Arbitrage. Here is ALFs 12 month rolling TSR (dividends reinvested) vs the portfolio performance net of fees. You can see the market over and under shooting the portfolio performance, the same old LIC problem/opportunity. If you think about it from the perspective of arbitraging the SP vs NTA, current positioning looks potentially attractive. The obvious question is when will portfolio returns start driving again, which is the necessary catalyst for the SP.
When I caught up with him earlier in the year, Justin admitted that the team and strategy changes across the Watermark business over the last two years have been disruptive. But he has pulled back to try and enact a re-set. Portfolio returns, while underwater, do look like they have started to reverse from a year ago. Is it a buy? Who knows. But one to watch for a reversal of fortune.
