Today's director's interest announcements indicated that the rate of onmarket perfee buying has slowed considerably. The cutoff price of $2.8255, at which new shares can be issued, appears not to have been exceeded. There was no perfee buying at all on 13th and 14th Oct, presumably because of a lack of sellers at $2.82 on each of those two days. According to my calcs, there are now between four and seven days of perfee buying remaining. Unable to specify the exact number of days remaining because there is a total of three days for which I can see no reason why there was no perfee buying. Don't know whether the directors were prohibited from trading on those days because of a "prohibition on dealing when a person is in possession of inside information in accordance with the Insider Trading Policy", or whether they elected not to trade on those three days for reasons known only to themselves.
LSF's annual report will probably be published soon. Also, the next quarterly report is due next week. Both reports are likely to comment favourably on the excellent performance of the fund. Maybe some investors are expecting that these two pending reports will provide a boost to the SP, which might help to explain why the SP floated above $2.82 for most of the last week.
A more likely reason for the elevated SP may be that the NTA has recently been increasing at a faster rate than previously. The latest NTA announcement has post-tax NTA at $2.9059, with a high of $2.9212 two days previously. According to my indicative watchlist calcs, the next two NTA announcements are both likely to be positive, and the next one after those should also be positive provided that overseas markets don't tumble tonight. At the current rate of increase, it will not be long before post-tax NTA reaches the $3 milestone.
In last year's annual report, the chairman emphasised that the board was focused on narrowing the NTA-SP discount. However, there was no mention of eliminating the gap altogether or of turning the discount into a premium. I think that the discount is unlikely to become a premium unless the dividend yield is higher. The next dividend is not due for several months. However the buyback plus investor confidence could push the SP higher, even if the SP remains at a discount to the NTA. It will be interesting to see what the chairman has to say about the NTA-SP discount and future dividends in this year's report.
Changed mind, bought back in again because a continuing strongly rising NTA suggests that LSF's performance is gaining more steam, outweighing my previous reservations that there might be a temporary SP slide when the perfee buying ends. Anyway, if the SP remains above $2.82 then the perfee buying might effectively already be dead in the water. The buyback when it restarts can keep pushing the SP higher. The buyback cannot operate until the perfee buying period is officially over. So, there will probably be at least another week of a most unusual phenomenon - LSF's SP floating freely, close to the NTA, supported only by investor confidence.
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