For normal listed company, yes, it is a norm for company share price to trade above its NAV or NTA, due to the fact of potential higher earning ahead and good prospect and dividend yield return.

For Closed Ended Fund like ICAP, in theory, no, as closed ended fund they had no businesses, what they do is investing in equities market (can be bond as well). It is identical to UT, so buying a closed ended fund at above its NTA/NAV is not right. It is just like a UT NAV is 1.00, you go out market to buy 1.20, wise?

Their (closed ended fund) NAV is their net worth based on market price of their protfolio (as same as UT). But due to the fact, price is subjected to demand and supply theory so price can go way beyond or below its NAV, which happened on ICAP.

TS has some points, but to tell people avoid this counter at all cost seems a bit exaggorated.

ICAP is a closed ended fund, not a stock or share, bare in mind which is the central point of this thread discussion. Can't use normal stock NTA or NAV issue to compare with NAV issue on closed ended fund. A bit like apple and orange issue.
But to say avoid at all cost seems a bit exxagorated as mentioned.

For eg. (assuming, not real) ICAP is holding Maybank, Pbbank, BAT etc, the total market price or value of those stocks will equal to the ICAP NAV, so if one is paying 20% premium on a closed ended fund, that's means you are buying BAT, Maybank and Pbbank stocks etc that are 20% higher than current market price. So if Pbbank stock now is 11.00, so if one buy a closed ended fund at a 20% premium, it is indirectly equivalent to buy at 13.20 for Pbbank share. So, by right, better off buying through open market of Pbbank share at 11.00, if can. <-- I stated if can because it is a pool of diversification investment like UT as limited fund individual can't have the luxurious to do it. It is as same as UT although one can always invest on their own in stock market, but if one is not rich and limited fund, like several thousand or ten of thousand only, one never able to achieve the diversification like fund does.

As said, since closed ended fund is listed one is subjected to demand and supply issue to determine its daily share price, so some price distortion can be expected. If investors really ike its portfolio structured then due to the demand supply theory, its price can be traded at its above NAV.
But over long run, its price won't run away too much on its fundamental worth aka NAV

No doubt about the professionalism of the ICAP founders and its portfolio.
Just to highlight as part of issue on closed ended fund. Not mean to recommend anything. Judge your own.

This post has been edited by cherroy: Jan 25 2008, 02:00 PM

Icap is not a company.
Icap is a closed ended fund.
Please be minded.

Icap underlying or fundamental is about its share holding aka share portfolio.
Icap doesn't run as a business.

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Added on June 11, 2011, 10:50 amTell to those bought Lehman, Citi, BofA.


This post has been edited by cherroy: Jun 11 2011, 10:50 AM

I cannot find a reason, why an investors paid a 10~20% premium on a closed ended fund.
A slight premium may be justified, but 10~20%?

Not familiar with closed ended fund prospectus set.

Can a closed ended fund being liquidate?

Since share price is discount to NAV >20%.
Bought all the share in the market, having total control stake in the fund, then liquidate all the portfolio share at NAV, since can gain 20% out of it.

Yes, I knew, but the question is possible or "do-able"?

We can talk long, day and night, but it this route is not viable or do-able (be it from regulation set, shareholders issue, from SC pov), all discussion just merely for "syiok ourself" only.

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Added on August 6, 2012, 11:41 amJust like A listed company NAV is Rm5.00 or net cash RM3.00 or whatever, while share price just Rm1.50, with no debt and profitable.

We can talk about take over the company at Rm2.00, then liquidate the asset, sound a good strategy, but if there is a single major shareholder controlling >50%, it is impossible the major shareholders will let go at cheap.

So for a closed ended fund, it is possible if >50% of the closed ended fund shareholder demand a resolution to liquidate the fund, and get the money nearly to its NAV?

This is one of several keys discussion or previously query that I raised.

This post has been edited by cherroy: Aug 6 2012, 11:41 AM

Not necessary.

It depends.

Buying/selling of asset/company is happening everyday.
It depended on negotiation skill and willingness of both parties.

Thank you for the info.
This is what I want to know.

From the 2011 annual report, there is no single substantial shareholders hold more than 2%.
So can (or why not) shareholders give some pressure to give dividend?

