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AFI, AUSTRALIAN FOUNDATION INVESTMENT COMPANY
nipper
post Posted: Jun 4 2021, 09:46 AM
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From the May NTA statement, out yesterday:
QUOTE
As first signalled at the AGM in October 2020, a small part of our funds, $45 million (which represents approximately 0.52 per cent of the portfolio) has been invested into a diversified global equities portfolio during May. This consists of what we have assessed as high quality companies with strong competitive advantage, good growth potential and across a broad range of industries.

AFI had mentioned in last October their intention to look at setting up an International LIC. This may be the first step, both to assess and perhaps to hold and move into said vehicle as seed holdings?




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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: Jan 11 2021, 02:41 PM
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Bluechips rotating the lead of AFI holdings. Top 5:

End Dec 2020
1. CBA ... $648.7million .... 8.1% of portfolio
2. CSL ... $615.7million .... 7.7%
3. BHP ... $590.6million .... 7.4%
4. WES ... $371.5million .... 4.7%
5. TCL .... $322.9million ... 4.1%

End June 2020
1. CSL ... $608.5m ...... 8.5%
2. CBA ... $548.4m ...... 7.7%
3. BHP ... $498.8m ..... 7.0%
4. WES ... $330.5m ..... 4.6%
5. TCL .... $326.9m ..... 4.6%

End Dec 2019
1. CBA ....$631.2m .... 8.0%
2. CSL .... $584.7m .... 7.5%
3. BHP .... $524.7m .... 6.7%
4. WBC ... $387.3m .... 4.9%
5. TCL .... $341.2m .... 4.3%


End June 2019
1. CBA ... $654.0m .... 8.6%
2. BHP ... $554.8m .... 7.3%
3. WBC ... $440.9m .... 5.8%
4. CSL .... $440.3m ..... 5.8%
5. NAB ... $341.0m .... 4.5%

End Dec 2018
1. CBA .... $571.9m .... 8.6%
2. BHP .... $462.6m .... 7.0%
3. WBC ... $389.2m .... 5.9%
4. CSL .... $355.5m .... 5.4%
5. TCL .... $270.6m .... 4.1%



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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: Dec 12 2020, 08:30 AM
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https://www.sharecafe.com.au/2020/12/10/a-v...-afic-saw-2020/

A very challenging year: How AFIC saw 2020

by Mark Freeman, Managing Director
The speed of change, not the recovery, in investment markets in 2020 was arguably both the biggest surprise and biggest opportunity for investors. At AFIC we successfully capitalised on several buying opportunities throughout the downturn, including participating in some key capital raisings to further solidify our position in what we consider as high quality companies.

Interestingly, we entered calendar 2020 with the mindset that we may see a correction in the markets from the highs in January by the end of the year, but the sharp fall in March through April following the outbreak of COVID19 and the pace at which the market has rallied has been staggering.

In a matter of only months, we witnessed the heavy impact of COVID19 on markets while a vaccine was potentially still years away. Since then, multiple potential vaccines have been developed and markets generally have rallied as interest rates continued to fall to record-breaking lows, leaving yield seeking investors with little choice but to put their money into equities......



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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 15 2020, 01:20 PM
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AGM held today. Some takeouts...we are pleased to have been able to deliver 3 things to our shareholders :
.. Firstly by outperforming the ASX 200 Index by 3.5% we have softened the downturn in such a disruptive year. This is achieved in a portfolio exhibiting lower volatility than the market .
... Secondly we have kept the cost of running AFIC to just 0.13% allowing almost all of our income to flow through to our shareholders. This is very competitive against other investment funds.
.... Thirdly our policy of accumulating some profit and franking reserves in good years has allowed us to pay a steady 24c annual dividend despite our earnings falling to 19.9c due to significant dividend cuts or deferrals.
We have had a lot of queries as to our likely dividend this year. Unfortunately, as it is early in what will remain a difficult year for many companies we can not make any reliable forecasts yet. Suffice to say we are well aware of the importance of dividends to our shareholders in these difficult times.
. . . . . . . . .
Acknowledging our rising capabilities in understanding and analyzing global companies, along with the heightened flow of information through technology, the Board wanted to test whether our established successful style would work with International Equities. Over the past year we have put together and followed a model international portfolio based on our investment principles and processes the results to date are encouraging.
As a result the Board believed it was now time to actually invest a small part of our funds (up to one and a half percent) in this diversified global equities portfolio. It will consist of high quality companies with strong competitive advantage, good growth potential and offering a broader range of industries. It will add to the growth prospects and diversification of our existing Australian based portfolio.
Down the track, when the performance has been assessed, we will consider whether it represents an opportunity for our shareholders and other investors to invest in this global portfolio directly.



