Originally posted by peejay2
I guess that’s the reason I am still in GC1 and that is because....I respect the managers ability. I could argue that if you didn’t trust the manager to sell or buy at a strategic time, then you probably shouldn’t have invested in an LIC and should have been a buyer or seller in individual stocks.
GC1 probably more than most LICs, is more nimble, has managers skin in the game, and more freely reports (and more often) their thoughts and actions. As MG calls shareholders his fellow investors, I am more than prepared to accept the fluctuations (sometimes significant) that go along with trusting someone to manage your money. I think that if you look at the performance of GC1 in retrospect, I dont think you will see more of a significant discount to NTA over the longer term. However you must do what is best for you. It will be interesting to see what you picked to replace GC1 in your portfolio !
Good question what to do with the funds after selling. That is a big consideration in deciding to sell.
Many people here seem to have SMSFs. I understand for them selling something without having another stock to buy means getting 2% return in cash if lucky.
As an individual investor with the option of putting the funds in an offset account against an investment property loan I can get 4.5% pa in cash effectively. With a much higher risk-free rate of return I am more picky about whether to stay in a stock.
I have about a dozen LICs I am happy to hold long term where I rate the managers as better than the discount suggests. I buy and sell these at strategic times.
LICs such as GC1 which only report month's end NTA two weeks into the new month provide good opportunity for this strategy. It is like betting on a football game at half time when the odds haven't changed from the start of the game. This month is a good example. On Nov 30 GC1's share price was $.93. The Small Ords is down 2.7% and GC1 has probably underperformed that so far based on the disclosed holdings. So it should be trading at $.90 or less now.
It might sound like penny pinching to buy and sell for a few %. It is not for everyone due to the time, hassle, transaction costs and tax implications. But how much do you think the manager will outperform by? I am expecting more outperformance doing it this way.
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