gmi flat, page-9

Actually you'd probably need more than a 10% discount to justify NTA if management fees are 2% and they only perform average.

(I've seen this done on a stock tipsheet before so I'll try and replicate it ...)

Theoretically if you think you can do benchmark, which might be say, 10% per year, then to be interested in someone doing the stock picking for you you'd need them to do at least 10% a year, otherwise it wouldn't be worth you while. But if they take 2% a year every year off a discount is needed. If you're doing 10% a year for 10 years you're left with 2.59 times your money at the end.

A manager who does 10% a year but takes off 2% for fees will give you 2.16 times your money at the end of 10 years.

So to get the same multiple (2.59) on your money under the managers, you'd have to pay ... 83% of NTA. (100 / 83 x 2.16 = 2.59)

I'm using 2% as a rough estimate, because as the funds under management increase (e.g. exercise of the $1 options) some of the fixed fees decrease.

So paying NTA for this stock would mean you'd have to have a lot of faith in its ability to beat benchmark consistently ...

All subjective. Thanks for raising the point though, it made me think a bit more about the fees component.