Fisher looks to close discount
Listed investment trust Kingfish is actively working at trying to close the discount between its share price and net asset value.
Thursday, December 29th 2005, 7:22AM
The fund which is managed by Fisher Funds listed on the NZX in March 2004 issuing shares at $1 each and giving free warrants to subscribers.
Currently the discount is around the 15% mark, which appears “excessive”, Fisher Funds managing director Carmel Fisher says.
“Allowing for tax on wind up the average listed investment company in Australia trades at a 2% premium.”
In her view the discount is too wide and it presents a good buying opportunity – or as she says the fund is “on sale”.
“Closing the discount provides a cherry on top (for investors),” she says in her presentation.
“If the discount went to zero an investor’s three year return would increase by 4.2%pa.”
In addition to that investors can leverage the growth by investing in the warrants which are exercisable in March 2006, 2007 and 2008.
Fisher told brokers that the funds management company had a proven track record as stock pickers, with its unlisted growth fund averaging returns of 27% gross per cent a year, and that it has a clear process for assessing companies.
She says there is no reason to believe that the net asset value growth won’t continue to be strong, therefore the discount enhances the investment rationale.
“The discount provides the opportunity to buy a dollar for 80 cents,” she says.
Meanwhile fellow listed investment trust Salvus has had a bad November taking a hit on its Pod holding.
Its net asset value declined 4.7% compared to a fall in the NZ Smaller Company Index of 0.5%.
Pod revised its earnings downwards sharply as a result of competitive pressure on its margins from imported goods from China, and a tougher retail environment in general.
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