Some have trouble understanding that.
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All have their favourites and punching bags ...W69 / Bull surely dont like KFL and its value to investors
KFL has been distributing 2% NAV since June 2009 while still managed to increase capital to some extent ...but Bull still not convinced that system can work long term ...even after 14 years of it doing well ....maybe his long term is 1 year ...lol
Question for the KFL disciples please.
For a long term buy & hold Investor who wasn't trading KFL (as in selling the Warrants, or converting the Warrants and then selling the Shares), what is the IRR, since inception?
Cheers in advance.
I can't answer with any certainty but did reference the Kingfish website. A graph is available showing Adjusted NAV Return from March 2004 (listing) to September 2023, and also TSR (Total Shareholder Return) over the same period.
Given a $1.00 start point, TSR has reached $6.00 and Adjusted NAV seems to be around $6.20. Definitions of these are as follows:-
TSR = The Return which combines share price performance, the warrant price performance, the net value of converting any warrants into shares, and the dividends paid to shareholders. It assumes all dividends are reinvested in the Company pursuant to the DRIP and that holders exercise their warrants (if they are in the money) on the exercise date.
Adjusted NAV Return = the underlying performance of the investment portfolio adjusted for dividends (and other capital management initiatives) and AFTER expenses, fees and tax.
If we simply revert to a % being the last 5 years performance calculated on an annualised basis we get the following:-
Adjusted NAV Return 8.1%
TSR 9.1%
And by comparison the S&P NZX 50G Index yeilded 6.2% annualised over that period.
I don't think you can legitimately exclude the warrants from any calculation because exercise of warrants on each possible occasion necessarily reduces the NAV per share of all other shares on issue at that time, to a greater or lesser extent depending upon the number of warrants exercised and the inherent value available on the exercise date.
Apart from all that you need to factor in the PIE status of dividends, the potential value of which depends upon the holders upper marginal tax rate, and also the DRIP discount has value. For example it usually benefits a larger holder to take the DRIP on each occasion and if cash is needed to sell the equivalent number of shares received on market to achieve that capital sum after trade cost. The margin may be slim but it is mostly obtainable, and since you can sell any time after the record date then even with T+2 settlement you should have money in the hand even before the actual dividend payment date.
Thanks for taking the time to summarise Ronaldson.
Gosh, I was being rather lazy not referring to the KF website myself - apologies!
I'm in agreement with your rationale re not excluding Warrants from any meaningful TSR calculation.
But, I'm not entirely in agreement with KF's stance of measuring TSR based on the assumption that all divi's are reinvested back into the Co.
Thanks again.
getting savaged today :scared: might not ever see 1.30 again ?