy for you...I was a little worried about your state of mind for a while there..was getting ready to start planning an intervention.
In other words, you have obviously missed out on great stories like THL and Scales. :D

[Balance]

I'm happy for you...I was a little worried about your state of mind for a while there..was getting ready to start planning an intervention.

Thanks for your concern but it is what it is - can understand your sentiment if you happen to be in shares and companies which I comment negatively on as I think they possess negative attributes and features.

I thought that's what this forum is about? Posters commenting on positives and negatives?

[BIRMANBOY]

Absolutely correct positives and negatives ...and we know whats more likely to be coming from your end don't we? Thousands of satisfied shareholders, who probably cant be bothered countering your negativity, would in my view, outweigh your comments but by all means don't let me inhibit your posts. I think the problem lies in that your view of this, and the other Fisher funds, seems unable to understand or comprehend that good returns can be made in many shares given the right circumstances. You seem unable to see this..or choose to ignore it. Buy at the right time and even less than perfect situations can return well for you but a simplistic evaluation such as you keep pushing along ad infinitim is just that..simplistic.
Thanks for your concern but it is what it is - can understand your sentiment if you happen to be in shares and companies which I comment negatively on as I think they possess negative attributes and features.

I thought that's what this forum is about? Positives and negatives?

[Balance]

Thousands of satisfied shareholders

Will make for a new definition in the Oxford English dictionary of the word 'satisfied'.

Reminds me of Fawlty Towers !

http://www.telegraph.co.uk/travel/lists/Fawlty-Towers-20-of-Basils-best-rants/

Have a look at the last video and ENJOY! :D :D :D

[PLYNCH]

I wonder how many options will be taken up this week?The option exercise price is 81cents with the share price being 79/80.
The share price is about a 10% discount to NTA of 88cents.
This being a poorly performing fund I would have thought a discount of 15-20% would be more appropriate.

[Balance]

I wonder how many options will be taken up this week?The option exercise price is 81cents with the share price being 79/80.
The share price is about a 10% discount to NTA of 88cents.
This being a poorly performing fund I would have thought a discount of 15-20% would be more appropriate.

Share buyback, capital paid back as 'dividends', warrants issued to replenish the capital paid out as 'dividends' etc etc - 20% discount is not enough.

Management fees - heads they win, tails you lose.

[Balance]

http://www.nzherald.co.nz/business/n...ectid=11723746

Excerpt : "Other examples of the worship of false gods abound: the NZX listed investment companies run by Fisher Funds long ago instituted a policy whereby each quarter the funds give shareholders back some of their capital.

Directors label this return of capital a dividend thereby giving investors the warm fuzzies. You can however see from the accounts of the Marlin Global Fund, for example, that most of the dividends are actually a return of capital.

For example Marlin Global pays a dividend of 6.88 cents per share which on a share price of 79 cents is a dividend yield of 8.7 per cent.

This of course looks fabulous to the naive yield crazed investor but the reality is that all of this "dividend" is actually a return of the capital of shareholders.

According to the Marlin profit and loss account for the year ended 30 June 2016 dividend and interest income of $966,000 doesn't even cover operating expenses of $1.65 million.

This latter figure is made up of a management fee of $880,000 and various other operating costs.

There is no actual earnings, in the conventional sense of the term, available to fund a dividend. One could take this capital distribution model to its ultimate conclusion by paying out all of the company's capital to shareholders thereby delivering a fabulous yield of 100 per cent."

FOOLS AND THEIR MONIES ARE ALWAYS PARTED.

[BlackCross]

http://www.nzherald.co.nz/business/n...ectid=11723746


FOOLS AND THEIR MONIES ARE ALWAYS PARTED.

Couldn't get that link to work?

Googled and got this ?
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11723746

[Beagle]

I won't be putting any of my Mum's money into Fisher Funds "highly creative" 8% dividend yield funds.

[Balance]

I won't be putting any of my Mum's money into Fisher Funds "highly creative" 8% dividend yield funds.

Since inception, down 20.42% but DJI is up 62.37% tells the story.

But management fees continued to be paid for this lack of performace.

[Balance]

https://www.forbes.com/sites/laureng.../#317d23d9286b

Warren Buffett has said it before and he'll say it again: Don't try and beat the market with pricey, actively-managed funds. You're better off with a boring, low-cost index fund.

[Marilyn Munroe]

https://www.forbes.com/sites/laureng.../#317d23d9286b

Warren Buffett has said it before and he'll say it again: Don't try and beat the market with pricey, actively-managed funds. You're better off with a boring, low-cost index fund.

To expand Balances hypothesis an excellent book on this subject is A Random Walk Down Wall Street.

The author argues that asset prices typically exhibit signs of a random walk and in the long term actively managed funds often fail to outperform market averages.

Boop boop de do
Marilyn

[PLYNCH]

October update out today.The only winner here is Fishers.Shareholders would be better off in index funds.

[tim23]

What I can't figure out is given they are invested in large cap stockss (outside NZ & Australia) if they sold all their holdings on Monday (and their holdings are not so large to move prices like say KFL or BRM) then they would achieve over $1.00 so why is the discount to share price so big?

[stoploss]

What I can't figure out is given they are invested in large cap stockss (outside NZ & Australia) if they sold all their holdings on Monday (and their holdings are not so large to move prices like say KFL or BRM) then they would achieve over $1.00 so why is the discount to share price so big?

They aren't going to wind it up ...they wouldn't get any more fees ......

[tim23]

They aren't going to wind it up ...they wouldn't get any more fees ......
Yes good point but still think the discount is too big - its bigger than KFL when the reverse should apply?

[Beagle]

Yes good point but still think the discount is too big - its bigger than KFL when the reverse should apply?


Had a look at this. I think the Marlin portfolio is now being managed by an external fund manager, can't remember who ? but quite probably a better bet than local fund manager "expertise". Underlying investments look well spread and a 16-17% sizeable discount to NTA is right at the very top end of what I think is warranted. Possibly a bit cheap and a quick easy way to get exposure offshore and benefit from the potential for the $Kiwi to fall further. MLNWC warrants look interesting.

[tim23]

Warrants had a good day on a poor day on the NZX - I think the discount is excessive given how easy it would be liquidate their holdings.

[winner69]

Discount to NAV has been about current levels for a while .....what's going to change that?

[Beagle]

Warrants had a good day on a poor day on the NZX - I think the discount is excessive given how easy it would be liquidate their holdings.

Yeap I "hounded up" a few and appreciate your earlier comments regarding the size of the discount to NTA. Warrants exercise price is 83 cents in April 2019 adjusted for dividends paid on the shares in the period from issue until exercise. The way I read it the adjusted exercise price is just on 81 cents now taking into account the June 2018 dividend paid of nearly 2 cps. 1:4 was the issue ratio so NTA of MLN shares needs to be adjusted for future dilution of the exercise of the warrants in due course. Warrants give a lot of bang for buck if the markets head north but could be worthless if the opposite happens. We should know whether this trade war talk is just that, talk, or something far more serious well before April 2019 so I like the optionality the warrants give in terms of exposure to a significant investment in overseas shares without outlaying much money now. I'm not going to try and value the warrants other than to point out that the exercise price keeps going down every time MLN pays a dividend so you get a free carry in terms of the optionality aspect, i.e. exercise price + current warrant price is slightly less than the current share price. My gut tells me the warrants are cheap and the shares a little bit cheap. Wouldn't mind another 100K but probably have to pay more after this post lol

[percy]

Should you find yourselves getting excited,the MLN 10 year chart should cool you off a bit..!!...lol.
Take care.

[tim23]

Good points - I have shares in AFI and they trade around NTA so the 16% with MLN seems to be excessive. I got some free warrants and they have recently found a few more buyers which has given them a nice boost.

[winner69]

Just as well you guys Balance is on holiday at the moment

He would be adding to the discussion

[winner69]

A large part of that discount to nav is the future value of those excessive performance fees

[777]

Just as well you guys Balance is on holiday at the moment

He would be adding to the discussion

Wouldn't matter as I have him on my ignore list. A list of one.

[percy]

A large part of that discount to nav is the future value of those excessive performance fees

Exactly.!!!!...…………...

[Beagle]

Just as well you guys Balance is on holiday at the moment

He would be adding to the discussion

LOL he'd go into orbit over this. Discount to NAV of about 10-12% is warranted, head shares are possibly about right taking into account the future dilutionary effect of warrant exercise. Warrants look cheap but I could be wrong so its just a small position.

[tim23]

Big volume today and nice rise in the warrants - market seems to have woken up to value, next the head shares...

[winner69]

Big volume today and nice rise in the warrants - market seems to have woken up to value, next the head shares...

Not really the market ....just beagle and a few of his/your followers

[tim23]

Not really the market ....just beagle and a few of his/your followers
I'm flattered as don't have any followers! But 300,000 was quite good volume probably highest since listing - sold 1/2 mine off today 8c

[Beagle]

I'm flattered as don't have any followers! But 300,000 was quite good volume probably highest since listing - sold 1/2 mine off today 8c

Thank you :) If you'd like to sell any more at that price that would be much appreciated.

[Snow Leopard]

Bit of a surprise to me that there were any Marlin warrants currently listed.
Did a check and also discovered some new Kingfish KFLWE warrants as well.

I need a new data supplier who is up with the game, but nobody seems to be reliable for NZX End of Day Data these days.

[Beagle]

29m warrants against 119m shares. http://www.marlin.co.nz/investor-centre/portfolio-performance/ Lots of doom and gloom recently with threats of trade wars but if its all bluster and part of the Don's negotiating tactics then they might have another good year and return another 23% in which case in nine months time the NAV could be about 17% higher at $1.22.
Warrants exercise price is adjusted down for all dividends paid which are 2% per quarter of nav so dividends paid / payable during the warrant term will be about 8 cps so I expect an exercise price of ~ 75 cps. If the international markets do well there is serious potential upside to the warrants in percentage terms, [perhaps 3-400%), whereas on the other hand the maximum downside is 8 cps, 100% and you're controlling appox $1 per share of assets at present on an adjusted basis. I like the optionality of these warrants confer and the potential upside and maximum downside.

On the other hand if one buys the shares the maximum downside is quite obviously 89 cps and the upside on a percentage basis isn't nearly as strong. I chucked these in my black and shoals option pricing model this morning and got a price answer too good to go into print with but suffice to say it was more than 8 cents :D

[tim23]

Thank you :) If you'd like to sell any more at that price that would be much appreciated.
Did you buy some more on Thursday?

[Beagle]

Did you buy some more on Thursday?

Mopped up a few more stragglers.

[winner69]

Mopped up a few more stragglers.


