Johnson told the market he’d given up trying to repair the discount, averaging about 15 per cent to its net asset value. He said investor apathy towards closed-ended funds had become “entrenched” and that less liquid LICs such as his were “unlikely to trade at NAV for the foreseeable future”.
In this spirit, we dug up the sub-$200 million LICs trading at steep discounts (>15 per cent) that could be considering a similar move. There’s some irony in that there’s good money to be made in buying into suffering LICs (if you get it at the right time).
A handy chart from Bell Potter shows LICs with a market cap of less than $200 million are far more likely to trade at the steepest discounts – on average between 15 per cent and 25 per cent.
At the extremes, this includes $57 million Thorney Technologies, but around the $150 million mark, Naos Small Cap Opportunities, Tribeca Global Natural Resources and Bailador Technology Investments made it through the filter.
We reckon the Magellan Global Fund is on its way off the board, especially with an open-ended structure ready to go, but it’s dealing with a messy Bolton problem first, keeping arbitrage funds at bay.
Sources who spoke to Street Talk said conversions/windups were more likely with medium-sized LICs such as Platinum Capital, saying the smaller ones just aren’t on people’s radars. Some other left-field suggestions were VGI Partners and Hearts and Minds, but the sources acknowledged there are reasons not to get involved. They added that LICs are less likely to act unless pressured to do so by a larger player.