After all, the fund surely got receive dividend from its portfolio investment, just give (or a portion) back to shareholders, win-win situation.
Some little passive income may be needed for old investors like me.

If give good dividend, no bad considering this fund considered that it is in discount, as compared ordinary UT needs to charge 5%, and need to buy at full NAV.

Even giving out dividend, it may be merely 3-4%. (3-4% is considered high dividend already).

And 1.5% of the 3-4%, just a small sum difference only. If a fund is 300 million, (3% of 300 million mean 9 million. 1.5% of 9 million is only 135k only)

But with the consistency of pay out of dividend (from the dividend received from the fund),
it may change drastically investors confidence and willingness to own the fund, hence may be better pricing for the closed ended fund.
I knew, market price doesn't affect the manager fee, as better market pricing or worst pricing, do not alter the NAV,
but confidence on the fund by investors is invaluable, and open up more opportunity to set up another closed end fund which can attract more investors,
eventually manager can earn more and better off with managing 2 funds or even more.

What's the point of telling an investor, that his/her fund value has increased in paper, yet did not receive any dividend, nor capital appreciation (as there is always discount of market price vs its NAV, current situation).

As minority has only 2 source to earn or make a profit
1. Dividend
2. Capital appreciation through market price.

So if 1) is not available
then only left 2).
If 2) is mis-pricing due to lack of willingness of buyer in the market.

Then what a minority investors can do?

This post has been edited by cherroy: Aug 6 2012, 10:14 PM

Dividend does not give value?

But dividend is essential for me to buy foods, aka monthly vegetable money.

I just want my investment give me, some like 2-3% dividend, to feed me, if not I am dieing in hunger.

I am just small fella, non-known, irrelevant person, even if I want to set up fund, I have no ability, nor able to set up one.

We just make suggestion to pay some peanut 2-3% to minority shareholders. 2-3% is not a big problem for the fund to give, as the fund is making a double digit return and has high level of cash as well. The fund is constantly receiving dividend from the invested portfolio stock as well. So those stocks give dividend also not give any value to the fund investing on them?
So all stocks in the market should not giving any dividend, because it is not give value as mentioned?

The 2-3% can make a lot of difference to minority shareholders like me, who is non-value investors, irrelevant person in the society, non-long term investors.
Because ordinary person like me only know that make money in the stock market is
1. Dividend from the profit generated by the company
2. Capital appreciation from the market price aka my buy and sell price.

Even if I own a stock that NAV is Rm5.00, which I bought at RM1.50. If market pricing doesn't go up for 10 years, still at Rm1.50 while NAV goes to Rm8.00. I do not yet make a profit, but worst to worst I need the money after 10 years, I need to sell at market price, I cannot sell at NAV.

And the even worst part, some may privatise it at a price (for ordinary listed company, then end of story for my investment).

We make this suggestion because market pricing of the fund is not following value of the fund.
Or a consistent discount of fund NAV at 20% is a normal market pricing of a closed ended fund?

As much as I believe and supportive to the long term investing theory, and value investing, money is not with me forever, I will apart with money in decades to come. So if the value only realise after I parted with money, I cannot even see it, use it.

I am not those billionaire or multi-millionaires that can set aside a million of hundred of thousand and do not to touch at all. As small anchovies like me need money to survive as well as want to invest as well for long term. So dividend is key for my survival as well.

I speak for myself only as non-value, non-long term investors, small anchovies and irrelevant ordinary person.
Above has nothing to do it is right or wrong nor saying the fund is right or wrong not to give dividend, nor saying the fund is not good.

I do not know when I need cash, I may need it at 14 years, I may need it after 15 years.
I do not have crystal ball to know when I need the cash.
As said, I am not multi-millionaires, I do not have luxury to know or ascertain my money will not be used for 15 years or not.

Ok, it is my fault in the beginning that I cannot make a commitment for 15 years investment.

Huh, I taught said 15 years previously, now saying why not extend.

I taught I need a 15 years crystal ball to buy (so that it is not my fault), now need beyond 15 years plus crystal ball?

what is the use of money, of whatever value be it, like its value become1000x, if I am a dead man after 2 x 15 years?

