Ann: Net Tangible Asset Backing February 2024 with commentary, page-3

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15/03/24

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Post #: 72896304
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Originally posted by Wazz101: ↑

Current after tax NAV of 29.2c v a SP of 16c the Feb 24 discount is 13.2c

So based on the after tax NAV it is 45%

which is huge, especially as only 32% of the fund is unlisted and 6% is cash.

Given the nature of the portfolio - 62% listed and valuation is based on fair value, which is derived from last traded price and another 6% is cash with no valuation issues, the discount would mostly apply to the unlisted securities.

With a 45% discount the 32% unlisted portion is effectively being valued at nil - think about that. the market is saying zero reflects fair value for these.

The 32% listed securities are being discounted by the remaining 13% overall discount. Effectively they are being marked down by 41% as they are only 32% of the fund - so this translates to the market saying that because TEK owns them, i am only going to pay 60% of their value.

In terms of the valuation of the portfolio, this is how fair value is derived. for listed - 62% of portfolio - they are valued at last trade price and TEK can buy / sell as it sees fit on the market. For unlisted - 32% of portfolio - These are ordinarily valued at fair value using their last completed Financial Statements and reflected as such in the fund. A discount to reflect their lack of liquidity and performance since last FS is appropriate. Cash - 6% - no discount on this as cash is cash.

I realise this is a very narrow financial analysis of the numbers and there is more at play here, but in a financial perspective it is absolutely the case.

These type of anomalies don't last forever in financial markets and revert to fair value, be it through internal initiatives or an external hostile bid. Good to see the buy back continuing, as that seems to be the only party buying shares in TEK.

The herd seems to universally see it as a sell ?

I still see it as a buy and something big emerging to reduce the discount in addition to managements incremental initiatives.

GLTA

Wazz

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That's a good analysis for the NAV.

But it's essential to also consider the fee structure, including the performance fee.

I don't see anything big emerging.
Obviously the fund should be wound up.
But there's no incentive for management to wind up the fund.
That would be killing the goose which lays the golden egg.

TEK Price at posting: 14.5¢ Sentiment: None Disclosure: Not Held
3 Upvote

0 Great analysis

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