It will be a conditional trade for me to acquire some more if there is a tanty. $18 would be an extreme bottom value but I'd be happy under $24-25. The lost contract trading halt reason is still unconfirmed until the market opens today but looks likely.
There are some excellent posts here from other forum members. I agree that the past two years have been horrendous for any value trader - me included. Some other value LIC's have similarly underperformed so it isn't limited to just Hamish's product. However, as
@Chella and
@Jack1960 point out, you have got to not worry about the past and think about the future. IMO, the price of money will increase and I don't think valuations of some growth stocks can continue in the short to medium term. MFG appears to me a good exposure to a mainstream investment class of good old bricks and mortar style investing. They are holding stocks in some companies many of us use every day. You can't know how it will perform until you look at it retrospectively. Too many it would seem are focusing on the recent two-year returns. This is such a short term in the scheme of things to come.
So earnings might drop 10-15% at most if the exiting partner is true and we sustain current other FUM. An earnings reduction of circa 15% still makes MFG a very good investment at <$28. Actually, the hypothetical return on MFG over the last 3 years is actually very good with a grossed-up annual return of 19.75%.
The question mark hanging over the head of MFG is whether or not other institutions will follow and FUM continue to decrease. IMO, FUM have decreased for the short term only and MFG is still actually a really good manager. Short sales are only 1.9 times the long term average which doesn't convince me that the majority of institutions are looking to exit the MFG brand.
So why is St James exiting? It might actually be unrelated to MFG at all. St Jame's place discrete returns for a global equity style fund has historically varied a lot, -9% to 11%pa discrete return over 36-48months and that is also before fees of 1.6-1.9%pa + an initial outlay of 5%. The Magellan global fund, however, returned 13.14% over 3 years which is an outperformance over St James Global equity style funds. Maybe there isn't an industry-wide problem with MFG's funds and so there will not be other insto's looking to exit from the MFG brand. So are we just looking at only one hedge fund that is reshuffling its products on offer to their own benefit? "Magellan CIO Hamish Douglass has told the Sydney Morning Herald that no institutional investor had raised complaints" AFR. So back to my original statement, if this does a wobbly at open/upon news release, it would make sense to get in or top up.
Good luck investors. This post is not a recommendation but just my thoughts only.
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