Whilst the MGFO price has fallen substantially - the original...

Whilst the MGFO price has fallen substantially - the original investment thesis for MGFO remains and may have improved slightly.

I noted the following 4 items in Feb as potential catalysts to close the gap:

• Magellan driven consolidation / actions to close the gap - Magellan's leadership & board have a clear and stated strategy to simplify the business. The closure of FuturePay and sale of Guzman & Gomez reflect their willingness to make significant changes. IMO this increases the chance that Magellan takes direct action to close the gap.
• External action to close the gap (Wilson etc) - MGF has $3.13 billion in MGF in Feb 2022 - down to $2.55 billion now. The discount in Feb was around 15% - it has increased to 18%. It stands to reason that MGF is now more attractive to external parties than it was in Feb.
• Improvement in performance- Magellan's performance appears to have stabilised. Active managers are finally out performing the index in the current market. The opportunity for Magellan to out-perform has increased. Lonsec rates Magellan Global Fund as 'recommended' - which means it's not their first choice for global exposure but that Lonsec have high regard for the new investment team and the investment process.
• Reduction of fees - no change on this.

In terms of supply & demand with MGF - given the well-published issues at Magellan combined with severe under-performance, it is somewhat natural that the discount has increased given the closed-end structure. However, the tide may soon turn as the recently improved investment performance combined with Lonsec's 'recommended' rating - financial advisers can now justifiably retain existing Magellan holdings for clients rather than being somewhat obligated to sell upon reviewing their clients portfolios. FP's could now justifiably consider increasing client exposure to Magellan Funds and given MGF trades at an 18% discount to MGOC, it is logical that MGF is the instrument through which such exposure is obtained. Any new demand (or reduced selling pressure) may quickly rectify the current NAV discount.

This is not financial advice. These are my speculations only and this is not advice that you should invest in MGFO. Please seek your own financial advice.