Affluence Funds Management has had TGF as one of its top...

Affluence Funds Management has had TGF as one of its top allocations for some time in its LIC fund. https://www.livewiremarkets.com/contributors/daryl-wilson-ceo-portfolio-manager-affluence-funds-management
https://affluencefunds.com.au/alf/

Looks like they are selling down and will only touch this extractive fund for short term trades when the discount is extreme (over %20).

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The largest detractor was Tribeca Global Natural Resources Fund (TGF). Disappointingly, on 22 February, TGF announced they would raise $52 million via a placement and rights issue at a share price of $2.10, a 22% discount to the last reported NTA of $2.72. Prior to this announcement, TGF was trading at $2.25, a 17% discount to NTA. The capital raising dilutes the NTA from $2.72 to $2.54, a 6.5% reduction in value. In previous meetings with management, we were told they would not look to raise capital below NTA. Clearly, this latest transaction represents a change in philosophy. The manager has stated that the increased size and liquidity post capital raising would help reduce the discount to NTA. We have a lot of experience in LICs, and we believe this is not likely. In our view, three things are necessary for an LIC to trade at a sustainable premium to NTA: good performance, a consistent or growing regular dividend, and management displaying respect for shareholders. TGF management has failed on all three counts so far. We have always been excited about the potential for TGF’s investment strategy, being a long short fund that specialises in resource equities. Given the volatility in resource markets over the past few years, TGF has sometimes traded at a price we regarded as very cheap.

We have bought and sold the LIC on several occasions since it was first listed in 2018, and have made solid returns. Unfortunately for any TGF shareholder that bought and held the LIC since listing, management has failed to date in their efforts to deliver reasonable overall performance. The IPO price was $2.50. TGF has rarely traded above this price and has never paid a dividend. In 2020, management lost approximately 15% of TGF shareholder capital on a loan to a single borrower. Since IPO, TGF has traded at an average discount to NTA of approximately 15%. In the absence of some very good performance in the future, it is hard to see how the NTA gap will close meaningfully from here. February’s capital raising announcement for TGF represents a good example of the biggest risk of owning shares in listed entities – the potential for management to make poor capital allocation decisions.
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