I won't be putting any of my Mum's money into Fisher Funds "highly creative" 8% dividend yield funds.
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I won't be putting any of my Mum's money into Fisher Funds "highly creative" 8% dividend yield funds.
https://www.forbes.com/sites/laureng.../#317d23d9286b
Warren Buffett has said it before and he'll say it again: Don't try and beat the market with pricey, actively-managed funds. You're better off with a boring, low-cost index fund.
To expand Balances hypothesis an excellent book on this subject is A Random Walk Down Wall Street.
The author argues that asset prices typically exhibit signs of a random walk and in the long term actively managed funds often fail to outperform market averages.
Boop boop de do
Marilyn
October update out today.The only winner here is Fishers.Shareholders would be better off in index funds.
What I can't figure out is given they are invested in large cap stockss (outside NZ & Australia) if they sold all their holdings on Monday (and their holdings are not so large to move prices like say KFL or BRM) then they would achieve over $1.00 so why is the discount to share price so big?
Had a look at this. I think the Marlin portfolio is now being managed by an external fund manager, can't remember who ? but quite probably a better bet than local fund manager "expertise". Underlying investments look well spread and a 16-17% sizeable discount to NTA is right at the very top end of what I think is warranted. Possibly a bit cheap and a quick easy way to get exposure offshore and benefit from the potential for the $Kiwi to fall further. MLNWC warrants look interesting.
Warrants had a good day on a poor day on the NZX - I think the discount is excessive given how easy it would be liquidate their holdings.
Discount to NAV has been about current levels for a while .....what's going to change that?
Yeap I "hounded up" a few and appreciate your earlier comments regarding the size of the discount to NTA. Warrants exercise price is 83 cents in April 2019 adjusted for dividends paid on the shares in the period from issue until exercise. The way I read it the adjusted exercise price is just on 81 cents now taking into account the June 2018 dividend paid of nearly 2 cps. 1:4 was the issue ratio so NTA of MLN shares needs to be adjusted for future dilution of the exercise of the warrants in due course. Warrants give a lot of bang for buck if the markets head north but could be worthless if the opposite happens. We should know whether this trade war talk is just that, talk, or something far more serious well before April 2019 so I like the optionality the warrants give in terms of exposure to a significant investment in overseas shares without outlaying much money now. I'm not going to try and value the warrants other than to point out that the exercise price keeps going down every time MLN pays a dividend so you get a free carry in terms of the optionality aspect, i.e. exercise price + current warrant price is slightly less than the current share price. My gut tells me the warrants are cheap and the shares a little bit cheap. Wouldn't mind another 100K but probably have to pay more after this post lol
Should you find yourselves getting excited,the MLN 10 year chart should cool you off a bit..!!...lol.
Take care.
Good points - I have shares in AFI and they trade around NTA so the 16% with MLN seems to be excessive. I got some free warrants and they have recently found a few more buyers which has given them a nice boost.
Just as well you guys Balance is on holiday at the moment
He would be adding to the discussion
A large part of that discount to nav is the future value of those excessive performance fees
Big volume today and nice rise in the warrants - market seems to have woken up to value, next the head shares...
Bit of a surprise to me that there were any Marlin warrants currently listed.
Did a check and also discovered some new Kingfish KFLWE warrants as well.
I need a new data supplier who is up with the game, but nobody seems to be reliable for NZX End of Day Data these days.
29m warrants against 119m shares. http://www.marlin.co.nz/investor-cen...o-performance/ Lots of doom and gloom recently with threats of trade wars but if its all bluster and part of the Don's negotiating tactics then they might have another good year and return another 23% in which case in nine months time the NAV could be about 17% higher at $1.22.
Warrants exercise price is adjusted down for all dividends paid which are 2% per quarter of nav so dividends paid / payable during the warrant term will be about 8 cps so I expect an exercise price of ~ 75 cps. If the international markets do well there is serious potential upside to the warrants in percentage terms, [perhaps 3-400%), whereas on the other hand the maximum downside is 8 cps, 100% and you're controlling appox $1 per share of assets at present on an adjusted basis. I like the optionality of these warrants confer and the potential upside and maximum downside.
On the other hand if one buys the shares the maximum downside is quite obviously 89 cps and the upside on a percentage basis isn't nearly as strong. I chucked these in my black and shoals option pricing model this morning and got a price answer too good to go into print with but suffice to say it was more than 8 cents :D
Nice one percy, a good post
Beagle reckons no other mutt on this forum can value the optionality of these warrants...some tricks and the resultant feed are best not shared :D
TA speaks for itself, can't hide that.
