Hi timbowls, I can give you some insight from a long term holder's perspective.
On a positive note, what I would call the core investments that TOP have been involved in - Service Stream, Money3 and AMA - these have been acceptable, sound investments. The first 2 in particular have had stable and competent managers for the last few years. I have also owned these 2 companies directly and believe their prospects remain bright. Currently these 3 core companies make up about 37% of the TOP portfolio, which I'm thankful about because the quality of the remaining investments is substantially inferior I believe.
There has been a number of poor investments made by TOP management over the years. As far as I know, all these investments are still held.
*Palla Pharma (formerly TPI) I don't know a lot about the company, but on TOP's own admission they invested too early in this company's life. The shares have fallen in price from $4 to below $1 and TOP have acquired more on the way down.
*Austin Engineering is another underperformer that TOP invested in and were part of a recapitalisation after the company became overburdened with debt. There's been little recovery to date despite the company becoming more stable.
*Murray River Organics is a company TOP had $3.3m invested in at one point. Today the share price sits at 1 cent.
*MMA Offshore has been another underperforming investment for TOP where there has been additional funds allocated to the investment over time.
*Decmil Group is also one of TOP's holdings and has performed poorly as a business over a number of years and has just been recapitalised under 10 cents per share. Subsequently there has been a share consolidation for Decmil (1 share for every 10) so they effectively trade at 7 cents per share today.
*Australian Community Media Group is a recent TOP investment which has been impacted heavily by the pandemic as advertising revenue has dried up for newspapers. TOP has written off 15% of the investment (it is unlisted) and further write-offs are likely.
All these poor investments, I believe, are inferior companies with issues of high levels of debt, cyclical markets, weak competitive positions and inept management. And I cannot understand why TOP management have invested our funds in such companies.
Yes we all make mistakes along our investing lives, but TOP has been involved in far too many for my liking. Considering that management and performance fees for Thorney was 3.4% in FY2019 - this is clearly not justified based on the long term performance of the our company.
I personally don't have a large position in TOP and will exit completely in the near term (as the discount to NTA narrows). However, I'd point investors to other listed companies offering better prospects. FGX is a listed investment company that I hold and continues to perform admirably. Management fee is only 1% (importantly no performance fee) and the proceeds go to charity anyway. MIR is another with good credentials and low fees, one look at their top 20 holdings and you see the likes of ARB, REH, BRG, MAQ - very high quality companies.
Anyway, hope this helps give you the views of a long term investor here!
PS. I also hold directly SXE which is in the TOP portfolio, and I consider a reasonable quality company!
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