The share price to NTA discount compressed down to 8% a couple...

The share price to NTA discount compressed down to 8% a couple of months ago when NTA was just over $2 and the SP was sticky in the low $1.80s.

A strong rebound in NTA to $2.30 started with the takeout of Invocare and then huge rebounds in many of the funds over overweight and sold positions, Iress, Bega, Breville, Link etc.

Over a long period of time, the market carries a 10%-16% NTA discount weighting. One should expect that to persist.

Last year the 5% of NTA dividend policy was installed to close the gap, though it has been ineffective so far.

As a significant holder of SEC, l don't mind the comfort of knowing the SP does not reflect underlying assets. Though the manager is unlikely to do anything radical to close the NTA gap, the 5% of NTA dividend (resulting in a 5.8% sp yoeld) will eventually draw income hungry investors to the table, limiting downside risk in the SP should markets decline.

I want to be in the small cap space which has been in the "sin bin" for 18 months now. I hope it weakens further in the next 6 to 12 months as only then will true opportunity present itself.

SEC has a number of positions that will be turned into cash as a result of recent takeovers, so they will be in an excellent position to seize on oversold businesses paving the way for the inevitable recovery in small cap prices as the cycle matures.

My mental timeline here is 3 years plus before any real profits will be made.

ln the meantime, l don't mind holding for a lowish volatility, 5% plus income return. It sits as a pseudo cash position in my portfolio offering opportunities to buy when the NTA discount widens, then either hold or sell as it declines.

Presently, l see a near term market rise, so l will hold. If SEC discount drops below 10%, l expect l will lighten my overweight and hold a little more in cash, as l am a bear when it comes to H2 2024.

Everyone of course should follow their own plans, but l feel younger holders who may not be as conservative as l am, could consider a less active set and forget strategy, depending on their market experience, objectives and financial position.

GLTASH