Very little volume at that price and were a few people that had them issued for free and didn't want them. Since early May NTA and head shares up about 5 cps and straight on the warrants it goes.
Be great if all this trade war rhetoric dies down over the next few months and it proves to be simply "The Don's" way of doing business and the head shares went up say 15 cents wouldn't it. Soon we'll have Cindy back wrecking everyone's confidence even more and maybe sending the Kiwi dollar down further, that'd help too.
Suppose that doesn't happen and NTA stays about $1.045 and simply marks time in terms of earning in line with the dividend policy and then the warrants are exercisable at ~ 75 cents...hmmm...pretty big discount to NTA there !
Yes,was trying to be helpful,and give a word of wisdom ,after I made the same mistake years ago, with one of Fisher Funds warrants.May have brought Marlin at issue,sold, and loaded up with more warrants,which went down nearer conversion,when I thought I would gain massive upside leverage.
So as I could not remember the full facts,and the thought of spending hours trying to find the details, I decided it was not worth the effort,and deleted my post.
If you consider that:
the current exercise price of these warrants is as near to $0.81* as makes no difference;
and that the difference between the heads at $0.89 and these warrants at $0.08 is also $0.81;
then you can see that, based on the real world experience of previous MLN and similar entities profligate warrant emissions, the market attitude to these things is:
Stuff your fancy formulae, these things are mangy flea ridden dogs.
Snow Leopard recommendation:
https://media-cdn.tripadvisor.com/me...algary-zoo.jpg
*$0.83 - $0.0196 of divvies
Fisher Funds probably happy collecting their $2.7 million performance bonus
Keeping skin in the gain ...use 25% of it to buy more shares (on market)
That should stop the discount to NAV getting any greater
Doing research
I see they added Facebook to the portfolio in April ......sold Amazon to fund it
Still up a bit on FB but AMZ has continued to roar ahead
Except that someone cleaned out all the head shares at 90 cents this morning so given the warrant exercise price is 81 cents (adjusted for future dividends paid) then it stands to reason the warrants even without the optionality and leverage they confer should be worth 9 cents with ( the benefits of optionality and leverage thrown in for free). I love a free lunch !
Could someone please explain to me how dividend ammount/supp/imputation works?
I have an idea of how they work. But how do they actually play out?
If I had one share and the dividend amount was 1.96c the Supp 0.074c and the imputation 0.162c. What would actually arrive in my bank account?
Also, 33% tax rate if that is relevant.
Thanks in advance.
First of all ignore the Supp. That is for overseas investors due to missing out on Imp credits.
Therefore, and we are talking Marlin here, you will get the full 1.96c in the bank. As you are on 33% tax then nothing for you to do as Marlin is a PIE entity and your final tax is 28%. You don't have to include PIE distributions on your tax return. Your statement is either a PIE statement or a dividend statement Quite clearly indicated.
The only advantage of declaring the payout is if you are on 17.5% or 10.5% tax rate. In this case you can claim any RWT or Imputation credits. In yopu case this is not applicable.
Discount to NAV down to 13% as at 31/7
Not the best week for MLN
I know you guys aren't keen on Marlin and understand why and agree there is no evidence that their analysts add value and I also agree the performance fees are expensive.
As I see it the pending trade war is something of a binary outcome, things will either get resolved or it all turns to custard. We should hopefully know how things are going to turn out within the timeframe of these warrants. Its a bit of a small left field punt from me that things will work themselves out between China and America and that markets will respond fairly positively.
[QUOTE=Beagle;723514]I know you guys aren't keen on Marlin and understand why and agree there is no evidence that their analysts add value and I also agree the performance fees are expensive.
Ending up having to convert the options means adding to your exposure, to "there is no evidence that their analysts add value etc.".
Therefore, I would think you would need to sell them before conversion.
And that is the risk.
Yes ideally it would be good to cash these out for a handsome profit before 12 April 2019, (the exercise date)
Current NTA ~ $102.5, exercise price of warrants ~ 75 cents. Risk is considerably ameliorated by the large potential discount to NTA in my opinion.
Horses for courses...all shares / warrants involve risk. As always its a case of investors weighing up the potential risks and rewards for themselves. Its not my first rodeo...I have seen what happened to Kingfish warrants before....that was a wild ride !
The discount is a bit harsh like I've previously stated unlike KFL or BRM, MLN are invested outside Australasia so if the portfolio was sold on Monday the stakes are so tiny that they won't move the market.
