HML (ASX) Ann: Update on Audited Financial Statements

Originally posted by BarneyMaroon: ↑

Certainly my personal experience of using LICs has been very disappointing, so I agree that it is rational that there should be a discount on LICs to allow for the large fees. Have not owned one yet that has accessed the 10% of out-performance fees.

What sticks in my craw is when companies drift along at 15-20% discount. It is so blindlingly obvious that they should shut up shop and return investors money - or better still go on a massive buy back and then sell up and return capital. Instead they sit on their captive money and bleed it out (sorry public holiday and Ive just woken up from my nana-nap and grumpy as hell). I wonder what directors charged with legally looking our for shareholders do at their board meetings. Should we vote for shareholders, or vote to keeps our fees and mumble about serving a need in the sharemarket?

That said at least you can often walk away with 85% of your cash on markets - that's a bloody win for LICs.as HML holders know.

Still hold ARG as it easier to pass the franked divies through the trust to the kids (yep, I'm that lazy!). Also still hold PMC - bought before the wide range of intl ETFs was around. Wish I didn't still hold. After not looking at it for a year - I managed to log on the check on the day it hit an 18 month low. Bugger that.

Did I say I hate LICs?

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Persistent discounts in quality LICs don't bother me one bit, in fact I embrace a good discount and quite often see it as a buying opportunity. When I buy anything I am mindful of a margin of safety, my view is if a quality manager is holding a basket of quality stocks trading at a discount and then that LIC is also trading at a discount to NAV, that LIC is buy.

Research, patience and the ability to buy at the right time, in my opinion, adds up to bargain basement buying, a margin of safety and a chance for substantial gains at a later point.

The main reasons I see discounts in quality LICs is:
1. Impatience , people want to get rich quick and want immediate results.
2. Short term focus, people concentrating too much on what a fund did on a monthly or quarterly basis.
3. People following the latest trends and not sticking to their knitting.
4. People not doing enough research and not following managers that don't follow the herd.