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1st time investor looking at microcap managed funds
nipper
post Posted: May 9 2019, 11:42 AM
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: We used to run two small managed funds, but we’d spend a lot of time on ratings, getting on platforms, generating advice demand. You know, all the conflicted gatekeepers. The real growth was never going to happen. We were the first LIC to list after the success of MFF (Magellan) but of course the market has come a long way since then.

Using the LIC structure was the smartest thing we did in the Australian micro-cap sector. I heard a prominent fund manager interviewed last week about his unlisted fund and he said, “Never invest in illiquid stocks.”

GH: Because of redemptions, which force you to sell.

SE: Yes, and you can’t recover your losses. If something goes wrong, the fund can kill you. We take a very different view. We operate in a LIC format. We don’t suffer from redemptions and we can invest in illiquid businesses that might be better than liquid businesses. Often it’s illiquid because the founder has a large stake. The benefit of a LIC is you’re not forced out of some of these businesses today. You can wait for them to become successful businesses.

GH: In the micro space, do you find sometimes you’re the only professional analyst?

SE: Yes, sometimes we’re the only fund manager on the register. If look at all the positions in our micro-cap fund, there might be two that are covered by brokers with one or two other fund managers there.

GH: And you see that as a comparative advantage?

SE: I do, but people will have their own views. I can get on my mobile phone now and I could call any managing director of stocks we own and they would pick up and talk for an hour and a half about the business. I could ask them for referrals from customers, old employees, whatever. We might not make money on them in the first six months, or even the first 12 months, but I feel we benefit from that level of understanding. A lot of bigger fund managers don’t waste their time on a $10 million investment.
- Naos NCC. http://blog.naos.com.au/news-media/hanging...;_hsmi=72502357

...not endorsing, but the sentiment is true (NCC is trading stubbornly below NTA, and having some shocking months , of late)



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Nov 28 2017, 11:39 AM
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In Reply To: nipper's post @ Oct 9 2017, 06:43 PM

Spheria Emerging Companies Limited - code SEC; likely to list 05 December 2017
- the boys (looks like another 'all blokes' outfit) have been out charming the journo's:

Spheria stays cool amid rush to hot small caps
QUOTE
Spheria portfolio managers Marcus Burns and Matthew Booker are looking forward to investing the proceeds of the Spheria Emerging Companies IPO which closed yesterday, but they won't be rushing into all the hot small cap stocks that are flavour of the month.

The Spheria small caps IPO raised $132 million — comfortably above the $100m minimum. It will issue 66,000,000 fully paid ordinary shares in the listed investment company at an application price of $2 a share, due to start trading on the ASX on 05 Dec.

"Our view is that there's a lot of speculative money playing the markets right now," Burns tells The Australian. "Particularly in the smaller end."

Small caps are certainly outperforming the broader market this year. The S&P/ASX 200 Small Ordinaries Index is up 12.3 per cent versus a 5.6 per cent rise in the blue chip S&P/ASX 200. Small caps surged in early 2016 as large cap fund managers waded in to boost their performance, but a rush for the major banks and resources companies after the US election sidelined small caps for more than 12 months, crimping the performance of many active fund managers.

A number of popular small caps like Estia Health, Aconex and Spotless suffered sharp falls and retail stocks were beaten down by investor anxiety about the impending arrival of Amazon in Australia. Spheria bought into Adairs and Vita Group as their share prices hit multi-year lows this year.

"We typically form a view of what a company is worth and what could happen in a worst-case scenario," Burns says. "In both scenarios Adairs looked pretty attractive. Vita hasn't been a huge winner so far although we still think it's very cheap."

Overall he says it's a tough market because a lot of the hot stocks have run so aggressively. After underperforming global markets since May, Australian shares had their best month for the year in October. The S&P/ASX 200 rose 4 per cent while the Small Ordinaries index rose 5.9 per cent.

"A2 Milk, Bellamy's, WiseTech, Afterpay — anything tied to the China growth story or the fintech growth story has been bid up on nothing more than euphoria as far as we can tell," Burns says.

In fact, the gains driving the small caps benchmark have been very narrow. "With literally 10 stocks that went up 30 to 50 per cent — it looked really unusual."

Unlike 2016 — when large cap fund managers waded into small caps — he thinks the surge in recent weeks has been driven more by retail money rather than the large cap managers.

"My sense is that it's late-cycle retail money pumping into the stocks that have gone up a lot."

While the current optimism about the global economy has no doubt helped sharemarket sentiment, Burns says the small caps that have run hard recently aren't due for a catch-up.

