Well if you are happy to permanently lockin the huge discount that may well be the right option. Plus you do realise that one of the managers will be getting a very large payout from the assets. Go and read up about the URB takeover by 360 capital that saw the discount baked in and a payout of $2.5 million to contact the manager. Really these larger funds are only trying to improve their shareholders returns for their management company. The merger ends up not improving anything. We have a manager with a track record that is much longer than the company and a lot longer than a number of other listed LIC's. I believe that this LIC got stung by a bad investment which looked very good on paper (AXL) these happen from time to time but cost around 6c or more per my calculations to the portfolio with zero recovery. Merging would just put my investment with another manager. I want to choose those myself. Size has no benefit (unless you have a fan club name linked to it). Look at the PM LIC's pGF is over $400 million in a blend of mostly global opportunities and has the same discount and at times more. They have also got a great track record as well. If this doesn't work I would rather approach MG if I felt this won't work and ask him to wind it down. There are mechanisms for that. I respect him enough to know that he will do that if that is the best for shareholders. I don't sell my shares if they discount gets to zero. The growth in NTA over the years and no CGT ends up with the investment being able to withstand crashes as the CGT cost is great than the falls.
GC1 Price at posting:
82.0¢ Sentiment: None Disclosure: Held
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