Ann: Net Tangible Asset Backing, page-3

Most LICs are trading at a discount to NTA. It is a persistent frustration to many, but actually a comfort to me.

Some of the movers and shakers of LICs (like Geoff wilson and Regal Funds Mgt) have pretty good processes eventually to extract NTA. The biggest weapon they use is investor discontent to liquidate the funds and release NTA.

I view this as a variation in the well known difference between investors who understand how markets work, and punters, who don't.

Eventually, the NTA discount will close,, but it will probably take years rather than months. In the meantime, most here have an average cost well below$1.90 with an after tax net asset backing above $2.30.

With a 1.25% of NTA dividend policy, that is an actual investor yield of over 6% fully franked.

At that rate, I am happy to wait as long as it takes and add to my position whenever the NTA discount stretches beyond 14%. I will admit to selling when NTA discount closes to around 10%, which it invariably does. Tactically trading smallish parcels of stock through the cyclical peaks and troughs in most LICs has proved to be a very profitable way to accumulate large holdings with a finite amount of capital over long periods of time, until the eventual closure of the Fund.

Since the early 2000's I generally prefer to hold green energy businesses, precious metals producers and U3O8 leaders. These have been my greatest source of growth. But when it comes to industrials, I am enamoured by out of favour small cap LICs that will eventually outperform broader market sectors.

Each to their own Scott.

GLTASH