I note that at 31/7 the discount to NAV for BRM was about the same as MLN .....so your argument about liquidity being the reason doesn’t apply
High discounts to NAV are the norm ....always have been and will always be. Do you really think that this will ever change?
Believe it or not gurus who trade these sort of funds have a thing called a z-stat to see how valuations are going ....
.....and on that measure MLN is ever so slightly underpriced at the moment .....but not a SCREAMING BUY
I very much doubt MLN has every been,or ever will be a SCREAMING BUY...........lol.
MLN performance report says they returned 23% for the year to 30 June 2018, not too shabby. Yes their fees and the performance fee is very expensive and yes the warrants are still a cheap short term punt with interesting upside potential.
Warning, this is definitely not a grannies and orphans thing these warrants. They could be worth anything from 0 - 30 cents in April 2019 under a number of scenarios I have modelled. (Thing is and nobody ever talks about this much, all shares could get absolutely smashed in a GFC MK2) and at least with this one you're only risking 8 cents up front. Warrants confer the right to subscribe for shares but not the obligation. Invest in the shares, risk 90 cents per share. Invest in the warrants, risk 8 cents per warrant. Your maximum possible downside between now and 12 April 2019 is clearly a LOT higher per share with the shares than with the warrants but you have the same upside with the warrants. Its risk mitigation.
WINX.ASX good punt, divie due in two weeks
Punters love AFI eh ...always have.
I see from one of their charts they regularly trade higher that NTA
But that doesn’t automatically mean MLN should trade close to NAV does it ..hardly ever has and unlikely ever to do so.
Obviously completely irrational and makes no sense? Don’t think so, must be a lot of entrenched reasons why it does .....and what’s going change to reverse what’s reality.
Value is sometimes misleading,it can be hidden or it can be real or fake.
Today I watched an Australian share I was considering buying, ECX drop 40.8%, as earnings growth is only expected to be between 12-17% when they projected earnings growth of between 27-30%.
A lot of value suddenly disappeared.
One of the reasons I got in is I am finding it hard to find adequate diversification on the NZX in stocks which I feel are good or fair value. I have repeatedly heard a number of expert commentators on CNBC say that the US market S&P 500 is now trading at about the average of the last 5 years (forward PE about 16.5 times). So many experts have said this I am prepared to take it at face value now.
I think you can find value there on that multiple a lot easier than here. I don't have the time, expertise or inclination to pick individual stocks on the U.S. markets.
The discount this trades at compared to the NTA and the relatively attractive attributes of the warrants cover a lot of evils in terms of management and performance fees in my opinion.
hi Beagle
One way I keep a track on the valuation of the US market, and subparts of it, is by looking at the reports from Vanguard. They report a whole raft of valuation metrics for each index: S&P 500, small-cap, mid cap, value, growth, etc. I can't post a link as you have to agree to some conditions (but it's free, found via www.vanguard.com). For me, it's a really cheap and easy way to see the overall valuation of the US market components on a consistent basis.
Eg, today for the VTI (a measure of the entire US share market) Vanguard report:
Number of stocks 3654
Median market cap $64billion
Price/earnings ratio 20.8x
Price/book ratio 3.0x
Return on equity 15%
Earnings growth rate 8.2%
Foreign holdings 0%
Fund total net assets $702.1 billion
PS. The P/e ratio is down from 24x at the start of 2017 - earnings growth expectations are stable since then.
Thanks, that makes sense as a lot of the NASDAQ stocks would be trading at vastly higher multiples, (often no earnings) than S&P 500.
As you suggest the earnings multiple has come down a lot this year what with the market ostensibly tracking sideways and the corporate tax rate cut.
Chinese markets down 20% this year on fear of trade war. I wish Trump would just go on holiday to the beach already and stop tweeting his nonsense.
Better fishing this week for the Marlin team, NAV back over $1.04 as of a couple of days ago. $Kiwi tanked about 1% today (for reasons unknown) so NAV effectively about $1.05 today based on known info. Tempted to "hound up" some more warrants...might wait till NAV hits $1.06, (maybe next week ?), then go fishing again.
MLN warrants on fire ...looks like every man and his dog wants toncash in on this certainty
Lower dollar helping today still decent gap to NTA but closing at least.
$Kiwi looks very vulnerable, just like the economy and to be frank both look dangerously like falling down a dark rathole with a depth of who knows ? Great to have some money in offshore assets.