This post has been edited by cherroy: Aug 22 2012, 10:40 PM

Let the kids inherit is not doing good for them. So no use for me.

I am more practical person, money to me, is just a tool to be used upon, or something that can generate something.
If money has no this 2 function, it is meaningless to me.
WB got a lot of wealth which he may not finish spending it, but the difference is, he can liquidate the wealth into cash whenever he wish to.

If one tells me to invest into something that can become 1000000x but cannot withdraw a single cent, and is not generating cashflow over decades long, sorry, kinda difficult for me to commit in it as I have no crystal ball to know what will happen in the future, or my future (when I need the money, when I become a dead man).

Ability to liquidate an investment is quite important to me, and also 2008 global crisis instill my mindset further.

Since when I said I cannot get my money from ICAP or not.
I was responding to below quoated post, aka talk of why not extend beyond 15 years, or may be potential 2 x 15 years.
As I do not know I have 2 x 15 years or not.

As suggested by above post, I should not invest if need the money without having to wait for 15 years, isn't suggest I shouldn't liquidate and get the money?


If gives dividend, yes there is no guarantee it will close the gap between market price and NAV, but it may close the gap, not the like 20+%.

BH is a company
BH traded in an efficient market, so pricing has no issue, liquidating at company worth generally has no issue instead market may trade at premium most of the time.
BH can buy a company, own a company, strip it or having a say on how company being run, realise the investment worth etc.

Icap is a closed ended fund,
and current market pricing is inefficient to reflect the true value, so minority shareholders even bought at discount, may has difficulty to liquidate at true fund worth.

It is premature to make this kind of statement.
Unless one has crystal ball to know this assumption.
We only can compare what had happened, what is happening.
We cannot know what if ABC did this or that in the first place and draw out a conclusion from it.

This may be the reason why Icap is trading significant discount to its NAV due to no dividend issue as well.

Yes, inclusive.
Based on latest Q report,
it has 130+ million cash, so translate about near Rm1.00 cash per share.

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Added on November 12, 2012, 12:59 pmYes, own little share, then it rely on others or major shareholder wish already to decide the company/fund future.

I see more pros then cons.
Just like WB with BH.
Investors may feel more confidence as they may view we are in the same boat, and having same interest.

The major shareholder can demand the resolution voted by shareholding as well, which is the basic and ultimate, (as if vote according to shares, it takes considerably long process to verify and count, so most AGM are done simply by vote of hand/shareholder present).

But Laxey even emerged as major shareholder, it is not holding more than 1/3, so they need other minority shareholders support as well.

This post has been edited by cherroy: Nov 12 2012, 04:45 PM

I have a suggestion, right issue or private placement at NAV by then can raise the fund to 150 to 200 million, Fund has extra cash for long term investing, while T can subscribe those private placement or right issue as well, in return has more stake.
Benefit
1. Has better control stake, prevent vulture short term investor to have bigger say.
2. Fund has extra cash and fund to maneuver, more cash can invest better and more.
3. Within the same boat with minority shareholder, aka raise investors confidence towards the fund, which may lure more buyer in, eventually may close the gap between share price vs NAV.

If not mistaken, there is no word of guaranteed that it must/will liquidate in 2020. It may, or may not. Correct me if I am wrong.

Fund manager can come and go as well, like fund manager willingness to manage, or majority shareholder wish to have who to manage.
Fund manager can quit the job as well (the recent saga).

If anyone manage to get enough shareholding then it is major shareholder call then who to manage, how to manage as well.

With the fund only invested 60-70%, as 130+ million is in cash with RM2.9x NAV (total share with 140million), which the 130+ million represent nearly 30% of the fund NAV, the most can generate 3% (current situation) through FD,
means the other portion of invested money or the portfolio stock needs to work harder or achieve a gain better than 18% in order to achieve a total NAV increment of 18%.

Summarise
About 30% in cash the most can generate is 3%,
The rest about 70% needs to achieve about 24%,
So that you have a total average of near 18%.


Unless the cash is being invested afterwards, buy at low point of the market and reap a good profit, then different story.

I have no comment whether it is hard or not then.