KFL - discount to diluted NAV

[shasta]

Just a point that may not have been mentioned. The manager of the various Fisher Funds is compensated on the basis of the NAV and not the share price. When I found this out I sold my shares in Marlin two months ago at a big loss.

Before doing so I rang Fisher Funds and told them that the structure of the funds was wrong (as determined by the massive discounts of the share prices). I said the moral action would be for them to admit the flaws with the fund's structures and liquidate and give the money back to shareholders.

Of course they rejected that idea!

I see that Fishers have been buying stock in BRM and KFL to support the prices. This is rational considering the NAV's. However, the MOST rational act for the shareholders is fund liquidation and distribution.

They won't liquidate a company where they get paid to look after "your" money, regardless of performance, nice try though!

Don't they put half of there bonus fees into buying shares on market?

I'm sure they did this a while back, maybe Treetops will remember?

I was in KFL a while back & did quite well out of it when its main holdings were running quite nicely (MFT, RAK, PPL etc).

If they can't find a decent home for the money (& i dont mean sitting around doing nothing but earning interest!) they should be buying back shares on market & retain as treasury shares to use for future DRP's.

Perhaps you should contact KFL & request they get 50% of there management fees in KFL shares on market, & keep them on escrow for 12 months.(If they refuse, they clearly don't back themselves!)

Whilst perfomance on NAV seems unfair, you don't want management too focussed on the short term & selling winners to meet KPI's, at the expense of shareholders longer term interests.

Look at GPG & IFT, like KFL they announce "lumpy" earnings due to the timing of asset sales, so how else would you want there KPI's set?

As an Accountant, i'm seeing the term EVA (Economic Value Added) become more & more prevailent, in brief it's the kind of KPI, Warren Buffett would like, as it refers to "use/allocation of capital".

That's very simplistic but i'm not going into it in great depth on here, but i wonder if it's a more "transparent" KPI that they may agree to?

I always found the KFL team very approachable, though i've been out for quite a while.