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ALF australian leaders fund limited

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Salvation on its way finally!, page-6

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Backdraft

1,305 Posts.

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24/02/20

10:31

Post #: 43106944
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Originally posted by marketmaker ↑

Article in the AFR tonight. Looks like we might finally be able to escape this horrible ride! Best wishes to Mr Kingston!

Pen pals: David Kingston takes on Geoff Wilson over ALF LIC

It's a battle of David versus the local goliath of the world of listed investment companies (LICs).And in this case the David in question is well-known agitator and former Rothschild managing director David Kingston, who has Geoff Wilson and the Watermark-managed Australian Leaders Fund in his sights.Kingston has penned a letter titled: "TIME’S UP - Let’s end the pain for long suffering Australian Leaders Fund shareholders" which is set to land on Wilson's desk Sunday night.In the letter, Kingston argues that ALF shareholders "are locked in the ALF cage". He says investors cannot sell their holdings in the LIC without incurring a big exit penalty, due to the gap between its net tangible assets and the share price.The veteran investment banker points to ALF's pre-tax NTA per share of $1.18 and post-tax NTA of $1.16 – which includes a 5¢ a share deferred tax asset – as of January 2020."However investors choosing to sell on the ASX can only do so at the current price of around 98¢ - a very large discount," Kingston writes.He calls for three strategies to combat this.Either winding up ALF and returning funds to shareholders; converting it to an unlisted trust "which enables investors to exit at near NTA"; or merging ALF with an entity that is trading at around NTA.Kingston has form agitating in the LIC space and played a key role in getting Ashok Jacob's Ellerston Global to convert its LIC to an unlisted trust at the end of last year.Wilson is a non-executive director of the ALF and rakes in some of the manager fees via his 80 per cent stake in Boutique Asset Management. Boutique is paid 25 per cent of Watermark Funds Management's ALF management and performance fees.Kingston says the Justin Braitling-led Watermark Funds Management – which manage the ALF – have committed two damaging strategy errors that have destroyed shareholder value and seen the ALF share price slip more than 25 per cent in the past five years.The first is taking a net zero equity exposure position for the past five years which Kingston says has been particularly damaging given a strong bull market."I note the Company’s 2003 Prospectus states 'the number of short positions will not exceed 30% of the equity portfolio by value'," he writes."In contrast the short positions are much greater."And the second has been a "failed international investment strategy" which he acknowledges the ALF terminated in the last year.Kingston says these two strategies diverged from ALF's initial investment strategy outlined in its 2003 prospectus, which said 70 per cent of the equity portfolio would be invested in the ASX 100."As a leading proponent of the virtues of LICs, and director of ALF and having an economic interest in the management fees, I strongly advocate that you take urgent action to optimise the interests of the ALF shareholders," Kingston says to Wilson towards the end of the letter.

AFR article: https://www.copyright link/street-t...-on-geoff-wilson-over-alf-lic-20200221-p542z6

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David Kingston will achieve very little without been on the board. Personally I’m happy to see the price at these levels to buy more, have had a small parcel for years and waited until a reasonable discount to NTA to purchase more. Current strategy refocus looks promising. People seem to forget ALF HUGE outperformance in 2009 bear market, another bear market looms potentially.

Last edited by Backdraft: 24/02/20

ALF Price at posting: 99.0¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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