Don’t forget to sell a few weeks/months before the exercise date or else you might have to front up zillions to capture the profits

[Beagle]

Don’t forget to sell a few weeks/months before the exercise date or else you might have to front up zillions to capture the profits

Conservative hound isn't going to buy any more than he's happy to exercise at ~ 75 cps.

[winner69]

Nice one percy, a good post

[Baa_Baa]

Nice one percy, a good post

An ex-post, he mustn't be comfortable criticising the hounds decision on this one? I thought he made a good point.

[Beagle]

Beagle reckons no other mutt on this forum can value the optionality of these warrants...some tricks and the resultant feed are best not shared :D
TA speaks for itself, can't hide that.

[winner69]

Beagle reckons no other mutt on this forum can value the optionality of these warrants...some tricks and the resultant feed are best not shared :D
TA speaks for itself, can't hide that.

......some pussy cats are pretty clever though

[tim23]

Beagle reckons no other mutt on this forum can value the optionality of these warrants...some tricks and the resultant feed are best not shared :D
TA speaks for itself, can't hide that.
The buyers at 2.5c will be feeling pretty smart - me not one of them!

[Beagle]

The buyers at 2.5c will be feeling pretty smart - me not one of them!

Very little volume at that price and were a few people that had them issued for free and didn't want them. Since early May NTA and head shares up about 5 cps and straight on the warrants it goes.

Be great if all this trade war rhetoric dies down over the next few months and it proves to be simply "The Don's" way of doing business and the head shares went up say 15 cents wouldn't it. Soon we'll have Cindy back wrecking everyone's confidence even more and maybe sending the Kiwi dollar down further, that'd help too.

Suppose that doesn't happen and NTA stays about $1.045 and simply marks time in terms of earning in line with the dividend policy and then the warrants are exercisable at ~ 75 cents...hmmm...pretty big discount to NTA there !

[Beagle]

......some pussy cats are pretty clever though


Cunning cool cat :)

[percy]

Nice one percy, a good post

Yes,was trying to be helpful,and give a word of wisdom ,after I made the same mistake years ago, with one of Fisher Funds warrants.May have brought Marlin at issue,sold, and loaded up with more warrants,which went down nearer conversion,when I thought I would gain massive upside leverage.
So as I could not remember the full facts,and the thought of spending hours trying to find the details, I decided it was not worth the effort,and deleted my post.

[Snow Leopard]

If you consider that:

the current exercise price of these warrants is as near to $0.81* as makes no difference;
and that the difference between the heads at $0.89 and these warrants at $0.08 is also $0.81;

then you can see that, based on the real world experience of previous MLN and similar entities profligate warrant emissions, the market attitude to these things is:

Stuff your fancy formulae, these things are mangy flea ridden dogs.


Snow Leopard recommendation:
https://media-cdn.tripadvisor.com/media/photo-s/06/d7/ef/94/the-calgary-zoo.jpg


*$0.83 - $0.0196 of divvies

[winner69]

Fisher Funds probably happy collecting their $2.7 million performance bonus

Keeping skin in the gain ...use 25% of it to buy more shares (on market)

That should stop the discount to NAV getting any greater

[winner69]

Doing research

I see they added Facebook to the portfolio in April ......sold Amazon to fund it

Still up a bit on FB but AMZ has continued to roar ahead

[Beagle]

If you consider that:

the current exercise price of these warrants is as near to $0.81* as makes no difference;
and that the difference between the heads at $0.89 and these warrants at $0.08 is also $0.81;

then you can see that, based on the real world experience of previous MLN and similar entities profligate warrant emissions, the market attitude to these things is:

Stuff your fancy formulae, these things are mangy flea ridden dogs.


Snow Leopard recommendation:
https://media-cdn.tripadvisor.com/media/photo-s/06/d7/ef/94/the-calgary-zoo.jpg


*$0.83 - $0.0196 of divvies

Cool picture.

[Beagle]

If you consider that:

the current exercise price of these warrants is as near to $0.81* as makes no difference;
and that the difference between the heads at $0.89 and these warrants at $0.08 is also $0.81;

then you can see that, based on the real world experience of previous MLN and similar entities profligate warrant emissions, the market attitude to these things is:

Stuff your fancy formulae, these things are mangy flea ridden dogs.


Snow Leopard recommendation:
https://media-cdn.tripadvisor.com/media/photo-s/06/d7/ef/94/the-calgary-zoo.jpg


*$0.83 - $0.0196 of divvies

Except that someone cleaned out all the head shares at 90 cents this morning so given the warrant exercise price is 81 cents (adjusted for future dividends paid) then it stands to reason the warrants even without the optionality and leverage they confer should be worth 9 cents with ( the benefits of optionality and leverage thrown in for free). I love a free lunch !

[YoungBuck]

Could someone please explain to me how dividend ammount/supp/imputation works?

I have an idea of how they work. But how do they actually play out?

If I had one share and the dividend amount was 1.96c the Supp 0.074c and the imputation 0.162c. What would actually arrive in my bank account?

Also, 33% tax rate if that is relevant.

Thanks in advance.

[777]

First of all ignore the Supp. That is for overseas investors due to missing out on Imp credits.

Therefore, and we are talking Marlin here, you will get the full 1.96c in the bank. As you are on 33% tax then nothing for you to do as Marlin is a PIE entity and your final tax is 28%. You don't have to include PIE distributions on your tax return. Your statement is either a PIE statement or a dividend statement Quite clearly indicated.

The only advantage of declaring the payout is if you are on 17.5% or 10.5% tax rate. In this case you can claim any RWT or Imputation credits. In yopu case this is not applicable.

[winner69]

Discount to NAV down to 13% as at 31/7

Not the best week for MLN

[YoungBuck]

First of all ignore the Supp. That is for overseas investors due to missing out on Imp credits.

Therefore, and we are talking Marlin here, you will get the full 1.96c in the bank. As you are on 33% tax then nothing for you to do as Marlin is a PIE entity and your final tax is 28%. You don't have to include PIE distributions on your tax return. Your statement is either a PIE statement or a dividend statement Quite clearly indicated.

The only advantage of declaring the payout is if you are on 17.5% or 10.5% tax rate. In this case you can claim any RWT or Imputation credits. In yopu case this is not applicable.

Understood. Much appreciated.

[Beagle]

Discount to NAV down to 13% as at 31/7

Not the best week for MLN

It was a rough week for fang stocks with facebook in particular getting slammed.

[winner69]

Except that someone cleaned out all the head shares at 90 cents this morning !

Wonder who bought them?

[percy]

Wonder who bought them?

Really?
No surprises...…………...It was MLN...…………….Who else would?

[Beagle]

I know you guys aren't keen on Marlin and understand why and agree there is no evidence that their analysts add value and I also agree the performance fees are expensive.

As I see it the pending trade war is something of a binary outcome, things will either get resolved or it all turns to custard. We should hopefully know how things are going to turn out within the timeframe of these warrants. Its a bit of a small left field punt from me that things will work themselves out between China and America and that markets will respond fairly positively.

[percy]

[QUOTE=Beagle;723514]I know you guys aren't keen on Marlin and understand why and agree there is no evidence that their analysts add value and I also agree the performance fees are expensive.


Ending up having to convert the options means adding to your exposure, to "there is no evidence that their analysts add value etc.".
Therefore, I would think you would need to sell them before conversion.
And that is the risk.

[Beagle]

Yes ideally it would be good to cash these out for a handsome profit before 12 April 2019, (the exercise date)

Current NTA ~ $102.5, exercise price of warrants ~ 75 cents. Risk is considerably ameliorated by the large potential discount to NTA in my opinion.

Horses for courses...all shares / warrants involve risk. As always its a case of investors weighing up the potential risks and rewards for themselves. Its not my first rodeo...I have seen what happened to Kingfish warrants before....that was a wild ride !

[tim23]

The discount is a bit harsh like I've previously stated unlike KFL or BRM, MLN are invested outside Australasia so if the portfolio was sold on Monday the stakes are so tiny that they won't move the market.

[winner69]

The discount is a bit harsh like I've previously stated unlike KFL or BRM, MLN are invested outside Australasia so if the portfolio was sold on Monday the stakes are so tiny that they won't move the market.

I note that at 31/7 the discount to NAV for BRM was about the same as MLN .....so your argument about liquidity being the reason doesn’t apply

High discounts to NAV are the norm ....always have been and will always be. Do you really think that this will ever change?

[winner69]

Believe it or not gurus who trade these sort of funds have a thing called a z-stat to see how valuations are going ....


.....and on that measure MLN is ever so slightly underpriced at the moment .....but not a SCREAMING BUY

[percy]

I very much doubt MLN has every been,or ever will be a SCREAMING BUY...........lol.

[Beagle]

MLN performance report says they returned 23% for the year to 30 June 2018, not too shabby. Yes their fees and the performance fee is very expensive and yes the warrants are still a cheap short term punt with interesting upside potential.

Warning, this is definitely not a grannies and orphans thing these warrants. They could be worth anything from 0 - 30 cents in April 2019 under a number of scenarios I have modelled. (Thing is and nobody ever talks about this much, all shares could get absolutely smashed in a GFC MK2) and at least with this one you're only risking 8 cents up front. Warrants confer the right to subscribe for shares but not the obligation. Invest in the shares, risk 90 cents per share. Invest in the warrants, risk 8 cents per warrant. Your maximum possible downside between now and 12 April 2019 is clearly a LOT higher per share with the shares than with the warrants but you have the same upside with the warrants. Its risk mitigation.

[winner69]

WINX.ASX good punt, divie due in two weeks

[tim23]

I note that at 31/7 the discount to NAV for BRM was about the same as MLN .....so your argument about liquidity being the reason doesn’t apply

High discounts to NAV are the norm ....always have been and will always be. Do you really think that this will ever change?
I'm saying because Marlin have such tiny holdings in global companies then if they sold the portfolio tomorrow they wouldn't be market moving whereas in NZ or Australia it could do so esp inNZ.
I hold shares in AFI and they trade at about NTA?

[winner69]

I hold shares in AFI and they trade at about NTA?

Punters love AFI eh ...always have.

I see from one of their charts they regularly trade higher that NTA

But that doesn’t automatically mean MLN should trade close to NAV does it ..hardly ever has and unlikely ever to do so.

Obviously completely irrational and makes no sense? Don’t think so, must be a lot of entrenched reasons why it does .....and what’s going change to reverse what’s reality.

[tim23]

Punters love AFI eh ...always have.

I see from one of their charts they regularly trade higher that NTA

But that doesn’t automatically mean MLN should trade close to NAV does it ..hardly ever has and unlikely ever to do so.