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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: Jul 27 2020, 05:35 PM
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In Reply To: nipper's post @ Jul 27 2020, 11:01 AM

The managing director of Australia's oldest and largest investment company has described the impact of the coronavirus as worse than the global financial crisis, after reporting a 41 per cent decline in profit and being forced to draw on reserves to make up the final dividend.

Australian Foundation Investment Company managing director, Mark Freeman, said the impact of the virus crisis on everything from everyday routines to global economies felt more challenging than the GFC,
QUOTE
This feels more broad based. It is global and affecting the economy in a broader way, there are not too many industries that have been spared.

The coming distribution will see AFIC pay out more than $100 million after accounting for a large participation in its dividend reinvestment program. Reserves will fund around 4¢ of the second-half dividend but will not prop it up forever, according to AFIC. In the past we have used our reserves in tough times. Certainly we could keep it going for a little while but that will depend on performance, Mr Freeman said.

Following a review which found valuations were at an extreme low in March, the number of holdings was culled from 76 to 61 and AFIC participated in capital raisings, but believes the bargains are now long gone. Our turnover for the year was about 7 per cent which is still very low by fund manager standards, going forward it might even be lower. Telstra, we still like franked dividends and we did exit some higher yielding stocks facing structural headwinds like Suncorp, Scentre and Perpetual. We think telecommunications has longer term structural growth and felt more secure with the income flows. Mr Freeman said.

AFIC is equally bullish about the outlook for Sydney Airport and Auckland International Airport despite international travel being off the agenda for the foreseeable future. We think on a 10-year view you will look back and think, 'Well that was the opportunity to buy a high-quality piece of infrastructure at a heavily discounted price', Mr Freeman said



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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: Jul 27 2020, 11:01 AM
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Australian Foundation Investment Company (AFI) says the expansion of market valuations is difficult to reconcile as it reported a 40.8 per cent fall in full year profits. Net profit after tax fell to $240.4 million, with investment income down due to lower dividends from companies in its portfolio and because one off items, such as the Rio Tinto and BHP offmarket buybacks last year, were not repeated.
The portfolio returned negative 3.1 per cent over the year compared to a 6.6 per cent decline in the S&P/ASX200 All Accumulation Index.
QUOTE
AFIC, as a longstanding listed investment company, has reserves that can be used in difficult times. Drawing upon these reserves, the final dividend was maintained at 14 cents per share fully franked despite the fall in income in the second half.

AFIC says the outlook remains unclear as companies face an extremely difficult operating environment, adding the outlook would be dictated by progress in suppressing COVID 19.
QUOTE
In this environment, it is difficult to reconcile the expansion of market valuations with the pressure company profits and dividends are likely to remain under

AFIC says they are content to be patient with its portfolio. A number of purchases were undertaken during the year. This included placements in National Australia Bank, Cochlear, Auckland International Airport, Oil Search, NEXTDC, Ramsay Health Care, Reece and Qube Holdings. Major additions included Goodman Group, Telstra (to bring some income into the portfolio), Macquarie Group, Cleanaway and Sydney Airport.

While there has been a reduction in the number of holdings in the portfolio over the year from 76 to 61, three new companies were added, given we consider the long term opportunity for each business to be attractive: Altium, Netwealth and Ryman Healthcare. Major sales included the complete disposal of holdings in Treasury Wine Estates, Suncorp Group, Scentre Group, Adelaide Brighton and Perpetual.