……."Bring back Bill."...………..
A safe pair of hands wherein business could plan with a reasonable degree of certainty.
At issue now is with over 100 different working groups looking at policy framework change, how does business plan 3-5 years down the track now ? For example, how much will water cost per cubic meter for that proposed new irrigation project, will Iwi get a royalty ?, will the greens allow the drawdown from rivers ? is that new multi million dollar irrigation project viable or some future potential white elephant ?
The tax working group is another example. Nobody has any idea at this stage what the policy framework will look like down the track. What will the corporate tax rate be, will there be capital gains tax, a land tax, an inheritance tax, some form of wealth transfer tax. Will GST go up ?
There's simply too much uncertainty about which direction this Govt will lurch in next and its impact on business. In this environment I expect a lot of people in business will simply take a wait and see approach and put a freeze on major capex. This is the reason why small business is at its most pessimistic since the depth of the GFC.
I would argue its not a protest vote, its a vote of no confidence and how do we plan in this environment and if small and medium business stop investing in new projects and stop expanding because its too hard then we're inevitably headed for a serious slowdown.
I plan to allocate more investments overseas and have a degree of urgency around that.
Beagle I hear what you’re saying but surveys are just that, surveys. Real flows are looking very healthy
Agreed, there are so many good things going but we have this politicalised negativity filtering through the threads . Im really disappointed but not surprised in some peoples negative, sore loser attitudes on here, its like if we cant govern we will take everyone down, its a betrayal attitude pervading, careful for what you wish for.
Sensible stuff from the Mainfreight AGM - chairman Bryce Plested "Consumers are consuming and confident, building of infrastructure is evident everywhere and the movement of people to areas outside the main centres is exhilerating to see. Our roads and cities are more well-kept than ever - everyone is caring more and trying to do business"
Not a lot of posts here referring to Marlin.
Lets agree to disagree on where the N.Z. economy and $Kiwi is going. Back to Marlin. Solid bidding this morning at 92 cents. A reminder that the warrant exercise price is adjusted for dividends paid including the just on 2 cents paid in the last quarter and is just on 81 cents. Forgetting about the benefits of the optionality and leverage these warrants confer a well bid SP of 92 cents suggests the minimum warrant price should be 92-81 = 11 cents.
Opportunity knocks ?
LOL you're a character mate. I think we both know some discount to NTA is definitely warranted :)
Justified or not ever since Marlin has been around the market (ie the masses) have said a pretty large discount to NAV is warranted (at least most of the time even though a few times times it has come close to par)
The masses are sometimes wrong but honestly whats going to change that view after so many years.
Anyway fund going well at the moment
Discount to NAV shrinking
You guys could be on to something here.
Bizarre that the shares have been trading ay 95 cents and the warrants at 10 cents. Exercise price is 81 cps so warrant price should be 14 cps. Pretty good delta there for anyone who wants the leverage and optionality that these confer thrown in to the bargain for free.
Overseas markets on fire, still a great delta on the warrants at 12 cps. 95c head share price plus gains to come today from very strong international markets, say 96 cents, less 81 cent exercise price = 15 cent theoretical warrant price, (excluding the value of the leverage and optionality which I would still argue is worth something).
Opportunity knocks with the offer at 12.5 cps ?...you folks decide.
Shame about the suspended trade today was tracking nicely - getting closer to NTA...
http://nzx-prod-s7fsd7f98s.s3-websit...821/286679.pdf
Marlin team doing very well and significantly exceeding their benchmark.
Worth noting for those that don't know that this is a PIE fund so 8% distributions are tax free, effective rate for shareholders with a top marginal tax rate of 33% is
therefore 8 / 0.67 = 11.94% gross.
I like the fact that the majority of their fund is invested in North American companies. Warrants theoretical value with shares at 93 cents, (exercise price is now 83 cents less 4 cents dividends paid = 79 cents) is 93-79 = 14 cents per warrant.
Disc: Holding warrants and planning on exercising them when they mature in April 2019.
I see the discount to NAV last count was below 10%
Wonder what’s happened to NAV this week
Dow 2% to $1.02 as at 9/10/18. Would be under $1.00 now for sure. Sold most of my warrants today.
OMG ...the discount gap to NAV has shrunk dramatically and down to 3%
Good call king ......hope it doesn’t expand again
MLN trading at a premium to NAV according to last announcement
That’s some turn around from the 15% plus discount to NAV a few months ago
You guys called this right in thatbit didn’t deserve to be discounted soo much