Sorry, I have been away and only just read about this. I see is as a negative for share price performance, although as you say it does depend what the premium is. I do not think it will be much as Karl wants to grow this fund and it will need to be attractive enough to attract new money. My last message pointed out that the market was paying too high a premium to NTA. Karl saw the opportunity and is taking advantage of it. The market is realising this now with the SP slipping from 154c to 142c. The recent 6 month performance shows the fund only outperformed the XAO by 0.05% on that performance it should be at no premium. I believe the share price will slip further, closer to NTA in the short to medium term. Why, It is likely there will be a lag in performance until the new money is effectively invested. If Karl intends maintain dividend levels the new shares will be a further drain on NTA. I am of the view the larger a fund gets the harder it is to achieve high returns. As CDM has been small it has been nimble enough get sizeable positions in small caps. Generally there isn't the liquidity in small caps for large funds to get in and out of positions. As pointed out previously my view was the market was paying too high a premium to NTA simply on past performance and yield chasing. You can see the bulk of the past performance is attributable to the large holding CDM had in RHG. This is history. Outperformance is now 0.05% for this fy so why pay a premium??
CDM Price at posting:
$1.38 Sentiment: ST Sell Disclosure: Not Held
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