CSL was the largest holding with a 8.5 per cent weighting at June 30, followed by Commonwealth Bank (7.7 per cent) and BHP (7 per cent



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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: Jan 20 2020, 09:37 AM
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AFI is ticking along, maintained dividend at 10c FF though reporting lower numbers this Half. But only because the last Annual report was boosted by corporate actions such as BHP and Rio buybacks and WES / Coles demerger;.
QUOTE
.. .also worth making some observations on the effect of the change in profile of the portfolio on AFIC’s more immediate income streams. The dividend cuts from three of the four major banks, combined with a reduction in the proportion of our portfolio in financials, has put a short term drag on our dividend income streams as many of our new investments have lower yields. We believe the move to stocks with a better growth profile should enhance the potential for dividend growth in the medium to long term, particularly as bank dividends are expected to remain stagnant.

As part of the move to build larger positions in quality companies with a strong competitive advantage, further shares were purchased in Goodman Group, Macquarie Group and CSL.

Major sales to fund these acquisitions included a small proportion of the holding in National Australia Bank (due to the exercise of call options through the six-month period at higher than current prices) and the complete sale of Perpetual, Boral, Orora, Link Administration, AMP and Iluka Resources. Dulux Group was sold because of a takeover.




--------------------
"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: Jul 22 2019, 04:13 PM
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QUOTE
“The Australian equity market is facing an interesting dilemma: Very low interest rates are reinforcing the move by many investors to buy equities at a time when the Reserve Bank of Australia is concerned about the outlook for the economy,” AFIC told shareholders today. "If the economy does weaken, then this is likely to have implications for the earnings outlook for a number of companies,” it said.

Against this backdrop, the $7 billion LIC reduced the number of holdings in its portfolio during the year, from 91 to 76. It dumped nearly half its holding in Rio Tinto and also cut its stake in AGL Energy due to the structural issues the energy industry is facing, it said. But it boosted its holding in National Australia Bank due to the “attractive dividend yield on offer at the time” and added to its holdings in Reliance Worldwide, James Hardie Industries and Transurban...

Companies that contributed to the returns included BHP, Commonwealth Bank, Transurban, Telstra, Brambles and CSL, it said. In contrast, Clydesdale Bank and Challenger, both of which were sold during the second half of the financial year, significantly underperformed.

While the LIC said it was close to fully invested, it still has some cash available “to add to selected holdings should there be any short-term disappointments during the upcoming reporting season,” it said.
- dividend 10c ff, return for period 11.4% vs market 13.4%



--------------------
"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: Jan 21 2019, 03:31 PM
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In Reply To: nipper's post @ Jan 21 2019, 11:05 AM

QUOTE
Major sales arose because of participation in the Rio Tinto and BHP off-market share buy-backs (AFIC was previously well overweight the index in Rio Tinto). There was also a reduction in holdings of AGL Energy, Washington H. Soul Pattinson and Perpetual. In addition, the Company disposed of its entire position in QBE Insurance Group and Bega Cheese during the period.

More significant purchases included adding to holdings in James Hardie Industries, Transurban Group via participation in its rights issue to fund the WestConnex purchase, Adelaide Brighton, Reliance Worldwide, Woolworths Group and Sydney Airport, all of which have strong positions in their respective market segments.
- done on valuation models, not because they have to (to meet redemptions)



--------------------
"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

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: Jan 21 2019, 11:05 AM
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QUOTE
The nation’s largest and oldest listed investment company, Australian Foundation Investment Co, has dumped 40 per cent of its holding in blue chip miner Rio Tinto and sold off 3 per cent of its long-held position in BHP to capture the value of franking credits for its mostly elderly, retired shareholders before the dividend imputation system is ripped up by a future ALP federal government.

And the Melbourne-based investor will immediately distribute much of those funds to its own shareholders soon, declaring this morning a special dividend of 8 cents per share to be paid in late February as it races to get the money into the hands of its shareholders so to beat any devaluation of the franking by the stated ALP policy.

The company also revealed that its feedback from its 130,000 investors is they are asking for help and questioning why they are being punished for saving for their retirement which included investing in some of Australia’s biggest and most successful companies.

“This is going to hurt a lot of people who are saying I’m not rich, I’m not wealthy and why am i being forced to go on a higher tax bracket through this?,’’ Australian Foundation Investment Co chief executive Mark Freeman told The Australian this morning.

“Australian Foundation Investment Co continues to get consistent feedback from its shareholders that what’s being proposed is going to be damaging, people feel hurt that they are being classified as rich and wealthy and don’t understand why they are being forced into a higher tax bracket because they are not getting the credit back. Why them?”




--------------------
"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
 
 


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