"If they were underperforming stocks that have had good upgrades — I would get it — but they're stocks that were already fully rated, with strong momentum. You always worry when they are driven up by people just looking for a quick return," he says. "These kind of gains, I do think they flag that some caution is warranted. You've got a lot of people flying into this stuff. They don't do valuations and they don't really know what they're buying."

He sees some parallels between the surge in small caps and the mania over bitcoin this year... "It feels to me that euphoria in markets is driven by speculative forces at the moment," Burns says. "Some small cap companies are flying up without fundamentals to justify them, and other things like bitcoin — which are pure speculation — are going up a lot as well; just confirms we're pretty late cycle.

"They're general signs that we're seeing in a toppy market, so we're just going back to basics and making sure that everything we buy ticks all our boxes because invariably you look a little silly if you don't own all the hot stocks in a given period of time, but chasing all the hot stocks is not a great way to invest long term. Usually these speculative moments end up causing some pain."
http://www.theaustralian.com.au/business/o...b37e419aa3019d3



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Oct 9 2017, 06:43 PM
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QUOTE
small-cap fund manager Spheria the latest to target investors with an ASX-listed offering.

Spheria, which is part of the Pinnacle stable of funds that include previous LIC issuers Antipodes and Plato, has over $400 million under management [in its unlisted managed fund] and is targeting a maximum raising of $250 million. It will not take over-subscriptions.

Spheria's offering will invest in a blend of small and micro-cap companies and aims to give investors a diversified exposure to small companies with good cash flow generation. It is expected to meet increased demand among investors for a listed version of their funds, with Spheria to cover the issue costs of the capital raise through recouping the performance fee
- check the fee structure.



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Oct 2 2017, 05:59 PM
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In Reply To: nipper's post @ May 11 2017, 09:04 AM

Contango funds have got themselves in a pickle. High fees, unhappy holders, divided board and poor selections.
(Never held)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 15 2017, 08:36 AM
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or you can punt with Monash Absolute Investment Company Limited (ASX: MA1), whose "portfolio fell 2.74% (after fees) for the month of April, during which the Small Ords fell 0.25% and the S&P/ASX300 rose 0.98%. The run of poor returns that the Company has experienced has been extremely disappointing, and quite extraordinary, given the positive updates and good business momentum of the stocks held, as previously detailed in monthly updates." !

And, research house Lonsec .."notes some deficiencies detracting from its rating at this stage. The investment team is small and the investment process allows the Manager to take on very high idiosyncratic stock risk in micro-cap names. There is also a heavier reliance on 'sell-side' brokers versus many peers. Finally, Lonsec highlights the higher fee load. Furthermore, the Company has traded at a discount to its NAV for most of its trading history, with a noticeable increase of this in the last six months"

(And yet Paul Ditheroe probably thought it
misere ouvert)



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 11 2017, 09:04 AM
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Key bloke risk is always a challenge with smaller managed funds
QUOTE
Lonsec has assigned a 'Redeem' rating to the Ausbil Microcap Fund following the announcement of the departures of portfolio managers Tony Waters and Chris Prunty on 26 April 2017. Lonsec held a relatively high opinion of both Waters and Prunty, considering them to be astute investors in what is considered to be a specialist sector. John Grace, the current portfolio manager of the Ausbil Australian Emerging Leaders Fund and member of the Ausbil Portfolio Construction Committee, has been appointed as the Fund's sole portfolio manager. Josh Clark will continue as an analyst.

Consequently, Lonsec believes this to be a material loss of experience for the Fund. While Grace is a familiar entity to Lonsec having been a long-standing contributor to the Emerging Leaders Fund and the wider Committee, Clark is considered by Lonsec to be a junior analyst who is at the outset of his career and has limited 'buy-side' experience in micro-caps.

Lonsec has discussed the micro-cap team developments with the Manager and notes that Ausbil has indicated a commitment to re-build resourcing for the micro-cap capability. Lonsec notes that this adds an additional element of uncertainty to the longer-term shape of the investment team. Lonsec believes this situation to be unwelcome for investors as it will take some time to resolve and this has led to a substantial reduction in its conviction for the Fund


listed Contango Microchip (CTN) is struggling - trading well below NTA ... though this isn't stopping Geoff Wilson throwing his hat in the ring, tapping his loyal (purblind) investor cohort
QUOTE
on Friday, 5 May 2017 we lodged a prospectus for the WAM Microcap Limited initial public offering. WAM Microcap will primarily invest in small and micro-cap companies, an area we have focused on since I established Wilson Asset Management in 1997.

WAM Microcap shareholders will gain access to a portfolio of undervalued micro-cap growth companies with a market capitalisation of less than $300 million at the time of acquisition. It is extremely important that the investment team continues to identify undervalued micro-cap companies that demonstrate significant growth potential. WAM Microcap will provide the investment team with an appropriate structure to continue this rigorous and disciplined process.