Obviously completely irrational and makes no sense? Don’t think so, must be a lot of entrenched reasons why it does .....and what’s going change to reverse what’s reality.
Funny things can happen and one day the market might wake up and say the discount is plain dumb and there might be share price closer to NTA good enough for AFI?

[percy]

Funny things can happen and one day the market might wake up and say the discount is plain dumb and there might be share price closer to NTA good enough for AFI?

If that day should happen please let me know.
Be the day I sell all my shares.!..lol.

[tim23]

If that day should happen please let me know.
Be the day I sell all my shares.!..lol.
Yes I don't necessarily disagree - but sometimes value is staring you in the face and you wish you had acted.

[percy]

Yes I don't necessarily disagree - but sometimes value is staring you in the face and you wish you had acted.

Value is sometimes misleading,it can be hidden or it can be real or fake.
Today I watched an Australian share I was considering buying, ECX drop 40.8%, as earnings growth is only expected to be between 12-17% when they projected earnings growth of between 27-30%.
A lot of value suddenly disappeared.

[kiora]

Funny things can happen and one day the market might wake up and say the discount is plain dumb and there might be share price closer to NTA good enough for AFI?

Actually SP =NTA-value of the cost of the management contract

[Beagle]

Yes I don't necessarily disagree - but sometimes value is staring you in the face and you wish you had acted.


One of the reasons I got in is I am finding it hard to find adequate diversification on the NZX in stocks which I feel are good or fair value. I have repeatedly heard a number of expert commentators on CNBC say that the US market S&P 500 is now trading at about the average of the last 5 years (forward PE about 16.5 times). So many experts have said this I am prepared to take it at face value now.

I think you can find value there on that multiple a lot easier than here. I don't have the time, expertise or inclination to pick individual stocks on the U.S. markets.
The discount this trades at compared to the NTA and the relatively attractive attributes of the warrants cover a lot of evils in terms of management and performance fees in my opinion.

[jg8512]

hi Beagle
One way I keep a track on the valuation of the US market, and subparts of it, is by looking at the reports from Vanguard. They report a whole raft of valuation metrics for each index: S&P 500, small-cap, mid cap, value, growth, etc. I can't post a link as you have to agree to some conditions (but it's free, found via www.vanguard.com). For me, it's a really cheap and easy way to see the overall valuation of the US market components on a consistent basis.

Eg, today for the VTI (a measure of the entire US share market) Vanguard report:

Number of stocks 3654
Median market cap $64billion
Price/earnings ratio 20.8x
Price/book ratio 3.0x
Return on equity 15%
Earnings growth rate 8.2%
Foreign holdings 0%
Fund total net assets $702.1 billion

PS. The P/e ratio is down from 24x at the start of 2017 - earnings growth expectations are stable since then.

[Beagle]

hi Beagle
One way I keep a track on the valuation of the US market, and subparts of it, is by looking at the reports from Vanguard. They report a whole raft of valuation metrics for each index: S&P 500, small-cap, mid cap, value, growth, etc. I can't post a link as you have to agree to some conditions (but it's free, found via www.vanguard.com). For me, it's a really cheap and easy way to see the overall valuation of the US market components on a consistent basis.

Eg, today for the VTI (a measure of the entire US share market) Vanguard report:

Number of stocks 3654
Median market cap $64billion
Price/earnings ratio 20.8x
Price/book ratio 3.0x
Return on equity 15%
Earnings growth rate 8.2%
Foreign holdings 0%
Fund total net assets $702.1 billion

PS. The P/e ratio is down from 24x at the start of 2017 - earnings growth expectations are stable since then.

Thanks, that makes sense as a lot of the NASDAQ stocks would be trading at vastly higher multiples, (often no earnings) than S&P 500.
As you suggest the earnings multiple has come down a lot this year what with the market ostensibly tracking sideways and the corporate tax rate cut.
Chinese markets down 20% this year on fear of trade war. I wish Trump would just go on holiday to the beach already and stop tweeting his nonsense.

[Beagle]

Better fishing this week for the Marlin team, NAV back over $1.04 as of a couple of days ago. $Kiwi tanked about 1% today (for reasons unknown) so NAV effectively about $1.05 today based on known info. Tempted to "hound up" some more warrants...might wait till NAV hits $1.06, (maybe next week ?), then go fishing again.

[winner69]

MLN warrants on fire ...looks like every man and his dog wants toncash in on this certainty

[percy]

MLN warrants on fire ...looks like every man and his dog wants toncash in on this certainty

Your mates from the bowling club being market trend setters.?

[tim23]

Lower dollar helping today still decent gap to NTA but closing at least.

[777]

Lower dollar helping today still decent gap to NTA but closing at least.

But the NTA will have increased as well so gap maintained.

[tim23]

But the NTA will have increased as well so gap maintained.
Find out on Thursday but 3c jump today is biggest day +ve increase I can recall.

[Beagle]

$Kiwi looks very vulnerable, just like the economy and to be frank both look dangerously like falling down a dark rathole with a depth of who knows ? Great to have some money in offshore assets.

[tim23]

$Kiwi looks very vulnerable, just like the economy and to be frank both look dangerously like falling down a dark rathole with a depth of who knows ? Great to have some money in offshore assets.
Hardly - the job market is still strong, a fair bit of the confidence survey in my opinion is a protest vote from employers - we voted National but we lost, time to accept things, the new normal.

[stoploss]

Hardly - the job market is still strong, a fair bit of the confidence survey in my opinion is a protest vote from employers - we voted National but we lost, time to accept things, the new normal.
If employers cut back on investment , job cuts will follow and the economy will tip . Agree Beagle 62 cents here we come , especially with Fonterra spluttering ....

[percy]

……."Bring back Bill."...………..

[Beagle]

A safe pair of hands wherein business could plan with a reasonable degree of certainty.

At issue now is with over 100 different working groups looking at policy framework change, how does business plan 3-5 years down the track now ? For example, how much will water cost per cubic meter for that proposed new irrigation project, will Iwi get a royalty ?, will the greens allow the drawdown from rivers ? is that new multi million dollar irrigation project viable or some future potential white elephant ?

The tax working group is another example. Nobody has any idea at this stage what the policy framework will look like down the track. What will the corporate tax rate be, will there be capital gains tax, a land tax, an inheritance tax, some form of wealth transfer tax. Will GST go up ?
There's simply too much uncertainty about which direction this Govt will lurch in next and its impact on business. In this environment I expect a lot of people in business will simply take a wait and see approach and put a freeze on major capex. This is the reason why small business is at its most pessimistic since the depth of the GFC.

I would argue its not a protest vote, its a vote of no confidence and how do we plan in this environment and if small and medium business stop investing in new projects and stop expanding because its too hard then we're inevitably headed for a serious slowdown.

I plan to allocate more investments overseas and have a degree of urgency around that.

[Patient Panda]

Beagle I hear what you’re saying but surveys are just that, surveys. Real flows are looking very healthy

[stoploss]

Beagle I hear what you’re saying but surveys are just that, surveys. Real flows are looking very healthy
The real flow will be cash out of the country a la Beagle hence the plunging currency ...., not a flow into business investment ... I don’t think the Beagle mentioned the random shutdown of the exploration industry , what next ?

[Joshuatree]

Hardly - the job market is still strong, a fair bit of the confidence survey in my opinion is a protest vote from employers - we voted National but we lost, time to accept things, the new normal.

Agreed, there are so many good things going but we have this politicalised negativity filtering through the threads . Im really disappointed but not surprised in some peoples negative, sore loser attitudes on here, its like if we cant govern we will take everyone down, its a betrayal attitude pervading, careful for what you wish for.

[tim23]

If employers cut back on investment , job cuts will follow and the economy will tip . Agree Beagle 62 cents here we come , especially with Fonterra spluttering ....
Sensible stuff from the Mainfreight AGM - chairman Bryce Plested "Consumers are consuming and confident, building of infrastructure is evident everywhere and the movement of people to areas outside the main centres is exhilerating to see. Our roads and cities are more well-kept than ever - everyone is caring more and trying to do business"

[777]

Not a lot of posts here referring to Marlin.

[tim23]

Not a lot of posts here referring to Marlin.
Agreed - it got a little off track but a post referred to being a good idea to be invested offshore (and MLN is a vehicle for that) because some posters thought NZ going in some rapid downward spiral and some of us begged to differ.

[Beagle]

Lets agree to disagree on where the N.Z. economy and $Kiwi is going. Back to Marlin. Solid bidding this morning at 92 cents. A reminder that the warrant exercise price is adjusted for dividends paid including the just on 2 cents paid in the last quarter and is just on 81 cents. Forgetting about the benefits of the optionality and leverage these warrants confer a well bid SP of 92 cents suggests the minimum warrant price should be 92-81 = 11 cents.

Opportunity knocks ?

[winner69]

Lets agree to disagree on where the N.Z. economy and $Kiwi is going. Back to Marlin. Solid bidding this morning at 92 cents. A reminder that the warrant exercise price is adjusted for dividends paid including the just on 2 cents paid in the last quarter and is just on 81 cents. Forgetting about the benefits of the optionality and leverage these warrants confer a well bid SP of 92 cents suggests the minimum warrant price should be 92-81 = 11 cents.

Opportunity knocks ?

And just imagine if that ridiculous irrational unwaranted stupid discount to NAV narrowed or even got back to par ....wow

You guys making me so envious ......hate missing obvious free lunches ...hmmm


Mind you WINX.AU paying a dividend this week

[Beagle]

LOL you're a character mate. I think we both know some discount to NTA is definitely warranted :)

[tim23]

LOL you're a character mate. I think we both know some discount to NTA is definitely warranted :)
Why is it warranted? - I'm still not convinced that the large discount is justified?

[winner69]

Why is it warranted? - I'm still not convinced that the large discount is justified?


Justified or not ever since Marlin has been around the market (ie the masses) have said a pretty large discount to NAV is warranted (at least most of the time even though a few times times it has come close to par)


The masses are sometimes wrong but honestly whats going to change that view after so many years.

Anyway fund going well at the moment

[winner69]

Discount to NAV shrinking

You guys could be on to something here.

[Beagle]

Bizarre that the shares have been trading ay 95 cents and the warrants at 10 cents. Exercise price is 81 cps so warrant price should be 14 cps. Pretty good delta there for anyone who wants the leverage and optionality that these confer thrown in to the bargain for free.

[winner69]

Bizarre that the shares have been trading ay 95 cents and the warrants at 10 cents. Exercise price is 81 cps so warrant price should be 14 cps. Pretty good delta there for anyone who wants the leverage and optionality that these confer thrown in to the bargain for free.

Share price falling back to somewhere near where the warrants say it should be.

