KFL - Kingfish. What are your feelings for this?

[macduffy]

It's not unknown for managed funds to trade at a premium on occasion but that is more normally associated with out-performance by the manager and/or weight of money pushing the price up. I suspect it's more the latter in this case - I'd be cashing up and looking elsewhere, if I was holding KFL.

[Sideshow Bob]

Closed back at $1.28 today, but over 230,000k traded which is large for KFL - only about 12 days over 200k in the last year. Goes ex-div in a couple of weeks, and surely this couldn't be a driver, as quarterly and think about 2.2cps.

I've had some money parked in there as a default, but have been thinking about exiting. So at least got some gain out of Ryman, as didn't buy them a couple of years ago, two years, or last year.........

[Anna Naum]

Interesting to note the company continues to buy back shares. In the past they have stated that they would only do this if the shares traded at a discount to NAV.

[777]

Interesting to note the company continues to buy back shares. In the past they have stated that they would only do this if the shares traded at a discount to NAV.

Last buyback in KFL was 11/4/12. Over a year ago

[bonne vie]

KFL pays out a quarterly dividend based on asset value - this was commenced I think 06/2009. Is a possible explanation of the current buy back is that they are needing to build up the shares held by the company for the June dividend for those in the dividend re investment scheme. If they don't buy back then they would need to liquidate assets that are in a rising market. Noting Buy back in BRM has been very regular.
Disc - held since 2004 float

[Anna Naum]

Look at that, MLN and BRM buybacks, sorry thy usually do everything in 3's, same day and time for all three board meetings, same manager, usually same buybacks. Thanks 777 for putting me right.

[bonne vie]

KFL pays out a quarterly dividend based on asset value - this was commenced I think 06/2009. Is a possible explanation of the current buy back is that they are needing to build up the shares held by the company for the June dividend for those in the dividend re investment scheme. If they don't buy back then they would need to liquidate assets that are in a rising market. Noting Buy back in BRM has been very regular.
Disc - held since 2004 float

Yes you are right it makes sense to take some profit to disburse, but they still need the shares available in their Treasury Stock for the dividend reinvestment scheme. Noting they also paid out a large management fee in shares recently too though I think this was reserved for). Had a quick look at interim 30/9/12 financials to see the value held as Treasury Stock but this has confused me more - as it appears to show they are increasing the number of shares under the reinvestment scheme "New shares issued under shareholder reinvestment scheme" $1,960,000. Perhaps someone can provide a simple explanation re treasury stock/reinvestment dividend shares.

[blah]

I just sold out at $1.32 - a price above NAV simply cannot be justified. I am not all too familiar with the machanics of share buy-backs, but I wouldn't think it would make sense to buy back at a price extremely close to or above the NAV. My understanding is that buy-backs occur when the share price is unjustifiably low to stop the price from going any lower.

I will keep an eye on this and might buy back if the price falls back down to a level I am comfortable with (90c!! I'm dreaming)

[voltage]

yes also trying to sell out at 1.32.

[macduffy]

Perhaps someone can provide a simple explanation re treasury stock/reinvestment dividend shares.

Hi bonne vie.

Don't take this necessarily as "gospel" but my understanding is that a company may issue shares in lieu of cash dividends provided it has established a dividend reinvestment plan and doesn't exceed any statutory or NZX limits on issuing shares without specific shareholder approval. It may be different for investment companies such as Kingfish where the dilution effect might be more readily apparent but in principle, any issue of equity is dilutionary - is that a word?

The point of holding Treasury stock is to avoid the hassle of cancelling shares and then having to (possibly) seek shareholder approval in the event of needing to re-create them.

Clarification and/or correction of the above would be welcome.