KFL - discount to diluted NAV

[Beagle]

https://www.nzx.com/announcements/347736 Net Asset Value just on $1.67 as expected. I see no reason for this to trade at a premium or a discount to NAV.

[Beagle]

Thanks for crunching those numbers mate and agree its not cheap to run but I am sure those expenses include the performance fee that they have certainly well and truly earned in the last year.

As I type its $1.71 and trading at a 4 cent premium to last reported NTA. I have already taken the appropriate portfolio action at $1.70 and above any intelligent investor would.

[justakiwi]

Out of curiosity - which is what? (given that I am a very long way from being an intelligent investor )

I have already taken the appropriate portfolio action at $1.70 and above any intelligent investor would.

[Pipi]

So the question for me is, is it best to buy and hold KFL or the FNZ. I trying to work that out, and would appreciate anyones feedback.
Thanks

Beagle,

Agree it is hard to understand why anyone would pay a premium. I would not buy unless there is a solid discount (10%+) to NAV as the Operating Expenses are high averaging 2.76% of opening shareholders equity over the last 5 years (calcs below). Compare this to virtually no expenses for self managed or 0.1% + $30 p.a. for Simplicity NZX50 fund. Many of KFL holdings are big constituents of the NZX50 anyway including AIA, FPH, ATM, RYM, SUM, POT, MEL, IFT and MFT.

Operating Expense $m/Opening Shareholders Equity $m/Operating Expense %
2019 - $9.17 m /$276.3m /3.3%
2018 - $7.00 m /$220.1m /3.2%
2017 - $5.01 m /$208.4 m /2.4%
2016 - $4.87 m /$165.8 m /2.9%
2015 - $3.28 m /$161.8 m /2.0%

[Pipi]

Thanks for that Mogul. I will look into the Simplicity NZX50 option, I have been buying mine through Investnow. I have all the family including myself in the Simplicity kiwisaver scheme.

Simplicity NZX50 fund with fees of 0.1% plus $30 p.a. far better value than FNZ which has fees of 0.5% if you are buying a few. Can create auto withdrawals from Simplicity fund I believe if you want some income. Average operating expenses on KFL funds around 2.8% p.a. as posted above, so you would need to think the Fisher team can consistently outperform the market by around 2.6% p.a. to match the Simplicity option. Not confident on that myself when they hold a lot of the big stocks in the index anyway. It would change the equation a bit if KFL were to revert to trading at a discount, but they have been surprisingly trading at a premium recently as per Beagles post. DYOR.

Disclosure. Hold none of the above as prefer the 0% fee option of own portfolio. I do have Simplicity Kiwisaver with has fee of 0.31% plus $30 p.a.

[Beagle]

Simplicity NZX50 fund with fees of 0.1% plus $30 p.a. far better value than FNZ which has fees of 0.5% if you are buying a few. Can create auto withdrawals from Simplicity fund I believe if you want some income. Average operating expenses on KFL funds around 2.8% p.a. as posted above, so you would need to think the Fisher team can consistently outperform the market by around 2.6% p.a. to match the Simplicity option. Not confident on that myself when they hold a lot of the big stocks in the index anyway. It would change the equation a bit if KFL were to revert to trading at a discount, but they have been surprisingly trading at a premium recently as per Beagles post. DYOR.

Disclosure. Hold none of the above as prefer the 0% fee option of own portfolio. I do have Simplicity Kiwisaver with has fee of 0.31% plus $30 p.a.

http://nzx-prod-s7fsd7f98s.s3-websit...408/315571.pdf Ownership of Kingfish changed a few years ago to the Taranaki savings bank community trust and new investment team put in place shortly thereafter. Well worth noting that their gross performance before fees for the 3 years to 31 December 2019 was 3.5% per annum higher than the NZX50. Adds a bit of heat to the debate about whether passive or active funds management is best. I think given this, neither a premium nor a discount is warranted as its quite clear they are earning their keep.
3 year average gross performance 22.2% per annum, 3 year average NZX50 performance 18.7% per annum.

The PIE tax free status makes it dead easy for people and the regular issues of warrants makes for an interesting instrument to work with.

I currently hold none because they are not worth a premium. I manage most of my N.Z. investments myself.

[Beagle]

Yeap, I am happy. Further back than 3 years was a different investment team and the current team inherited their legacy investments. Most recent one year performance by all three seperate teams at KFL, BRM and MLN has been exceptional but I agree, past performance is no guarantee of future poerformance.
Marlin and Barramundi are especially useful to me as I don't have the time or inclination to thoroughly research a vast array of international equities.
ETF's all the rage these days but I think there's still a place for active management and the Kingfish teams are proving their worth. One advantage they have over me personally investing is they have more patience than I do

[winner69]

Just as Beagle deserts the ship they try to seduce him back with an offer of some free warrants.

https://www.nzx.com/announcements/348013

[winner69]

Can’t keep KFL down for long

Seems market thinks it deserves to trade at a premium to NAV

(Need to change thread title)

[justakiwi]

Can you explain to me how trading at a premium/discount works? How does one decide if a discount or premium is justified? And what it means for holders?

Can’t keep KFL down for long

Seems market thinks it deserves to trade at a premium to NAV

(Need to change thread title)