We are seeking to raise up to $154 million for WAM Microcap through the issue of up to 140 million shares at an application price of $1.10 per share. The offer is expected to open on Monday, 15 May 2017 and the priority offer is expected to close on Monday, 5 June 2017.

The capacity restraints on a product focused on micro-cap companies requires the capital raising to be limited in size. As a result, the capital raising will not include options being issued.

To ensure we meet demand from WAM Capital, WAM Leaders, WAM Research and WAM Active shareholders, the priority allocation is $121 million, representing almost 80% of the capital raising. I will personally be investing $1.1 million in the offer and hope that you will join me as a shareholder in WAM Microcap.




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


henrietta
post Posted: Jan 2 2011, 04:29 PM
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In Reply To: mistagear's post @ Jan 2 2011, 09:31 AM

Hi mistagear

I believe you are quite right. Many buy a share based on what someone else has said , then when the share price drops they become an "investor", then on further devaluation they are " in for the long haul ", then finally the trade goes "in the bottom drawer " . Been there, done that.

It takes a huge amount of self - discipline to sell when you are convinced that the "story" is a good one, but the share price steadily drops. There's that enormous reluctance to admit that maybe you were wrong, or the timing was wrong. Are people afraid that they won't catch the rebound if the share takes off again ??

No plan ........ no hope. Just gambling ....... and I've done my fair share.

Many thanks for sharing your thoughts.

Cheers
J


Said 'Thanks' for this post: mistagear  rule303  
 
mistagear
post Posted: Jan 2 2011, 09:31 AM
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I'd like to make a comment, whilst it does not exactly apply to this thread, I think it you could draw some conclusions on how far off the mark most market forums really are.

If.. THE most important reason to invest in the stock market is to increase your wealth, not decrease it,

then.. risk to capital should be paramount in every contributors mind.........right ???????????

Here's an example why I reckon it's not......

A search of topics on SS for subjects titled "Risk"
returned a thread named Risk... The last post was in Feb 2007, it has only ever had 2 replies and a grand total of 158 views.
compare that to the MST thread.. last post yesterday, 24,274 replies and 702,430 views.

With respect to the folks on the MST thread, I think there is something drastically wrong when risk to your finances runs such a poor last place to everything else discussed on SS..

Things like win/loss ratio, % profit/trade, etc dont really tell the whole story.
I could have my whole account tied up in 2 trades, one which has been closed and was a 10 bagger 1000% profit from an initial $5000 position and the other a trade where I am holding a continuing loss of $100,000 value. I've only closed 1 trade and can claim a 100% win/loss, a 1000% profit result.. great.. except I'm actually out of pocket to the tune of $(50,000) and only kidding myself.
The guy who did a heap of small loss trades and a few big winners may be far better off, say
only 30% win/loss but the losses were only 1/5th the size of his wins, making the drawdown on his account almost non existant.
30 wins of 25% from a $10k position.... $2500 x 30 = $75,000
70 loses of 5% from a $10k position.... $ 500 x 70 = $35,000 (and no unaccounted for losses)
Who is better off, me with 100% win/loss, 1000% trade profit and a $(50,000) drawdown on my account,
or the guy with only 30% win/loss,25% trade profit and $35,000 more in the bank than he started with ?????????..

Anyhow, have said my piece, now going back to my holiday .

Cheers, M



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Said 'Thanks' for this post: arty  rule303  
 
rule303
post Posted: Jan 1 2011, 03:41 PM
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In Reply To: mistagear's post @ Jan 1 2011, 02:07 PM

Fair enough slate is wiped clean


Said 'Thanks' for this post: mistagear  
 
mistagear
post Posted: Jan 1 2011, 02:07 PM
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In Reply To: rule303's post @ Dec 31 2010, 11:12 PM

Hi Rule,

Let's start the New Year right,, ehh

QUOTE
I dont care how other people trade, do whatever you like. I offer my methods and if someone sees value, I'm happy to share whatever I have learned from the generous traders who spent time to teach me.
Some members here should take a chill pill and back off a bit, personal attacks dont achieve anything.


Thanks, M



--------------------
------------------------
[url="http://xgamesbowling.com"]X Games Bowling[/url]
Bear Cottage is the first children's hospice in NSW.

It is a place where children with terminal illnesses and their families can stay from time to time and receive rest and medical care in a home-like environment.

Please support >>> Bear Cottage for Kids,
An initiative of the Children's Hospital at Westmead NSW
http://www.bearcottage.chw.edu.au/

................................................................
www.xgamesbowling.com
 
 


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