Ann: Net Tangible Asset Backing, page-3

I bought some more SEC during last week at $1.76. I really do believe that the managers do good research before selecting stocks and in the early days they picked a few stocks that were taken over. Their only crime was not hanging onto a couple of those for higher prices. I’m a bit worried about their Cabcharge pick as analysts are not overly positive on that one, but the SEC guys seem to be determined not to overpay for stocks and to eliminate those they see as overpriced. Interesting to see that they have picked ISD and AGI, and altho I hold them, they have been dogs for me ! Interesting to see if they have made the correct decision or if those 2 are only short term trades. I hold quite a number of LICs and altho most have a SP lower than the NTA, and altho SEC is in the same boat, I do believe that the quality of their stock picks and strict criteria of not overpaying, will provide sound longer term gains. The buy back can only help the SP in the long term and the discount to the NTA is fairly significant, something like 15%, which will close in the near term. I think a lot of LICs are trading at a discount because individual investors think they can make money on their own. When the market drops, there tends to be a rush to the investment professional and for the security of a “managed” investment. That, and a reasonable dividend I think, should see the SP at least get closer to $1.90, still a discount of something like 10%. Only time will tell !