Weird eh

[Beagle]

Overseas markets on fire, still a great delta on the warrants at 12 cps. 95c head share price plus gains to come today from very strong international markets, say 96 cents, less 81 cent exercise price = 15 cent theoretical warrant price, (excluding the value of the leverage and optionality which I would still argue is worth something).

Opportunity knocks with the offer at 12.5 cps ?...you folks decide.

[tim23]

Shame about the suspended trade today was tracking nicely - getting closer to NTA...

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/323821/286679.pdf
Marlin team doing very well and significantly exceeding their benchmark.
Worth noting for those that don't know that this is a PIE fund so 8% distributions are tax free, effective rate for shareholders with a top marginal tax rate of 33% is
therefore 8 / 0.67 = 11.94% gross.
I like the fact that the majority of their fund is invested in North American companies. Warrants theoretical value with shares at 93 cents, (exercise price is now 83 cents less 4 cents dividends paid = 79 cents) is 93-79 = 14 cents per warrant.
Disc: Holding warrants and planning on exercising them when they mature in April 2019.

[winner69]

I see the discount to NAV last count was below 10%

Wonder what’s happened to NAV this week

[Beagle]

Dow 2% to $1.02 as at 9/10/18. Would be under $1.00 now for sure. Sold most of my warrants today.

[winner69]

OMG ...the discount gap to NAV has shrunk dramatically and down to 3%

Good call king ......hope it doesn’t expand again

[winner69]

MLN trading at a premium to NAV according to last announcement

That’s some turn around from the 15% plus discount to NAV a few months ago

You guys called this right in thatbit didn’t deserve to be discounted soo much

[Beagle]

Latest NTA is over $1.00, $1.0061 to be more accurate.
Exercise price was 75 cents so a no brainer to exercise warrants.
Much has been debated about Marlin and their fees and in particular some take exception to the basis upon which the performance fee is calculated, being a function of the 90 day bank bill rate plus 5% per annum.
Nothing has been made of the scalability of their fees which at a base rate of 1.25% less 0.1% for every 1 % of underperformance can go down to 0.75% per annum. I think this is pretty attractive relative to other managers.
I also think the discount to NTA is excessive and even if all shareholders, (unlikely) exercise all warrants the diluted NTA next week will be 95.5 cps, adjusted for subsequent movements in the fund from latest valuation just released to the market this afternoon.
I must say that at 84 cents one is facing the rather delightful prospect of receiving a PIE tax exempt quarterly dividend of 8% per annum based on NTA = approx. 7.64 cps per annum paid quarterly. 7.64 / 84 = 9.1% tax free in one hands which for a taxpayer on a marginal tax rate of 33% (anyone earning over $70,000), this = 9.1/0.67 = 13.58% gross.

I really like their PIE investment structure and their dividend policy which suits me.

They take care of all the FIF paperwork too and there's a dividend reinvestment scheme whereby shares are issued in lieu of dividend at a 3% discount so those that take shares can boost their actual gross return to 13.58 / 0.97 = Gross effective yield = 14% per annum !
Latest quarterly newsletter is here https://marlin.co.nz/assets/Investor-Centre/Marlin-Monthly-Update-March-2019.pdf
They have beaten the global small cap benchmark index over the last 3 years, see here https://marlin.co.nz/investor-centre/portfolio-performance/

Easy way to shift some assets offshore and let them do all the hard work...no work, research or paperwork required.
Any fall in the $Kiwi will of course benefit Marlin shareholders with their assets offshore.

Disc: Significant sized holding.

[couta1]

I'm into these too with a good sized holding for the same reasons.PS-85 yr old neighbour reckons these are the bees knees.

[Beagle]

I'm into these too with a good sized holding for the same reasons.PS-85 yr old neighbour reckons these are the bees knees.

As long as he's not one of Winners bowling club mates we should be all good :)

[winner69]

As long as he's not one of Winners bowling club mates we should be all good :)

I might tell them about your, Couts and kingies efforts with Marlin

They’re getting really pissed off with Oceania so might have some spare cash soon

[Beagle]

I might tell them about your, Couts and kingies efforts with Marlin

They’re getting really pissed off with Oceania so might have some spare cash soon

NO, please don't, we don't want to jinx it lol

[percy]

NO, please don't, we don't want to jinx it lol

LOL.
So true.!.................

[Beagle]

https://www.youtube.com/embed/fzRgBGmPUmY?rel=0

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/333429/298502.pdf
Latest Monthly update.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/333436/298510.pdf

Warrant conversion.

[Beagle]

Good afternoon Beagle,

Thank you for your email query.
As you’re already aware, Marlin Global Limited (Marlin) holds investments & cash denominated in international currencies and is exposed to currency risk as the value of those assets fluctuate with changes in the relative value of the New Zealand dollar. Marlin mitigates this risk by entering into forward foreign exchange (FFE) contracts as & when the Manager (Fisher Funds Management Limited) deems it appropriate.

As at 31 March 2019 the Marlin portfolio has FFE hedges in place that hedge approximately 45% of the Marlin portfolio. (Please note that the level of hedging can change through the year, as & when the Manager deems it appropriate).

Barramundi Limited (Barramundi) holds investments & cash denominated in Australian dollars and is exposed to currency risk as the value of those A$ assets fluctuate with changes in the relative value of the New Zealand dollar. Barramundi mitigates this risk by entering into forward foreign exchange (FFE) contracts as & when the Manager (Fisher Funds Management Limited) deems it appropriate.

Kind regards
Wayne

Wayne Burns
Corporate Manager

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/333635/298749.pdf

Marlin investment manager significantly outperforms the market in march 2019 quarter.

Little known fact is that Fisher Funds ownership changed hands in 2017 and is now owned by TSB community trust.

[mfd]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/333635/298749.pdf

Marlin investment manager significantly outperforms the market in march 2019 quarter.

Little known fact is that Fisher Funds ownership changed hands in 2017 and is now owned by TSB community trust.

Comfortably behind their benchmarks over 5 years though - total shareholder return of 10.7% including the faff of dealing with warrants and reinvesting all dividends, vs 12.2% benchmark. Why would you hold this now we can access international index funds cheaply?

[Beagle]

Comfortably ahead over the last 3 years...current manager doing extremely well. Change of ownership in 2017.
PIE tax free income level is unbeatable through any other overseas investment vehicle.
Simple cost effective portfolio allocation of funds overseas with no FIF drama's.
Current manager is beating the benchmark index.
Ability to buy on market in $Kiwi at very low brokerage rates and at a discount to NTA of as much as 13% at times.
DRP scheme at 3% discount.
TSR stat's to 31 March 2019 affected by near term warrant exercise on 12 April 2019 affecting the share price. Quite unusual for SP to trade at 13.6% discount to NTA
No work whatsoever for the Dog to do.

[couta1]

Comfortably behind their benchmarks over 5 years though - total shareholder return of 10.7% including the faff of dealing with warrants and reinvesting all dividends, vs 12.2% benchmark. Why would you hold this now we can access international index funds cheaply? A no hassle investment that pays a tax free dividend and no FIF crap to attend to. PS-Warrants are easy to deal with ie convert them or sell them. Disc-XXOS sized holding.

[Beagle]

Agree 100% Couta1. Maybe he missed my post on 14% gross yield on the previous page.
My rating HHH - happily holding heaps :)

[mfd]

Agree 100% Couta1. Maybe he missed my post on 14% gross yield on the previous page.
My rating HHH - happily holding heaps :)

You mean they sell enough of their holdings each year to repay you some of your capital? The underlying holdings do not pay that high a yield. If you're after a hassle free overseas fund with the tax paid, why not pay 0.3-0.4% for a smartshares fund rather than 1.25%? Is it worth paying 3-4 times as much for someone to do your selling for you?

I would have zero faith in continued outperformance. The DRP and warrant smells like obfuscation to me, but each to their own.

[winner69]

You mean they sell enough of their holdings each year to repay you some of your capital? The underlying holdings do not pay that high a yield. If you're after a hassle free overseas fund with the tax paid, why not pay 0.3-0.4% for a smartshares fund rather than 1.25%? Is it worth paying 3-4 times as much for someone to do your selling for you?

I would have zero faith in continued outperformance. The DRP and warrant smells like obfuscation to me, but each to their own.


....but if the merry go round keeps going round it will be all OK

[mfd]

....but if the merry go round keeps going round it will be all OK

Very handy that people focus on the merry go round rather than the fees. Maybe we're paying for the entertainment value?

[Beagle]

You mean they sell enough of their holdings each year to repay you some of your capital? The underlying holdings do not pay that high a yield. If you're after a hassle free overseas fund with the tax paid, why not pay 0.3-0.4% for a smartshares fund rather than 1.25%? Is it worth paying 3-4 times as much for someone to do your selling for you?

I would have zero faith in continued outperformance. The DRP and warrant smells like obfuscation to me, but each to their own.

https://smartshares.co.nz/types-of-funds/smartlarge/total-world Passive fund charges are 0.55% per annum v 1.25% for Marlin managed fund
I would simply reiterate 3 facts.
1. I can and have bought at around a 13% discount to NTA, something that simply cannot happen with so called smart shares.
2. I like the PIE structure giving me what is effectively a gross return of 14% per annum on my entry cost.
3. The new manager has been consistently outperforming the relative index in the last 3 years.

You like so called smart shares where you pay $1.00 for $1.00 of passive assets and then pay 0.55% for the manager to mindlessly track some index. This doesn't seem especially smart to me.
I'm paying 87 cents on the dollar (13% discount to NTA) so regarding the extra fees at 0.7% per annum, by virtue of my discounted entry price the first 18.5 years of extra fee are covered, (assuming they only track the index not beat it which hasn't been the case in recent years).

Agree on the 'each to their own" and good luck with your smart shares.

[mfd]

I'm not particularly recommending smartshares and don't hold, it was just an example of a cheaper way to access this kind of fund. The other option is an even cheaper fund e.g. through invest now and do the tax work yourself.

I'll agree that there will be a discount value where this fund becomes attractive, and if you're looking for a simple draw down type arrangement it could be handy. I'm still young and don't need the income so having the higher fees chew up my returns for a few decades would not be ideal - compound interest works against you in this situation. I'm happy leaving others to keep the complex system of DRPs, share buybacks, capital repayments and warrant issuing going.

Fun fact, last year 15% of the paid dividend was funded by dividends marlin received, with the rest coming from sale of investments.

[Beagle]

TEM might be what you're looking for mate. Ultra low costs and exposure to emerging markets and listed on the NZX so simple to access.

[Snoopy]

A no hassle investment that pays a tax free dividend and no FIF crap to attend to. PS-Warrants are easy to deal with ie convert them or sell them. Disc-XXOS sized holding.


