discounts and premiums to NTA can be useful if indeed they are "volatile" ie up & down,
however from what I have seen too many LICs remain at either premium or discount to NTA
for years on end. I would love to buy into WAX for example but cannot bring myself to pay
a premium of over 20% which has persisted for years. PM capital LIC continues to languish at a 10%
discount even though the unlisted version has been outperforming for many years ( 23%p.a over past 5 yrs
and total 372 % since 1998 versus 107 % for the MSCI World in AUD ) .... where is the logic in that ???
how would VGI have gone through the GFC ?
from the IPO :
The Company’s Portfolio is expected to be concentrated on the long
side (with typically 10 to 25 Long Positions, 10 to 15 of which will be
considered core Long Positions).
The Long Positions will be complemented with opportunistic short
selling of businesses that the Manager considers to be of low quality and
materially overvalued. Short Positions within the Portfolio are expected
to be substantially more diversified (and smaller in size) than the relatively
concentrated Long Positions.
The Company will typically hold a net cash buffer ( up to 50%) that it may deploy
quickly in any period of market or stock specific volatility.
I suspect they would have done a lot better than long only managers in the GFC,
particularly those such as Contango global who have a stated maximum cash position of only 7%.
I don't know Ellerston's cash limit but they also are long only. extremely hard to do
well in a GFC being long only.
VGI will have no options, which is great. From what I have seen, LICs that do not have options on listing tend
to have maintain better share price performance.
