KFL - discount to diluted NAV

[Louloubell]

Thank you. It needed my laptop. My phone didn't show any followable link or attachment.
What is the logic/explanations for the big variation of discount to premium? It is more than low or high interest rates.

[winner69]

Thank you. It needed my laptop. My phone didn't show any followable link or attachment.
What is the logic/explanations for the big variation of discount to premium? It is more than low or high interest rates.

I’ll leave alokdhir to answer that

[alokdhir]

I’ll leave alokdhir to answer that

Thanks mate for leaving the difficult part for me ...lol

In our humble opinion ( our stands for me and w69 ...I think ) discount / premium is mostly based on demand and supply mechanisms for this particular stock . When OCR is high thus TD rates being high, demand side slackens a lot and it goes other way when TDs are not an option for regular income . Also KFL is 100% retail stock with zero institutional support which means its SP behaves on the whims of retail investors ....

PS : I will pay more attention to its NAV then SP as a long term investor ...as one can see discount is cyclical thus one will get SP close to NAV too or over it if he is lucky !!

Dividends are NAV based DRP is SP based

[Louloubell]

Thank you Alokdhir. This explains the illogical pattern of the share price. I'm a recent but long term investor and was attracted by the current discount to NAV and regular dividends. Plus it is creating a diversity to my portfolio.

[moose]

I'll add to that - it is also a useful handbrake for anyone who has a tendency to be overweight any single stock on NZX. KFL seem to have a very simple investment strategy - only buy shares in companies that have a great management team - they have generally avoided everything else (FBU/WHS/SKT etc) - they seem to do better at this than us mere retail investors who are always at risk of looking for the next shiny trinket (and NZX being a very small market has a lot of those.....)

[Louloubell]

Yep Moose. Your rationale of being over invested in some companies fully applies to me, hence the attraction to KFL.

[FatTed]

Hey Alokdhir as a long time investor considering Dividends are NAV based DRP is SP based when should one choose Dividend as opposed to DRP? (in your opinion)

[alokdhir]

Hey Alokdhir as a long time investor considering Dividends are NAV based DRP is SP based when should one choose Dividend as opposed to DRP? (in your opinion)

Meaning was 2% of average quarterly NAV decides the next quarter dividend value ...while 5 days of volume weighted average SP from ex dividend date decides strike price of DRP shares ...its at 3% discount to this vol/wt average SP .

Now if your purpose is pure growth then it makes sense to always participate in DRP to utilise 3% discount .

If need is of regular income then also one can use DRP to get new shares but one can encash them on suitable market price and time .

Ronaldson has been doing so on first day of it going ex and getting his dividend in bank almost 3 weeks before cash dividend payout date . This time he sold his future DRP shares @ $ 1.31 on 4th Sept ( very lucky !!! ) in advance while he will get replenishment via DRP issue on 27th Sept @ $ 1.2501 ...so in nutshell he made small profit also and got money early also by subscribing to DRP .

DRP makes sense most of the time but maybe not in sharply falling market . Rising or stable market DRP works better as 3% is a huge discount to current SP

Most of the time SP is at discount to NAV and DRP at 3% discount to SP so one gets DRP shares at good discount to easily sell on market if cash is the requirement

But in rare case of SP being at premium to NAV then DRP shares will be at discount to current SP but maybe still at premium to NAV .

Now one can decide which option suits ones purpose the most ...it can be opted in or out online via registry website ...I reckon

[Louloubell]

Alokdhir, you are very generous in sharing your knowledge. Thank you, is appreciated.

[FatTed]

Thanks for that