Overnight the US markets are on track to close off the days trading where they began. In an unusual turn of events, actual company earnings will become the focus for investors this week as we get into US earnings season. The major tech stocks are due to report this week. All eyes will be on the magnificent seven.
- S&P 500 = -0.04%
- Nasdaq = -0.21%
- Aussie dollar steady at 64.17 US cents
- Iron ore $98.55 US a tonne
Eyes on Listed Investment Companies
Many moons ago, I took a break from the funds management space to write for Alan Kohler’s Eureka Report. I specifically covered listed investment companies and trusts (LICs and LITs). They were having a moment in the sun, with lots of high profile listings.
Exchange Traded Funds, whilst they existed, weren’t the dominant force they are today. When I look at my watch lists from back then, a lot of the LICs are no longer with us. Capital markets moved on.
Most of the time when you read about them you’ll hear of moaning about the discounts the share prices trade at compared to the net tangible assets within the vehicle. I never understood the complaints. Of course an investor would like their dollar to be trading at a dollar, but what attracted them to it in the first place? Most likely the fact that a buck was trading at eighty cents!
I’ve always viewed the discounts and premiums as a feature not a bug. And, if you invested today and find yourself in a vehicle trading below its NTA, well you probably haven’t been paying attention.
I’ve done two podcast interviews with LIC managers, one a round table and this one with Miles and Emma from Global Value Fund Limited (ASX:GVF). Jump towards the end and Emma rattles off a laundry list of things they look for as investors who plumb the bargain bins looking for deep discounts.
It’s currently front of mind because I am sitting down today with a guest for an interview who runs an industry body for these vehicles.
One final word on them, even if you’re not interested in investing in them I always think they’re worth a look. They are a fantastic read on sentiment. The value of the assets are relatively well known but the discounts can swing wildly.
Latest LIC listing from WAM stable
Speaking of sentiment, we watched with interest to see how the latest IPO from Geoff Wilson’s WAM Funds Management would end up. Shares in the WAM Income Maximiser (ASX:WMX) are due to list on the ASX tomorrow. This is an LIC combining equities and debt and you’d think right in the sweet spot for the income focused WAM investors.
However, the AFR recently reported the new listing managed to raise $150M of a possible $500M. We’ll be watching the discount/premium of WMX for the first few months.
It is fair to say the timing of the listing weighed on the outcome. The offer period opened on the 12th of March and closed on the 11th of April. This was right in the tariff mayhem that sent markets and investors into a complete spin.
The WMX IPO followed another income LIC IPO late last year from Whitefield. In December Whitefield Income Limited (ASX:WHI) raised a maximum of $200M. There may be more income offerings to come to. market as managers aim to fill the void left by the phase out of hybrid securities.
As always, if you want to have a chat with me you can reach me via the chat function in the bottom right of the page, the Rask Community or by jumping across to the Rask Invest site.
Have a great day and I’ll catch you tomorrow.
