new thread, page-81

"I cannot apologise for following class."


I was only joking of course.
In response to Gareth's question, it is not true that the discounts to NTA always persist, although this has been the case with AUI/DUI in the past 2-3 years. But I have seen all the LICs at premiums.

There are basically 2 reasons.

The quality LIC's we discuss on this thread have a distinct buy-and-hold shareholder constituency. They are also very illiquid with wide bid/ask. These are not trading stocks. The reasons people buy and sell here are very different than those in other stocks. Buyers typically outnumber sellers, the problem is that the NTA can run away from the price and people are unware of it. But the ultimately there is convergence.

The other reason is more technical.
There is probably a school of thought out there which believes that the economic value of a LIC is its after-tax NTA. This is not true of the 'traditional' LICs, as they are able to pass on LIC capital gains dividends, but it is true of other LICs.

Anyway, if you like the underlying portfolio of a LIC and its management, just be grateful you can buy quality assets at a discount to the market value. A 10% discount for instance means that you can buy the All Ords at 5,600. Why pay 6,200 ? You still get the full economic benefit when you buy at discounts.