That is capitalism at work. The risk vs reward of you buying more at the perceived discount in the view to the gap closing is an excellent example of someone seeing a possible diamond in the rough, if you can see the significant upside then happy days.
My concerns ... if the gap widens, one is essentially giving up capital (and future gains) and suffering from opportunity loss. Is the risk worth the possible reward?
Counting on a buyback is often a risky strategy of hope-ium. A lot of capital is required to sustainably implement that in a big enough way to move the share price consistently. Where is ARG going to get that much capital (selling down assets ? Which would dilute the NTA. Or they retain income (dividends) therefore reducing their payout to you) ?
The only sustainable way to close the gap (IMHO) is for ARG to shoot the lights out repeatedly and then the market will wake up it. NTA performance needs to rise faster than the market (after fees) as well as dividend payouts needing to rise in line with inflation + 10 yr govt bond rate + risk premium.
if LICs now just hug an index, new money will not be attracted to it. Thornhill will be long forgotten. LICs share prices will languish.
Personally, I want LICs to come back into favour. I'm just struggling to see how AFI and ARG do that sustainably.
ARG Price at posting:
$8.89 Sentiment: Hold Disclosure: Held
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