Of course what you mean Couta is that the managers of Marlin are the ones that deal with the FIF regime, not you. There is a bit of a myth developing on this forum that the FIF regime is difficult to deal with. Stripped to its basics this isn't true. It is actually no more complicated than withholding tax on fixed interest (two inputs, gross income and withholding tax), for example.

There are only two input figures for FIF:

1/ Start of year opening balance of your investment.
2/ Exchange rate to covert that figure to NZ dollars.

The steps to calculate your tax liability are then:

1/ Work out what 5% of your opening balance comes to.
2/ use that figure as 'deemed income' and pay tax at your marginal tax rate.

That's it!

Dividends can be ignored for tax purposes. Much simpler than the case of owning NZ shares.

SNOOPY

[777]

To add to Snoopy's post.

Also work out the end of year balance and deduct the opening balance and from this figure add any dividends or distribution and if this is less than 5% then pay tax on this amount. CV method.

Of course you have to adjust for buying and selling during the year.

[Beagle]

Trust me on this, neither I or Couta1 need any more paperwork to do than we've already got !
As 33% taxpayers the PIE structure of Marlin's dividends suits us perfectly.

[kiwico]

FIF is fairly straight forward but gets messy if you buy and sell shares in the same tax year which, for simplicity, I try to avoid. Dowse Murray chartered accountants used to provide a FIF spreadsheet for use which I have found very useful - a copy is available here (https://www.dropbox.com/s/gkcjrks5p7q77vu/fif-calculator.xls?dl=0) (although again it didn't deal with buying and selling in the same tax year). Dowse Murray has since merged with another accounting firm so the download link in the spreadsheet no longer works.

[Beagle]

FIF is fairly straight forward but gets messy if you buy and sell shares in the same tax year which, for simplicity, I try to avoid. Dowse Murray chartered accountants used to provide a FIF spreadsheet for use which I have found very useful - a copy is available here (https://www.dropbox.com/s/gkcjrks5p7q77vu/fif-calculator.xls?dl=0) (although again it didn't deal with buying and selling in the same tax year). Dowse Murray has since merged with another accounting firm so the download link in the spreadsheet no longer works.

^^^^Messy = plenty of work.

[voltage]

I use sharesight to keep a record of all my shares and for 1 month I opt for expert plan that gives me premium reports which includes the FIF report, all done in seconds, then I return to investor reporting which is cheaper.

[kiwico]

I use sharesight to keep a record of all my shares and for 1 month I opt for expert plan that gives me premium reports which includes the FIF report, all done in seconds, then I return to investor reporting which is cheaper.

I like the cut of your jib!

[Beagle]

Nice jump in NTA to 98.47 cps on Friday. 88 cents a pretty cheap and easy way to diversify some of one's portfolio offshore and a pretty handy discount to NTA of over the average at 10.6%.
My rating HHH (Hound holding heaps) :)

[Snoopy]

To add to Snoopy's post.

Also work out the end of year balance and deduct the opening balance and from this figure add any dividends or distribution and if this is less than 5% then pay tax on this amount. CV method.

Of course you have to adjust for buying and selling during the year.


I carefully left out the complication of the CV method that allows individuals and certain trusts to dodge their Fair Dividend Rate (FDR) payments in years where the fair dividend rate would still tax investors when there has been no gain. So fair point to mention it 777. However Marlin is a company and as such I don't believe the CV method is available to it as an alternative way to assess FIF tax. I have tried to find a reference to confirm this on the new IRD website. However, all I got to were broken links, so I am going by memory.

If I am right this means that Marlin will be paying tax on investments even when they make a capital loss on those investments, because they must use the FDR option. So yes you avoid having to do the CV calculation if you invest in Marlin. But if you are really worried about doing these CV calculations as an individual you don't have to. You can just pay your tax using the FDR method, the same as all companies do. This means I stand by my claim that, at its core, the FDR method is actually simpler than having to pay tax on dividends that you might receive from NZX listed companies.

SNOOPY

[couta1]

Well Snoopy for those of us holding Marlin shares and on the higher tax rate fortunately don't have to think about which method to use as we don't have to use any.Lol

[Snoopy]

Well Snoopy for those of us holding Marlin shares and on the higher tax rate fortunately don't have to think about which method to use as we don't have to use any.Lol


Being ignorant of the high rate of tax you are actually paying behind the Marlin firewall doesn't mean you aren't paying it. But "Ignorance is bliss" I guess. Don't let me disturb your happiness.

SNOOPY

[couta1]

Being ignorant of the high rate of tax you are actually paying behind the Marlin firewall doesn't mean you aren't paying it. But "Ignorance is bliss" I guess. Don't let me disturb your happiness.

SNOOPY When your getting a near 14% return on your investment as Beagle has already highlighted then ignorance really is bliss.

[Beagle]

When your getting a near 14% return on your investment as Beagle has already highlighted then ignorance really is bliss.

Happiness is a very well fed Beagle :t_up:

[777]

Being ignorant of the high rate of tax you are actually paying behind the Marlin firewall doesn't mean you aren't paying it. But "Ignorance is bliss" I guess. Don't let me disturb your happiness.

SNOOPY

What is high?

28c or 33c is what I pay everywhere else so why am I being ignorant.

Do you also moan about the cost of fees on funds when getting 10-15% returns?

[mfd]

When your getting a near 14% return on your investment as Beagle has already highlighted then ignorance really is bliss.

Slightly misleading to describe this as a return on capital - it is almost entirely a return of capital. Marlin will sell your holdings, regardless of the state of the market, to pay your dividends.

[Snoopy]

What is high?

28c or 33c is what I pay everywhere else so why am I being ignorant.


'High' is more than you would pay for the same investment under other tax structures for the same underlying investment.

On the positive side if you are a top rate tax payer, the PIE structure for Marlin means you will be taxed at a maximum rate of 28%,

On the negative side any capital you have returned to you as a 'dividend' by Marlin would have only been taxed at a rate of 1.5% of the opening balance per year if you had held these assets in your own name, or even in a private company set up by you.

As an example, if you held these assets in your own name for five years, the amount you would have left of your maturing balance after progressively paying tax for five years under the FIF regime would be:

(1-0.015)^5 = 92.7%

Paying just over 7% (7.3%) of the post investment total sounds a lot less than paying the 28% PIE rate for returning capital to me.



Do you also moan about the cost of fees on funds when getting 10-15% returns?


Funds have good and bad years. The worst effect of being comparatively overtaxed will occur in the not so good years.

SNOOPY

[Beagle]

Slightly misleading to describe this as a return on capital - it is almost entirely a return of capital. Marlin will sell your holdings, regardless of the state of the market, to pay your dividends.

Why should we care in the slightest from where our dividends come ?
Its obviously sustainable as despite 5 discounted warrant issues over the years the NTA is approximately still at close to the $1.00 original issue price.
Can you please direct me to any other share on the NZX paying a sustainable dividend that amounts to 14% gross for someone on the 33% tax rate because to the best of my knowledge its unbeatable and also lowers the risk of one's overall portfolio by investing a portion of one's investments overseas in a fund that's beating its relative performance index.
Coutts and I also bought heaps at a deep discount to asset backing. Talk about a winning hand !
QED.

[mfd]

Why should we care in the slightest from where our dividends come ?
Its obviously sustainable as despite 5 discounted warrant issues over the years the NTA is approximately still at close to the $1.00 original issue price.
Can you please direct me to any other share on the NZX paying a sustainable dividend that amounts to 14% gross for someone on the 33% tax rate because to the best of my knowledge its unbeatable and also lowers the risk of one's overall portfolio by investing a portion of one's investments overseas in a fund that's beating its relative performance index.
Coutts and I also bought heaps at a deep discount to asset backing. Talk about a winning hand !
QED.

It's a strategy that worked well during the bull run we've had. If there were a crash that, say, reduced the NAV by 30%, you will find your 'dividends' reduce by the same proportion - the fund sells holdings so that it is able to distribute 2% of NAV per quarter. As snoopy points out above, there are also tax implications.

So long as people understand this dividend is not analogous to a regular company dividend, that is fine. People are welcome to pay the hefty fees for marlin to return their capital to them.

[Beagle]

Their fees are not hefty and they are outperforming the relative index even after paying them and paying these so called expensive FIF taxes.
Adjusted NAV Return, (after fees and taxes) for the last 3 years = 13.4% per annum
Benchmark Index 11.3% per annum

This is a 2.1% average beat per annum after fees taxes and performance fees if any paid over the last 3 years.

Coutts and I accessed this management expertise and significant market outperformance at a whopping 13% discount to NTA and will enjoy a 14% gross dividend going forward.

Some people will see opportunity and others will just see the fees. "There is none so blind as those that will not see"
At 88 cps today this represents a 10.6% discount to last reported NTA late last week of 98.47 cps.
The opportunity is there to achieve diversification internationally in a proven outperformer with a very efficient tax structure at quite a material discount to NTA.
I get it that some people think they're good enough to pick overseas shares themselves and achieve outperformance and I wish them luck with that.
Others may look for a lower cost ETF and be happy to pay $1.00 for each $1.00 in assets content to know they will slightly underperform the market after fees and taxes each year. That seems like a pretty unattractive prospect to me but each to their own...

[mfd]

There fees are not hefty and they are outperforming the relative index even after paying them and paying these so called expensive FIF taxes.
Adjusted NAV Return, (after fees and taxes) for the last 3 years = 13.4% per annum
Benchmark Index 11.3% per annum

This is a 2.1% average beat per annum after fees taxes and performance fees if any paid over the last 3 years.

Coutts and I accessed this management expertise and significant market outperformance at a whopping 13% discount to NTA and will enjoy a 14% gross dividend going forward.

Some people will see opportunity and others will just see the fees. "There is none so blind as those that will not see"

The literature I have read suggests that virtually no active managers are able to outperform over the long run, and that it is impossible to predict which will outperform in the future based on their past performance. The fees are guaranteed, the performance is not.

[couta1]

The literature I have read suggests that virtually no active managers are able to outperform over the long run, and that it is impossible to predict which will outperform in the future based on their past performance. The fees are guaranteed, the performance is not. Like any shareholding if it starts underperforming you can easily sell your shares if you so desire.

[Beagle]

The literature I have read suggests that virtually no active managers are able to outperform over the long run, and that it is impossible to predict which will outperform in the future based on their past performance. The fees are guaranteed, the performance is not.

The fees are in fact not guaranteed. Base fee of 1.25% per annum reduces by 0.1% per annum for each 1% market underperformance.
As Couta1 quite rightly suggests if the manager starts to underperform its easy enough to sell a share that's listed on the NZX.
Their track record in recent years suggests to me the manager and his team know their overseas stuff better than you or I.

