Well there are a couple of different issues. I came into CAM via...

Well there are a couple of different issues.

I came into CAM via CAMPA, which proved to be an excellent investment (depending on when you bought the CAMPA's) but were at the expense of CAM ordinaries.

Of course the new raising is a play to increase the size of the fund and earn more management fees, but there is nothing wrong with that per se. This is what LIC's and managed funds do - most of the other LIC's on the market have done likewise. What is wrong is when the managers raise funds at the expense of existing share holders by issuing new shares to institutions at below NTA. This new raising is very ethical and very smart - it provides a fixed interest security for those who want a fixed interest security and advantages the existing shareholder by issuing at above NTA. And the cost of the new equity for the first four years is less than the dividend outlay on the equivalent shares. Really smart. The other LIC's should take note.

I think it unlikely that many shareholders will take up the new issue - if you are already a shareholder you recognise that it would be a better use of your cash to buy more CAM's on-market. But there is a large investment market for fixed interest products who will be interested.

CAM's performance is a different issue. It has been pretty lousy for the past few years - part of this was the CAMPA's sucking up earnings and part is the conservative deep value bias of the investment managers. The past few years have not been kind to deep value investors whereas growth stocks have flown to ridiculous heights. If you hold CAM, you hold a very defensive investment that will lag the market during good times, but beat the market during bad. That's the nature of the company - although they do seem to be slowly adding some growth stocks to the portfolio.

I am happy to hold because I want a more defensive stock to balance some more adventurous ones.