Achieving wealth through shares...how?

[JohnMichael]

What do you think of WAM as an LIC, Mr Falcon?

http://www.wamfunds.com.au/WAM-Capital/Tabs/Performance.aspx

My thinking:

Pros:
- targeting smaller / midcap stocks, which are much less represented in the index / larger LICs weightings
- fully franked dividend of over 7% is very high!
- has outperformed over the last 16 years by a much, much higher margin than other LICs

Cons:
- I think the MER was 1%, which is much higher than most LICs
- possible key man risk
- since it's outperformed, I tend to think it wont continue to do so

 

[lazibones]

Yeah, but it depends on how many shares bought. One of the advantages of property is that it can be highly leveraged, whereas tough to get that kinda loan with shares. If bought property in 2003/04 it would have most likely doubled by now or near it and this dollar gain will be greater than bhp unless you bought significant amounts of bhp at that time, and that is not easy for most Punters.

It is much easier to get a 100% loan to buy shares than to buy property. With a Defered Purchase Plan all you need to do is come up with 3 years interest in advance and a small amount for put options and commissions, or go cap in hand to anybody and beg.

 

[JohnMichael]

bump, for anyone who wants to chime in re: WAM and other LICs which differ from the ASX200/AFI/ARG/MLT. Would be considering them for a small segment of my Australian shares allocation

What do you think of WAM as an LIC, Mr Falcon?

http://www.wamfunds.com.au/WAM-Capital/Tabs/Performance.aspx

My thinking:

Pros:
- targeting smaller / midcap stocks, which are much less represented in the index / larger LICs weightings
- fully franked dividend of over 7% is very high!
- has outperformed over the last 16 years by a much, much higher margin than other LICs

Cons:
- I think the MER was 1%, which is much higher than most LICs
- possible key man risk
- since it's outperformed, I tend to think it wont continue to do so

 

[equitymate]

Ok will chime in, I would personally prefer something without an outperformance fee (I think WAM is 20% outperformance on top of the 1%)

Also don't take any small cap LIC dividend as a certainty they are giving you back capital gains so keep that in mind, more so if the market tanks.

Have a look (I hold) MIR(run by the AFI team) and they quiet achievers and only cost .64% no perf fee however keep an eye on NTA. If you don't like the premium to NTA check AMH(.65%) also run buy the AFI guys its like a blend of MIR and AFI, I think Falcon holds this one.

There is a recent LIC that looks good QVE cost 1% no performance fee run by Anton Tagliaffero one of the few Aussies listed in the book 'the worlds greatest 99 investors' but keep in mind there is bucket load of 1 for 1 options outstanding against this baby until sometime 2016.

All said and done Geoff Wilson is a good manager and you seem aware of the risks. If you are happy with the costs of WAM cool. CDM is another good manager with a similar fee structure.

 

[equitymate]

On the subject of WAM if you are interested I strongly recommend former WAM right hand man Matthew Kidman's book bulls, bears and a croupier.

 

[dajackal]

I recently added BKI to my portfolio for some midcap exposure.

Still need some more convincing to consider the higher MER and riskier nature of smallcap LICs

 

[JohnMichael]

Thanks equitymate for the LIC suggestions, ill be checking those out.

Ill have a look at BKI as well

 

[redwing]

Shares...

Here's a chart showing the ASX top 200 (red line) over a year and 2 spec stocks

Shows the allure of stocks as well as the volatility

 

[JohnMichael]

So I had a look at BKI, and it looks pretty good to me '

- MER of 0.16% - this is pretty much the same as VAS
- consistently paid a growing dividend - as Falcon said with AFIC, looks like they didn't cut dividends during the GFC
- mostly the banks, large caps, with some mid cap picks in there as well such as TPG etc.

 

[The Falcon]

BKI is Tom Millners baby, assisted by Will Culbert. Has a strong tilt to Millner family stuff - ie Soul Patts, New Hope, Brickworks, TPG. I think its a pretty good long term vehicle, and the investment team has a long runway. The guys write nice educational updates too. I think they are just back from Berkshires AGM.

In other LIC news, AFI is like Gibraltar...share price hasn't budged despite a near 250 point drop in the XJO. Not good buying today!

 

[dajackal]

In other LIC news, AFI is like Gibraltar...share price hasn't budged despite a near 250 point drop in the XJO. Not good buying today!

Seems like all the major LICs are trading at significant premiums relative to the recent drop.

Time to pick up some VAS perhaps?

 

[The Falcon]

Seems like all the major LICs are trading at significant premiums relative to the recent drop.

Time to pick up some VAS perhaps?

Yep, you are spot on. If you are looking to buy now ETFs or the LIC's largest underlying holdings if you are that way inclined would be my preference. The punters flock to the big LICs on down days....AFI and ARG both up despite XJO 50pt drop...ARG looks particularly expensive at the moment. Nice to have in the portfolio of course....like a sea anchor

 

[redwing]

What happened to LIC's BKI and ARG in late Jan this year, both spiked massively?

 

[The Falcon]

What happened to LIC's BKI and ARG in late Jan this year, both spiked massively?

Both were ex Div 12 FEB, but the main reason ;

XJO 16 JAN 5299
XJO 16 FEB 5888

 

[S1mon]

this might be worth a read for some

/me shrugs and runs off

 

[The Falcon]

Cheers Simon. Bells report is a cracker. Well worth a look.

 

[redwing]

Both were ex Div 12 FEB, but the main reason ;

XJO 16 JAN 5299
XJO 16 FEB 5888

See attached re large spikes

 

[The Falcon]

Ha. Ok I see what you mean Redwing. There is a problem with your chart.

 

[dajackal]

this might be worth a read for some

/me shrugs and runs off

Excellent report! Where can I go for regular updates?

I found this one a few weeks back. I particularly like the profiles on all the various LICs.
http://www.wamfunds.com.au/WAM/medi...illieu-Holst-LIC-Report-April-15.pdf?ext=.pdf

 

[redwing]

Ha. Ok I see what you mean Redwing. There is a problem with your chart.

Thanks, I put in the top 5 LIC's and these 2 showed an anomaly