[mfd]

The fees are in fact not guaranteed. Base fee of 1.25% per annum reduces by 0.1% per annum for each 1% market underperformance.
As Couta1 quite rightly suggests if the manager starts to underperform its easy enough to sell a share that's listed on the NZX.
Their track record in recent years suggests to me the manager and his team know their overseas stuff better than you or I.

Fantastic, we only need a 10% underperformance for the fees to be competitive. I always prefer to think of the fees in terms of a proportion of my returns which are lost, so the 1.25% fee is likely to take about 12.5% of my returns while other similar funds take more like 3 or 4%, and don't automatically sell my shares whether I think the timing is good or not. Too high a price for me to gamble on future returns, but each to their own.

[Beagle]

We get it you don't like Marlin, that the warrants and DRP are too hard for you to understand as is their proven outperformance.
Good luck with your own strategy.

[mfd]

We get it you don't like Marlin, that the warrants and DRP are too hard for you to understand as is their proven outperformance.
Good luck with your own strategy.

It's not that I don't understand them in isolation, I just don't understand why one fund would have so much going on - it's a merry-go-round of capital with unfunded dividends (based on asset value rather than income or performance), DRPs, warrants and share buy backs. A simpler structure would make any outperformance far easier to see.

I think we may have reached the end of the discussion without going round in circles, so all the best with your fisher funds.

[voltage]

why not just hold the ETF SP500, fees .05%

[couta1]

why not just hold the ETF SP500, fees .05% When you go to a restaurant you have a choice of meals same applies here different tastes for different folks.

[Beagle]

why not just hold the ETF SP500, fees .05%

That question has been answered already at quite some length. If you don't get it, that's fine and I am not here to "sell it" to anyone. I have simply pointed out the opportunity, the PIE structure, the discount to NTA, the gross effective dividend yield, the funds completion of all necessary tax and FIF matters, the advantages of the warrants and the dividend reinvestment scheme and the funds material outperformance of the index in recent years as well as provided links to the company website for further details.

If it doesn't suit some people or they can't or won't see it or think some other alternative is better that's perfectly fine.

[couta1]

That question has been answered already at quite some length. If you don't get it, that's fine and I am not here to "sell it" to anyone. I have simply pointed out the opportunity, the PIE structure, the discount to NTA, the gross effective dividend yield, the funds completion of all necessary tax and FIF matters, the advantages of the warrants and the dividend reinvestment scheme and the funds material outperformance of the index in recent years as well as provided links to the company website for further details.

If it doesn't suit some people or they can't or won't see it or think some other alternative is better that's perfectly fine. Well SUMmed up Beagje, I'm not sure what the obsession with ETFs is they as boring as you know what and I dont do that boring.

[Onion]

Given that Marlin provides exposure to foreign assets, how correlated is the SP with exchange rates?

My casual eyeball comparison of USD exchange rates over the past year against the SP appears to show a loose negative correlation -- perhaps with the SP lagging the exchange rate changes.

So... should I hold back with the current weakness in NZD? The real problem being that I have absolutely no clue (does anyone really) about where exchange rates are headed!

[Beagle]

45% hedging as at 31 March 2019 based on my enquiry of Marlin but it will change as and when the fund's manager see's fit.
As previously noted, the fund has been consistently outperforming against its benchmark in recent years so this suggests their ability to manage currency is also good.
Very happy to have plenty of these in my portfolio.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/334518/299804.pdf

The management team at Marlin have really smashed the ball out of the park over the last year relative to the index and the performance in 2019 has been outstanding.
I feel however that the US market has moved up a lot in the expectation of a trade deal and now its looking less likely the risks to the downside should not be underestimated.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/347410/315575.pdf

Marlin also had a stellar year returning over 32%, 7.6% higher than its global benchmark index.

What a phenomenal year for the markets and especially for the Kingfish group with
Barrmundi outperforming its relevant index by a whopping 13%, (gross return 36%), Kingfish outperformance of 8%, total gross return 39% and Marlin outperformed its index by 7.6%, gross return 32% !!

Well done and a BIG THANK YOU to all three investment teams !!

[stones]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/347410/315575.pdf

Marlin also had a stellar year returning over 32%, 7.6% higher than its global benchmark index.

What a phenomenal year for the markets and especially for the Kingfish group with
Barrmundi outperforming its relevant index by a whopping 13%, (gross return 36%), Kingfish outperformance of 8%, total gross return 39% and Marlin outperformed its index by 7.6%, gross return 32% !!

Well done and a BIG THANK YOU to all three investment teams !!

And so say all of us!!!

[tim23]

Seems MLN is being treated at last as a grown up listed fund now trading at about NTA instead of that crazy discount, it was good fun buying at discount while it lasted.

[Not too Flash]

NAV yesterday 1.0975
Selling Price today 1.18

Seems ridiculous .....

[SPC]

So what do you say about FPH?

NAV 1.41
Market price 3550
Yield .77

ridiculous ? I'd say so...along with many others...

[Beagle]

Seems MLN is being treated at last as a grown up listed fund now trading at about NTA instead of that crazy discount, it was good fun buying at discount while it lasted.

Yes it was great to buy at a discount but it would seem those days are over.
Ahead of NTA and Barramundi more than 12% ahead of latest NTA today. I guess that's what happens when on average over the last 3 years the investment team outperform the market and in the last year the Marlin and Barrmundi team have both outperformed their respective market benchmark's by a spectacular 19% !
The market has been according these investment teams with a premium to NTA for a while now and that could be sticky going forward.
Warrants in BRM are a cheap way into this excellent BRM fund now....I remain very cautious with Marlin with the election just around the corner.

[FatTed]

Yes it was great to buy at a discount but it would seem those days are over.
Ahead of NTA and Barramundi more than 12% ahead of latest NTA today. I guess that's what happens when on average over the last 3 years the investment team outperform the market and in the last year the Marlin and Barrmundi team have both outperformed their respective market benchmark's by a spectacular 19% !
The market has been according these investment teams with a premium to NTA for a while now and that could be sticky going forward.
Warrants in BRM are a cheap way into this excellent BRM fund now....I remain very cautious with Marlin with the election just around the corner.

Beagle what do you think a fair price would be for BRM, MLN and KFL warrants?

I managed to buy some BRM below NTA so happy with that.

[Beagle]

Beagle what do you think a fair price would be for BRM, MLN and KFL warrants?

I managed to buy some BRM below NTA so happy with that.

As I am sure you can appreciate fair value depends upon what the NTA is. I value them every week when the NTA is announced.
Its getting much harder to put a fair value on Marlin and Barramundi warrants because its become apparent that the market for some months now has been prepared to pay a premium for entry into the shares of these funds based on the very substantial outperformance these have enjoyed relative to their respective index's. The persistence and size of the premium is not something I have seen before so the market appears to be saying the management expertise behind these funds is worth something in addition to NTA. Perhaps this is unsurprising seeing as these funds have outperformed their index's for the last three years and most especially in the last year with about a 19-20% outperformance.

Whether this share price premium to NTA persists is very hard to predict and I think is intrinsically tied into whether the managers continue to outperform their benchmark's. I had a good chat with Robbie Urquhart after last week's Barramundi meeting and was quite impressed with him. I asked if he's ever beaten the Australian index by 19% before and he said he hadn't.

Just leaving Kingfish aside as Sam Dickie and his team have beaten the index after fees by 2.5% per annum on average for the last 3 years and the market is saying their shares are not worth a premium to NTA, my valuation model as of yesterday gave a fair value of 22.2 cps for their warrants. That's easy to value and I'm happy with that one.

Getting back to Barramundi, this presents as a real conundrum and I am starting to think my valuation model based on NTA, (which kicked out 11.0 cps yesterday) is too conservative. Today this closed at 85 cents against a last reported NTA of 75.17 cps. That's a whopping 13% premium to NTA not counting the exercise of the warrants, (probably exercise price ~ 64 cps). While this sized premium is extremely unusual, some premium in recent months has been quiet persistent and there are reasonable grounds to think this is justified based on the managers outperformance in recent years. It would seem Robbie and his team are well capable of beating the market and the market is acknowledging that.

At this stage I would however prefer to be conservative and say that I am very comfortable that the teams in all three funds are at the very least on average earning their fees BUT the market is telling me this is too conservative a position. All I can say based on my model is Kingfish warrants are worth at least 22.2 cps and Barramundi at least 11 cps.

I don't think the Marlin warrants which have to be exercised by 6/11/20 are quite worth what they're trading at on the NZX. Election risk looms large there and i think it is possible the market has overlooked the dilutionary effect on the NTA of warrant holders exercising their warrants at 86 cents. I wouldn't be a buyer of Marlin shares or warrants at this point and presently don't have an interest in Marlin but I am looking for an opportunity in them down the track as i think Andrew Gardyne and his team are doing a stellar job.

[tim23]

Given the exercise date is so close and the 86c declared they should trade at approx the ordinary share price - 86c so more like 30c

[Beagle]

The elephant in the room tim23 is that the last reported NTA was just on $1.10 but if all warrant holders exercise their warrants at 86 cents the new adjusted NTA will be just (4 x $1.10 + 1 x 0.86) / 5 = $1.05. The shares closed at $1.18 yesterday so this would be a 12.3% premium to NTA.

Granted BRM closed at a similar premium to NTA of Friday and both funds are outperforming at a similar extraordinary rate, (so you could make the argument based on the current spot price of BRM this sort of premium is warranted and therefore the warrants are worth $1.18 - 0.86 = as much as 32 cents) but north of 10% price premiums to NTA for these funds have not proven to be durable in the past and I would think them unlikely to be durable in the future. Maybe a 3-4% premium to NTA is not unreasonable given their proven management expertise which suggests a fair adjusted price on warrant exercise of $1.08 - $1.09 which suggests a fair warrant price of 22.5 cps. The close yesterday at 24.5 cps given obvious near term election risk looks a little overcooked to me...but who knows, we live in extraordinary times and maybe warrant holders are expecting a strong bounce back in the US markets post election ?

[FatTed]

Thanks Mr B

[tim23]

The elephant in the room tim23 is that the last reported NTA was just on $1.10 but if all warrant holders exercise their warrants at 86 cents the new adjusted NTA will be just (4 x $1.10 + 1 x 0.86) / 5 = $1.05. The shares closed at $1.18 yesterday so this would be a 12.3% premium to NTA.

