Platinum Capital (PMC)

[Huang Chung]

For those of you that follow some of the LICs, you'll probably know that PMC usually trades at a hefty premium to asset backing.

For example, from their monthly updates, the share price premium to asset backing for the months of September, October, November, December and January are 26.2%, 23.3%, 25%, 23.2% and 17.5% respectively. (The premium has generally been increasing as we have moved from the very darkest days of the GFC, where PMC actually traded, for a short time, at a discount to asset backing)

To give the latest reported month, for example (January), asset backing per share was $1.37, but the share price as at 31 January was $1.61.

I've been watching PMC fairly closely this month, where its traded mainly between $1.51 and $1.56 (now ex a 5c dividend). Today, it was again hovering around the low $1.50s, but someone dumped a ton of stock to drive the price down to $1.44 at one stage. After the main dump, there was a bit more selling in the $1.40s, with the stock finishing at $1.45.

Took the opportunity to pick up a few.

We don't have the asset backing results for February yet, but it seems to me that the premium has shrunk quite dramatically. I'm betting that this premium compression will be a temporary phenomina, and certainly not helped by what appeared to be a big seller today...or does someone know something I don't know?

All in all, it seems like a window of opportunity to be accumulating some stock for the bottom draw, without paying the earth.

[OldRider]

Measured in NZ currency, so the return is bolstered by the fall in the NZ/Aus crossrate, my spreadsheet shows a return of 33.55% since April 2009 for PMC.

Presumably because dividends have been paid PMC has mostly retained their premium as posted above, most other similar Lic's are the reverse.

Compare TGG, will this company, and others, rise as economies improve and it recommences dividends payments.

I too have been gradually accumlating PMC, it has had several SPP's over the last two or three years if I recall correctly.

[COLIN]

For those of you that follow some of the LICs, you'll probably know that PMC usually trades at a hefty premium to asset backing.

For example, from their monthly updates, the share price premium to asset backing for the months of September, October, November, December and January are 26.2%, 23.3%, 25%, 23.2% and 17.5% respectively. (The premium has generally been increasing as we have moved from the very darkest days of the GFC, where PMC actually traded, for a short time, at a discount to asset backing)

To give the latest reported month, for example (January), asset backing per share was $1.37, but the share price as at 31 January was $1.61.

I've been watching PMC fairly closely this month, where its traded mainly between $1.51 and $1.56 (now ex a 5c dividend). Today, it was again hovering around the low $1.50s, but someone dumped a ton of stock to drive the price down to $1.44 at one stage. After the main dump, there was a bit more selling in the $1.40s, with the stock finishing at $1.45.

Took the opportunity to pick up a few.

We don't have the asset backing results for February yet, but it seems to me that the premium has shrunk quite dramatically. I'm betting that this premium compression will be a temporary phenomina, and certainly not helped by what appeared to be a big seller today...or does someone know something I don't know?

All in all, it seems like a window of opportunity to be accumulating some stock for the bottom draw, without paying the earth.

Kerr Neilson does a lot of shorting of equities. In a rising market these would lose value. He also shorts currencies too.

I held PMC for a number of years and did well. Bailed out in 2007 but came in again last year.

[Huang Chung]

Yes Colin, PMC can hedge and short....always been the case.

What grabbed my attention was the way the premium over asset backing has shrunk significantly over the past week or two....less than half of recent months.

Some may argue that PMC shouldn't trade at a premium at all, but history tells us that for this stock, it rarely doesn't.

I'll be watching to see what, if anything, happens today.

[Huang Chung]

Still trading at an unusually small premium to asset backing. Grabbed a few more at $1.405 on the open.

Top holdings include the likes of:

Microsoft
Cisco
Siemens
Johnson & Johnson
Merck

December quarterly investor report attached...always worth a read, even if you don't own.

http://www.platinum.com.au/images/pclqtr_1209.pdf