Barramundi ( BRM )

[BIRMANBOY]

Since you are looking for facts..here is the most important one for you. My return (dividends) on capital invested (including brokerage) in BRM is averaging at 10.06% per year AFTER TAX has been deducted. Its also holding a capital gain for me. So my opinion is, as I said, coloured by my facts. If you choose the appropriate set of facts and package them in selected circumstances its possible to make even TRS look positively wonderful and Xero the safest investment you could ever find. I'm sure you and Balance et al are right (in your own minds) but that particular location is for you and isn't my desired habitat so I'll leave you to your own devices and investment strategies. Ignore the noise and count the dollars is my way. Also bear in mind that a capital loss is not actually realized until its actually sold. I've had investments that showed losses for ages and 90% have recovered. In the interim they have continued delivering dividends. Its a big picture and change is always happening. You have to find your own way.

Thanks BB. It's going ok. I'm enjoying it and doing well. Cheers.

Here's some factual things I think are worth considering.

BRM started paying a regular dividend in Sep 2009 (http://www.barramundi.co.nz/barramundi-performance/)

The NAV of BRM has gone from approx 85c in Sept 2009 to 71c in Feb 2014, as per the NAV History link on that same page. A decrease of 14c.

During that period they have paid approx 30c in dividends (same initial link).

So 30c dividends minus 14c in capital value loss leaves a 16c overall gain for the period (of approx 4.5 years).

16c / 4.5 years = 3.5c effective return P.A. per share.

So if you had purchased the shares at this time (2009), the historical price was around 75c.

3.5c / 75c = 4.7% return.

Hardly spectacular IMHO. I have no doubt you could do better yourself BB!

Taking the situation a few years back to the initial price of $1 only makes it worse as you add many more years but only one extra 2c dividend payout.

As you say, timing is everything. Snapiti has done very well getting in at 37c. He is one of few though (well done Snapiti).

I'm happy to be proven wrong - given this very average historical performance and no obvious change on the horizon, sticking to facts not opinion, what makes you say this is a buy right now?

Cheers,

NBT

PS I appreciated you've previously said that 62c is below the average price and therefore it's cheap. Winners post earlier showed it is trading at its usual discount to NAV and therefore it's technically not cheap, it's exactly the effective price it always is on average (relative to current NAV).

[nextbigthing]

Since you are looking for facts..here is the most important one for you. My return (dividends) on capital invested (including brokerage) in BRM is averaging at 10.06% per year AFTER TAX has been deducted. Its also holding a capital gain for me. So my opinion is, as I said, coloured by my facts. If you choose the appropriate set of facts and package them in selected circumstances its possible to make even TRS look positively wonderful and Xero the safest investment you could ever find. I'm sure you and Balance et al are right (in your own minds) but that particular location is for you and isn't my desired habitat so I'll leave you to your own devices and investment strategies. Ignore the noise and count the dollars is my way. Also bear in mind that a capital loss is not actually realized until its actually sold. I've had investments that showed losses for ages and 90% have recovered. In the interim they have continued delivering dividends. Its a big picture and change is always happening. You have to find your own way.

It's good to hear it has worked for you BB. It's great that you're up and happy with your investment.

As someone else said to me, it's about what they do in the future that matters anyway. Hopefully they can turn the NAV trend around.

Cheers,

NBT

[nextbigthing]

Here's a graph taken directly from the Barramundi website.

BRM-performance-graph-031.jpg
Cheers,

NextBigThing

[nextbigthing]

......using capital to pay dividends.....

I'm not wanting to start any members on a rant here, this is a genuine question for someone more clued up on the rules than I...

Is paying dividends from capital not illegal - isn't that a ponzi scheme? What distinguishes between the two to allow it?

Genuine replies only please, keep it clean!

Cheers,

NBT

[Beagle]

It is not illegal but it is incredibly inefficient from a taxation perspective.
It is "at best" extremly disingenious in that it implies that BRM can pay 8% per annum dividend over the long run without any capital erosion.
Seems convienient Snapiti that you're making a 5 year comparison seeing as the bottom of the market was March 2009.
Claims Carmel's team of dart throwers beats Milford on average is something I simply don't believe.
Prove it !!
Do you work for them ?

[nextbigthing]

http://milfordasset.com/performance/fund-performance/

I haven't been through and accessed the NAV's for each one to see what they're up to.

[winner69]

BRM is a closed-end fund, ie no redemptions

This means they don't need to carry a cash float for redemptions and can remain fully invested whenever they desire.

Maybe hold more cash when the markets are going down but when the markets are going up one would hope fully invested

By paying dividends and other capital returns BRM to a large extent have reduced the capital they have to invest, lost opportunity I reckon.

NBT - have you looked at their annual accounts and read some of the notes ... might give you a better idea of how things work.

Look at the balance sheet and see what the accumulated losses figure

[nextbigthing]

NBT - have you looked at their annual accounts and read some of the notes

Yeah. http://www.barramundi.co.nz/uploads/...eport-2013.pdf

Some interesting statements in there.

[Lizard]

I'm normally not a fan of companies that pay divs out of capital. However, as I argued some time ago on the MLN thread, in this case I find it quite useful (I hold MLN, not BRM).

I don't consider BRM or MLN as a share in itself, but as a managed fund. In my view, managed funds are a shortcut for the bits of your portfolio you don't want to spend a lot of time on and are willing to pay someone else to spend the time. For those that invest in managed funds via some kind of platform or adviser, using MLN may be no more efficient than any of the other funds available. However, for those who don't want to pay for an adviser or platform on top of their management fee, MLN (and BRM/KFL) is easy to buy and sell on-line and offers the tax advantages of a PIE structure. Furthermore, for the large proportion of investors that draw down against their portfolio, a regular, reliable high dividend yield is ideal. Yes, it may come out of capital to some extent when annual returns are below the 8% returned but this SHOULD over time become income-smoothing rather than depleting - having listed at the peak doesn't help.

Try keeping a semi-consistent income while having your share portfolio tied up in the usual selection of low/no dividend funds and you would have to make quarterly sales of small parcels to get the same cashflow - a move which is probably both time consuming, impractical and possibly expensive.

Overall, I think there is a niche for this model. I'll be disappointed if Fisher Funds are ever influenced by the critics to drop the dividend policy in exchange for a lower or more fluctuating model. If you don't need the dividend for income, take the DRP and get the re-investment growth in your holding that way.

The one set of complaints I can relate to is whether their share-picking ability is any better than average. Though in the short term, enough discount to NAV can cover a few mistakes...

[percy]

It would appear to me an investor would have been better off leaving their money earning interest in the bank.
Their $1 of capital would still be worth $1 not 62 cents [BRM share price] and they would have had steady dividends.
It confirms to me most managed funds are best avoided at issue.