Granted BRM closed at a similar premium to NTA of Friday and both funds are outperforming at a similar extraordinary rate, (so you could make the argument based on the current spot price of BRM this sort of premium is warranted and therefore the warrants are worth $1.18 - 0.86 = as much as 32 cents) but north of 10% price premiums to NTA for these funds have not proven to be durable in the past and I would think them unlikely to be durable in the future. Maybe a 3-4% premium to NTA is not unreasonable given their proven management expertise which suggests a fair adjusted price on warrant exercise of $1.08 - $1.09 which suggests a fair warrant price of 22.5 cps. The close yesterday at 24.5 cps given obvious near term election risk looks a little overcooked to me...but who knows, we live in extraordinary times and maybe warrant holders are expecting a strong bounce back in the US markets post election ?

Probably my point was that you sell your shares just before warrants cease trading and buy the same number of warrants and then exercise them, a very profitable exercise!

[SPC]

Yes that would have been profitable on this occasion for sure but it has not historically been this way. Today there seems to be a lot of 'new' cash going in to the market which is really pushing up the market price/NTA disconnect of these particular funds. Hold all three since IPO... hasn't always been rosey. Recent manager appointments and buying decent stocks rather than obscure 'growth punts' have lifted their game..

[alokdhir]

https://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by kiora https://www.sharetrader.co.nz/images/buttons/viewpost-right.png (https://www.sharetrader.co.nz/showthread.php?p=859518#post859518)
I have been thinking along the same lines as alokdhir for a while now regarding how it will end for all their funds.
I invested in their KS & listed funds in the early days but switched a few years ago.

For a portfolio for someone approaching retirement with little savings(not me) I split a third of the funds into 5 listed shares in 2007 at $10,000/share

2007 $10,000 MLN value now $9520.It has received quarterly dividends of around
8.5 c/year https://marlin.co.nz/assets/Uploads/...nd-History.pdf (https://marlin.co.nz/assets/Uploads/Marlin-Dividend-History.pdf)
Adds about $10,400 ?
Total value $19920 slightly more if dividends were reinvested
According to the investor center value would be around $33000 now
https://marlin.co.nz/investor-centre...o-performance/ (https://marlin.co.nz/investor-centre/portfolio-performance/)
2007 $10,000 IFT value now with DRP $46,367 plus a few other dividends
As it turns out 2007 was a good time to invest in IFT
https://infratil.com/for-investors/
2007 $10,000 FPH value now with DRP $136,360

It would be interesting to have done the same with MFT & EBO in hindsight

[Stylerz]

Hi,

Wondering if anybody can advise is there is any additional tax requirements for an individual investor for holding these or Baramundi ie. FIF(due to international holdings) ? Or essentially no different tax wise than holding KFL or another PIE fund.

I have contacted Marlin directly but no reply yet.

Thanks in advance.

[justakiwi]

No different to KFL or BRM. FIF not an issue.


Hi,

Wondering if anybody can advise is there is any additional tax requirements for an individual investor for holding these or Baramundi ie. FIF(due to international holdings) ? Or essentially no different tax wise than holding KFL or another PIE fund.

I have contacted Marlin directly but no reply yet.

Thanks in advance.

[777]

Hi,

Wondering if anybody can advise is there is any additional tax requirements for an individual investor for holding these or Baramundi ie. FIF(due to international holdings) ? Or essentially no different tax wise than holding KFL or another PIE fund.

I have contacted Marlin directly but no reply yet.

Thanks in advance.

AS they are PIE's then no requirement to include distribution on your tax return. However if your marginal tax rate is 17.5c (Gross income less than 48,000) or 10.5c (Gross income less than 14,000) then you can declare the gross amount and claim any tax paid, including imputation credits. Ignore the excluded amount on the notice.

[Not too Flash]

At 31/3/21 NAV was $1.18 and Share Price was $1.30
Today NAV $1.24 and share Price $1.60

WOW

Obviously the warrant announcement was attractive

[Biscuit]

At 31/3/21 NAV was $1.18 and Share Price was $1.30
Today NAV $1.24 and share Price $1.60

WOW

Obviously the warrant announcement was attractive

That's a big lift today. I bought in a few weeks ago to increase overseas exposure and they are already up 20%.

[alokdhir]

At 31/3/21 NAV was $1.18 and Share Price was $1.30
Today NAV $1.24 and share Price $1.60

WOW

Obviously the warrant announcement was attractive

When people are ready to pay 50% over Council Value of houses then why not here also ....Value is in the mind only ...lol :D

Amazing ....Wish I had to sell and buy the warrants when listed ...:)


KFL is next in the line for new warrant issue ....IMHO ...maybe in next 2-3 months time thats why there also slowly slowly premium to NAV is going up

[artemis]

When people are ready to pay 50% over Council Value of houses then why not here also ....Value is in the mind only ...lol :D ....

Rating valuations have very little to do with market values. Except maybe to indicate comparative values, but even then not really.

[alokdhir]

People ready to pay 10 cents extra for the free warrants allotment @ 1 for 4 shares held ...so warrant SP should be more then 40 cents to justify this transaction ..:cool:

[mfd]

People ready to pay 10 cents extra for the free warrants allotment @ 1 for 4 shares held ...so warrant SP should be more then 40 cents to justify this transaction ..:cool:

Crazy how people go for this kind of thing isn't it? The managers offer you a fancy warrant and you don't even have to think about how it's you that's paying for it. I guess life's more exciting when your fund manager is moving your money between your pockets, almost like watching a skilled juggler.

[SPC]

'going for this kind of thing' has actually worked very well for me and many others I hear on this forum.
Are you a holder?
There are ways of excelling with these listed funds if you know what you're doing. It's not a simple dance.
More of a tango than a fox trot.
I've worked it out. Maybe you haven't?

[mfd]

'going for this kind of thing' has actually worked very well for me and many others I hear on this forum.
Are you a holder?
There are ways of excelling with these listed funds if you know what you're doing. It's not a simple dance.
More of a tango than a fox trot.
I've worked it out. Maybe you haven't?

The maths is very simple. If the management outperform the index by enough to overcome their high fees, you'll do better than investing in a simple index without the bells and whistles. The other tricks of giving with one hand and taking with the other (DRPs, dividends including your own capital, warrants etc) are pretty irrelevant. Who pays for your great deal on a warrant if not yourself as an existing holder?

I don't hold but am fascinated by the psychology.

[justakiwi]

I've held KFL since 2016. I have taken advantage of most warrants issues and I go with DRP. My total annual returns over that time (capital plus dividends) have consistently been in the vicinity of 23-28%. Currently sitting at 26%. I started out with 1000 shares. I have never bought any additional shares on market.Yeah, I know these figures are miniscule compared to everyone else's here, but KFL works. As do BRM and MLN. As long as they continue to perform like this, I don't care about their high fees or their money juggling. I don't have blind faith. I have informed faith and I am more than happy with how they are doing.


Crazy how people go for this kind of thing isn't it? The managers offer you a fancy warrant and you don't even have to think about how it's you that's paying for it. I guess life's more exciting when your fund manager is moving your money between your pockets, almost like watching a skilled juggler.

[mfd]

I've held KFL since 2016. I have taken advantage of most warrants issues and I go with DRP. My total annual returns over that time (capital plus dividends) have consistently been in the vicinity of 23-28%. Currently sitting at 26%. I started out with 1000 shares. I have never bought any additional shares on market.Yeah, I know these figures are miniscule compared to everyone else's here, but KFL works. As do BRM and MLN. As long as they continue to perform like this, I don't care about their high fees or their money juggling. I don't have blind faith. I have informed faith and I am more than happy with how they are doing.

Yes, they have had pretty decent returns recently, the management have done well. I am not really a believer that past success as a manager has any correlation to future success but we all make our own decision. Their ability to outperform their fees is the only reason you could do better here than in a cheaper index.

Your returns could have been even higher if management had cut down on the capital escapades and reduced their fees accordingly.

I am also interested to see what happens to the fund in a bear market given the need to spit out dividends at 8% of NAV. With a rising market this is accounted for, in a falling market it could fall hard.

[SPC]

MFD I don't think you're 'fascinated by the psychology' whatsoever.
You just don't like it. You don't like fund managers. Many don't.
I don't like Lawyers myself but I still use them, despite their fees.
I'll throw you bone..stop thinking about managed funds and start thinking about shares. That's all these instruments are.
Shares go up and shares go down. We each chose when we buy and sell.
It's a market place.
Follow your own words and ignore the rest.

[justakiwi]

I am not really a believer that past success as a manager has any correlation to future success but we all make our own decision. Their ability to outperform their fees is the only reason you could do better here than in a cheaper index

I don't disagree with you, which is why I said I don't have "blind faith."


Your returns could have been even higher <…> reduced their fees.

Edited for clarification: I agree that their fees are too high and that my returns would be higher if their fees were lower. But at the moment their high fees are something I am prepared to tolerate, as long as my returns are acceptable. Which they are.


I am also interested to see what happens to the fund in a bear market given the need to spit out dividends at 8% of NAV. With a rising market this is accounted for, in a falling market it could fall hard.

You are correct. There are no guarantees. About anything. I guess my basic philosophy is:

Watch and monitor
Always remember that things can change
Have faith but never blind faith
Revisit my investing goals/plan and amend as necessary

I'm a beginner. I still have so much to learn. I never lose sight of that fact.

[alokdhir]

If u study the last two warrant conversions of MLN and KFL then u will notice conversion rates of 90% and 91% respectively ....which means almost 10% warrants expired in spite of almost 40% discount being offered at conversion price to current SP ...Guess who lost that money ...Passive investors who didn't convert or sell their warrants and their holdings value got diluted . Who gained ...active , informed and timers etc type investors .

Big question ...Do u invest in managed fund and pay high fees to let a manager do a good job ? Yes ...Do u want to continuously monitor or be hands on investor if u letting a Fund manager take a cut and do the job for u ...No

Why listed funds of Fisher funds bring out warrants issue..To help investors make more money ...No ...they do for increasing corpus so that it increases their payout as its fixed %age of corpus .

So if u dont want to be active investor or glued on investor then these are not for u ...U rather be in passive index fund or a mix of them for full diversification geographically as well sector wise ..all types are also Listed PIEs from Smartshres ...with NZG having just 0.2% fund charges and it exactly replicates NZX50 index ...mind u KFL has outperformed index by bigger margin only recently due to some excellent stock picks and weightages

As there is never any free lunch in this world ...so all funds too have pros and cons ...Fisher fund's listed funds do well especially KFL and recently MLN and BRM too but then one need to learn to play these capital raising warrants issues too otherwise one will loose out to other active holders

Having said that ...I am also fascinated by tremendous premiums for these funds ...even to extent of 30% to NAV ...being an investor in all and now only in KFL since 2010...this recent phenomena has thrown another challenge to long time holders ...to sell out and become passive investors in a index fund to take advantage of this 30% premium as it may not last ( to me its like paying $ 130 for $ 100 bank note ..putting it very simply ) or to keep holding and eventually see this premium gone or reduced considerably . Maybe long term holders of discount days to NAV ( like me ) have less to loose then recent participants who bought at hefty premiums ...but still loosing an opportunity to make extra returns will haunt old holders too ...Think about MEL / CEN holders who didn't sell out in Jan at huge surges due to ICNL buying indiscriminately .

