Good morning,

We spend a lot of time bemoaning the sheer number of listed investment companies (LICs) trading at steep discounts to their net asset values, but what about those trading at massive premiums?

It’s a title that’s bestowed on a small group of LICs, mainly those belonging to LIC king Geoff Wilson. But we’d like to draw your attention to PL8 – Plato Investment Management’s Income Maximise LIC – trading at a whopping 17 per cent premium. It’s also danced around that level for a number of years.

The obvious question is: Why would anyone buy a LIC at a premium? In this case, especially, seeing as investors could just buy the unlisted managed fund version.

One argument is if the LIC is throwing off an attractive dividend yield but, in this case, it’s modest. On an annualised basis, PL8 is paying around 5.2 per cent. If it’s only about yield, investors would be better off hitting up a fixed-interest LIC such as the KKR Credit Income Fund (6.3 per cent) or the Neuberger Berman Global Corporate Income Trust (7.8 per cent).

The elephant in the room, of course, is franking credits, which essentially add around 2.2 per cent to PL8’s yield.

Broker clients also love that the LIC pays a monthly income stream, something they won’t get from the managed fund version. Why wait for the premium to subside?

Happy reading,

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Linx Cargo’s 22-page flyer shows the portfolio brings in $600 million in revenue and $70 million in earnings annually from a wide-ranging portfolio that spans logistics, bulk-handling, project cargo, oil and gas, port management and forestry.

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