Huang Chung
03-03-2010, 08:54 PM
For those of you that follow some of the LICs, you'll probably know that PMC usually trades at a hefty premium to asset backing.
For example, from their monthly updates, the share price premium to asset backing for the months of September, October, November, December and January are 26.2%, 23.3%, 25%, 23.2% and 17.5% respectively. (The premium has generally been increasing as we have moved from the very darkest days of the GFC, where PMC actually traded, for a short time, at a discount to asset backing)
To give the latest reported month, for example (January), asset backing per share was $1.37, but the share price as at 31 January was $1.61.
I've been watching PMC fairly closely this month, where its traded mainly between $1.51 and $1.56 (now ex a 5c dividend). Today, it was again hovering around the low $1.50s, but someone dumped a ton of stock to drive the price down to $1.44 at one stage. After the main dump, there was a bit more selling in the $1.40s, with the stock finishing at $1.45.
Took the opportunity to pick up a few.
We don't have the asset backing results for February yet, but it seems to me that the premium has shrunk quite dramatically. I'm betting that this premium compression will be a temporary phenomina, and certainly not helped by what appeared to be a big seller today...or does someone know something I don't know?
All in all, it seems like a window of opportunity to be accumulating some stock for the bottom draw, without paying the earth.
For example, from their monthly updates, the share price premium to asset backing for the months of September, October, November, December and January are 26.2%, 23.3%, 25%, 23.2% and 17.5% respectively. (The premium has generally been increasing as we have moved from the very darkest days of the GFC, where PMC actually traded, for a short time, at a discount to asset backing)
To give the latest reported month, for example (January), asset backing per share was $1.37, but the share price as at 31 January was $1.61.
I've been watching PMC fairly closely this month, where its traded mainly between $1.51 and $1.56 (now ex a 5c dividend). Today, it was again hovering around the low $1.50s, but someone dumped a ton of stock to drive the price down to $1.44 at one stage. After the main dump, there was a bit more selling in the $1.40s, with the stock finishing at $1.45.
Took the opportunity to pick up a few.
We don't have the asset backing results for February yet, but it seems to me that the premium has shrunk quite dramatically. I'm betting that this premium compression will be a temporary phenomina, and certainly not helped by what appeared to be a big seller today...or does someone know something I don't know?
All in all, it seems like a window of opportunity to be accumulating some stock for the bottom draw, without paying the earth.