I am still wondering what should be done here ...there are always new challenges for holders in these funds ...ie to decide whats the right thing to do at that moment . Me surely dont look for such challenges for holders when investing in an actively managed fund charging hefty fees and taking performance fees too . But then they are doing so well that not easy to let go also

[mfd]

MFD I don't think you're 'fascinated by the psychology' whatsoever.
You just don't like it. You don't like fund managers. Many don't.
I don't like Lawyers myself but I still use them, despite their fees.
I'll throw you bone..stop thinking about managed funds and start thinking about shares. That's all these instruments are.
Shares go up and shares go down. We each chose when we buy and sell.
It's a market place.
Follow your own words and ignore the rest.

I'm aware of what interests me but thanks for the psychoanalysis. I'm ok with fund managers, in fact thanks to my kiwisaver my largest position is in an index fund. I am skeptical of the ability for managers to consistently outperform, so I chose a nice cheap 0.3% fund and expect to do better than the fancy pricey funds over the long term, based on the extensive literature around this topic.

But yes, I am fascinated and always curious to hear peoples reasons for investing in these funds. I see it as similar to bonus bonds, accepting a lower expected return in exchange for a little more excitement. Or a little like the helicopter payments in the US recently - free money from the government which is really just taxpayers giving money to themselves. Interesting psychology.

The only reasons I've heard that make sense are a belief the management will outperform their high fees, or for retired people requiring simple cash flow options. Alokdhir has an interesting point regarding active investors making higher returns at the expense of the lazy, but that rather works against the 'simple cashflow option' for pensioners as they are likely to be the patsies.

[justakiwi]

I think you are missing the point. The Fisher trio are not performing like your traditional managed fund. They are, and have been for some years, performing very well, and beating the index. So definitely not a “lower expected return.”

As I have said, there are no guarantees this will continue, but in the meantime they are all excellent investments for overall capital and dividend return. For all the reasons you have mentioned, I would usually not invest in a managed fund, but these three are my “exception to the rule.” For now anyway.



But yes, I am fascinated and always curious to hear peoples reasons for investing in these funds. I see it as similar to bonus bonds, accepting a lower expected return in exchange for a little more excitement.

[SPC]

MFD none of these listed fisher instruments are 'funds' to me.
They are shares listed on the NZX.
It's as simple as that.
Normal share investment behavior applys.

[justakiwi]

I agree. They might be similar to managed funds in the sense that they actively manage their investments in companies, but we hold shares in KFL, MLN, BRM - not units in funds.


MFD none of these listed fisher instruments are 'funds' to me.
They are shares listed on the NZX.
It's as simple as that.
Normal share investment behavior applys.

[alokdhir]

I agree. They might be similar to managed funds in the sense that they actively manage their investments in companies, but we hold shares in KFL, MLN, BRM - not units in funds.

U hold shares in Investment companies which invest in listed companies as per portfolio disclosed ...so easy to see actual per share value of the company ...thats why they disclose weekly NAV and quarterly portfolio ratios . As these listed companies are closed end funds with only way to trade in them is on NZX so their SP gets determined both on demand and supply issues and intrinsic NAV ( Mainly ) ....If these were open ended funds then companies would be buying and selling them directly based only on NAV . Also if they had market maker feature like all Smartshare ETFs then also they would trade on NZX based mainly on NAV

Only reason they can deviate so much ( both ways ) from NAV is because of no market maker on NZX so demand and supply issues decide their SP in a big way

At present they are the most efficient tax side investment vehicle too as their only tax rate is 28% which is final thus making them 11% more tax efficient for highest rate payers

[justakiwi]

That’s basically what I was trying to say. You did a much better job ;)


U hold shares in Investment companies which invest in listed companies as per portfolio disclosed ...so easy to see actual per share value of the company ...thats why they disclose weekly NAV and quarterly portfolio ratios . As these listed companies are closed end funds with only way to trade in them is on NZX so their SP gets determined both on demand and supply issues and intrinsic NAV ( Mainly ) ....If these were open ended funds then companies would be buying and selling them directly based only on NAV . Also if they had market maker feature like all Smartshare ETFs then also they would trade on NZX based mainly on NAV

Only reason they can deviate so much ( both ways ) from NAV is because of no market maker on NZX so demand and supply issues decide their SP in a big way

At present they are the most efficient tax side investment vehicle too as their only tax rate is 28% which is final thus making them 11% more tax efficient for highest rate payers

[winner69]

Things like MLN like normal stocks can actually be assessed as ‘cheap’ / ‘expensive’ using the Z-score - just like people use PE ratios to assess (normal) stocks

Z-score represents how far away the current premium/discount is from its average premium/discount over a selected time period. The distance is measured in standard deviations and the sign indicates the direction away from the mean.

MLN and KFL on this measure (on a 12 month time frame) are quite ‘expensive’

In big markets there’s a whole industry that study and invests in these sort of funds.

[alokdhir]

Things like MLN like normal stocks can actually be assessed as ‘cheap’ / ‘expensive’ using the Z-score - just like people use PE ratios to assess (normal) stocks

Z-score represents how far away the current premium/discount is from its average premium/discount over a selected time period.
The distance is measured in standard deviations and the sign indicates the direction away from the mean.MLN and KFL on this measure (on a 12 month time frame) are quite ‘expensive’

In big markets there’s a whole industry that study and invests in these sort of funds.

If MLN and KFL are expensive then BRM is just super duper expensive ...Cheapest or I should say least expensive is KFL :D

I am also very pleasantly surprised with this new development of such huge premiums to NAV ...Dont know will they last ...what u think buddy ?

[justakiwi]

Which is why I never buy on market, but take advantage of DRP and warrants (when the exercise price is at a significant discount to market price -which is almost always).



MLN and KFL on this measure (on a 12 month time frame) are quite ‘expensive’

[alokdhir]

Which is why I never buy on market, but take advantage of DRP and warrants (when the exercise price is at a significant discount to market price -which is almost always).


Did u ever consider the opportunity cost of missing out on super inflated SP ? I understand U have a small holding which is growing nicely with DRP ( Even after 3% discount to 5 day average of SP is always over NAV as DRP issued shares these days ) plus u get FOC warrants which u subscribe to fully ...that just ensures your original holding is not getting diluted , no other benefit . What growth u seeing now is all because of SP trading much over NAV not that fund is doing that much special . But I do understand it gains for u at the moment . They call it Total Shareholder Returns .

But if it reverts to its more long term SP pattern of 2-5 cents discount to NAV then almost 20% gains will go unless overall markets go up 20% thus boosting the NAV .

Thats why I am confused as a long term holder to sell into this bubble or keep holding !!!

[justakiwi]

.... They call it Total Shareholder Returns .

Yes I realize that :)


But if it reverts to its more long term SP pattern of 2-5 cents discount to NAV then almost 20% gains will go unless overall markets go up 20% thus boosting the NAV .

That is why I am confused as a long term holder to sell into this bubble or keep holding !!!

The thing is, I do consider my Fisher trio to be long term holdings. So if that happens, I will just sit and ride it out. Because at some point things will change yet again and the SP will recover.

I'm not clever or brave enough to try to play the "time the market" game.

[alokdhir]

Yes I realize that :)



The thing is, I do consider my Fisher trio to be long term holdings. So if that happens, I will just sit and ride it out. Because at some point things will change yet again and the SP will recover.

I'm not clever or brave enough to try to play the "time the market" game.

As a holder since 2010 I can tell from experience that this kind of premium never happened before ..though I have seen 20 cents discount to NAV more commonly just before warrants exercise time . Thats why me more confused if this is special " Covid " phenomena or will keep repeating as u thinking to wait out till this type premium comes again .

But me as well is really loving this recent market attraction to Fisher Funds trio :cool:

[winner69]

As a holder since 2010 I can tell from experience that this kind of premium never happened before ..though I have seen 20 cents discount to NAV more commonly just before warrants exercise time . Thats why me more confused if this is special " Covid " phenomena or will keep repeating as u thinking to wait out till this type premium comes again .

But me as well is really loving this recent market attraction to Fisher Funds trio :cool:

Over time MLN KFL etc have in the main traded at a discount to NAV - the discount was seen as the NPV of future management fees etc.

Its only recently that they have consistently traded a premium. I think mainly because they are seen as just another stock (ticker code and all) and one that pays a decent dividend to boot in these low interest rate times. And for those who have come on bard over the last year (I would hazard a guess many have) its been a pretty lucrative investment eh

Doesn't seem to make much sense for oldies but these are weird times.

Question you ask is this the new norm ....and they will continue to trade at a premium to NAV forever.

[Biscuit]

.......continue to trade at a premium to NAV forever.


Naving is forever. But the premium isn't going to go away anytime soon. When money is cheap, every share is cheap.

[mfd]

Naving is forever. But the premium isn't going to go away anytime soon. When money is cheap, every share is cheap.

The premium here is a little different to a high PE though. You could sell your marlin shares and divide the proceeds proportionally through their portfolio and even up with about 30% more shares in the components than before, minus whatever your trading costs are.

You'd have to think the managers are worth paying a 30% up front fee to buy at the moment.

[fungus pudding]

Naving is forever. But the premium isn't going to go away anytime soon. When
money is cheap, every share is cheap.

When money is cheap assets are not.

[alokdhir]

Over time MLN KFL etc have in the main traded at a discount to NAV - the discount was seen as the NPV of future management fees etc.

Its only recently that they have consistently traded a premium. I think mainly because they are seen as just another stock (ticker code and all) and one that pays a decent dividend to boot in these low interest rate times. And for those who have come on bard over the last year (I would hazard a guess many have) its been a pretty lucrative investment eh

Doesn't seem to make much sense for oldies but these are weird times.

Question you ask is this the new norm ....and they will continue to trade at a premium to NAV forever.

Need yours and other learned and seasoned investors opinion about this important issue being faced by me and many like me ...Shall we switch from such pricy funds ( Z score basis ) or keep riding till it collapses ...What goes up must come down may happen ...Memory of CEN and MEL at lofty levels in Jan still fresh

As MFD said sell funds and DIY portfolio and get a 30% head start ...

Try to answer this for us please