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MFF, MAGELLAN FLAGSHIP FUND LIMITED
rlane
post Posted: Sep 2 2020, 11:56 AM
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from MFF


QUOTE
Fraud risks are not protecting index investors. The WireCard (Germany) fraud is reminiscent of the Swedish Match
fraud in the 1920s. Its market price peaked after rising 25x or more as it was added to prestigious indices before
the evidence of the fraud was accepted by market authorities. Accounting adjustments and Government payments
assist story tellers in maintaining their narratives around the world. It is not only China where Government
responses have again included focus on appearances of stability, short term unproductive investments and
delaying/avoiding transparency. Credulity remained widespread as too few asked what were they thinking? as 100
year Latin American bonds defaulted in 3 years causing billions of losses, and the US political convention breached
all conventions.


Wirecard chart $200 to .70 cents

 
nipper
post Posted: Jun 2 2020, 06:05 PM
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Magellan Financial Group co-founder, Chris Mackay, has quietly turned extremely bearish on equities, switching almost half the holdings in his $1.6 billion global equities fund, building a 46.4 per cent cash position as of May 29, mostly held in US dollars.

At the start of the year, the fund's cash levels were just 2.2 per cent, implying the manager sold nearly half his equities holdings over 2020. Through May, Mr Mackay's fund sold $192.8 million worth of assets with purchases of less than $1 million in a near all-in bet on another market correction.

He suggested the market was too optimistic over the likelihood of a COVID-19 vaccine.

"Business owners, political leaders and the general public appear to be more optimistic, around the world, as are recipients of fiscal payments travelling hundreds of miles to queue for hours for gaming venues reopening."

Mackay further justified the sale by arguing the virus will have long-term economic consequences.

"Heavily populated cities, globalisation and widespread global travel are crucial for ongoing economic growth and economic sufficiency for billions of people, but they are the fuel for future airborne viruses spreading. "Longer term, even if this pandemic is promptly brought under control, conditions for ready transmission remain."

He went on to attribute the shock rise in global equity markets over May, which included a 9.1 per cent return for the Nasdaq, partly to the rising influence of exchange traded funds (ETFs). "ETF trading is almost never associated with fundamental analysis of the underlying values compared with market prices of the individual components."

Mr Mackay also argued the unprecedented fiscal and monetary policy response to the pandemic may have long-term consequences that the short-term focused market has not priced in.

"Cyclicality may be disguised and underestimated during the heaviest phases of fiscal and monetary stimulus," he told investors. "Historically there have been eventual limits, for example to massive bond issuance, although relatively unconstrained issuance and central bank buying may go on for extended periods. "The implications for US markets are unknown if, for example, 10-year bond rates move to say 2 per cent from 0.6 per cent. The last 30 years in Japan do not support a favourable thesis for sustained economic earnings and market growth, although the economic and market differences between leading US companies and Japan are meaningful."

Under the fund's investment limits, no single investment in a company should exceed 10 per cent of the NAV, or 20 per cent given permission from the board. MFF Capital has not publicly disclosed any hard limits on cash holdings.

Mr Mackay told investors at the end of financial 2019 that higher market prices, and sustained low-interest rates, meant that his expectations for future medium-term returns were lower.



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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
 
kahuna1
post Posted: Jul 28 2018, 11:26 AM
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In Reply To: nipper's post @ Jul 27 2018, 10:37 PM

HI,
Yep Douglass and MAckay co founded MFG .... Mackay was the fund manager for the first 5 years or so of MFG .... whilst also running MFF portfolio .... Douglass took over MFG fund manager role about 5 years ago ...

Of the two ... to be blunt ... Douglass a fair to very good fund manager having beaten to be fair the benchmark most of the time. Mackay, to be blunt beat the index whilst running the much larger MFG and whilst running MFF by 5% OR more ... each year. When 90% of fund managers cant even make the index return, Douglass is a fair fund manager .... Mackay in an extremely difficult overall market is a master.

Mackay speaks often of cycles ... market cycles ... is a valuation based investor .. and whilst early on a Buffett fan ... as time has passed the realization that Buffet by NOT paying any tax has more to do with the size of his fortune than his skill ...


Comparing the two co founders of MFG ... as fund managers .... returns wise and style wise and even holdings wise is vastly different and so to the returns. Douglass has been 15-18% cash, idiotically I might add whilst USA had rates at zero since 2014 .... when YEllen signaled she would NOT move early 2014 for some time ... the stimulus was massive and still by the way is ... selling the S+P 500 at 1,800 as it paused there was PRUDENT ... till it was clear YEllen like Bernanke was an idiot from the flat erth society and would stimulate asset no matter what.
Amazing to be 18% in cash ... for the last 50% of the rise ... but still keeping up with the overall index. This was done f course via holding some of the market darlings and ,,, well ones that Buffett rejected in the 2000 dot com boom ..... but now embraced.
This week for the idiots holding high risk shares on the tech side must have made some blink. For some of us, around and trading in 2001/2 seeing Microsoft and a long list down 20-% in a single day happened a few times ... even survivors lost 70% and at times 90% of their peaks.
Nothing different today in 2018 .... Facebook is like Myspace and many others ... twitter even with Ronald Dump took a 20 % hit last nigh and unlikely ever to make much I suspect .... then one goes to other pets ... Amazon whom Mackay supposedly looks at according to someone who does not know him ... Amazon is accused of emptying malls and mains streets in the USA ... Mackay watches Amazon with wary caution as it destroys what it touches and high margin business's become zero margin ones that without very easy monetary policy which is still the case in the USA despite current rises ... and PAYING NO TAX ... to anyone ... is what equates to a wrecking ball moving at will ... destroying all it touches ... when the company itself is DOOMED .... One day people will demand tax be paid ... Bezos and Amazon paid no personal or company tax ... and does not believe they should.
Eventually these things, will like most others ... get hit by the cycle. Amazon and the woeful tech side in terms of investors returns ... in that I mean via dividends and REAL returns not playing with capital returns and valuations where inflated forward expectations make the share price 2/3/4 times what it should be.


Of course, to keep up with the index and benchmark ONE HAS TO ... and if being honest, IS FORCED to hold some of these frogs and use different and laxer valuation methods to justify holding them. Not holding Amazon or Apple or Google or Facebook was not and is not an option to exclude them all. Not sure Mackay has ever held Amazon ... the INFLATED claims and idiotic P/E kept him out despite what some idiotic journo said recently. Has fascination is watching the slow motion of a truck waiting to crash. Same for Douglass and his similar .... all be more Tech side ... still didn't allow him to buy what clearly was and is a shitty company.
Same for a long list of things like Twitter and so on .... but for the Apple Google or Alphabet and Facebook with fairly mature earnings ... it was a matter of closing your eyes and hoping that the music kept going. Kept going till the actual results ... caught up to the inflated share price reality which was 2-3 years ahead. In the case of Amazon it was and is at best 10 years ... OR NEVER ahead ....

Sometimes one has to pay a premium to buy into growth and the few largest returns of MAckay and Douglass as well still holding I think from Mackays purchase when he was running MFG was and is holdings in VIsa and MasterCard. Both have very high P/E's compared to others holdings and as such ... will be interesting to see if MAcaky REDUCES his risk and books some of the profit despite not wanting to pay tax, the most vulnerable shares to any pullback are ones that are overvalued or valued on future expected realities. More than likely Visa and Mastercard irrespective of longer term market direction just keep growing with the massive changes being seen in Asia and moves towards cashless society. They however like Facebook were and are high P/E.
As for Douglass, and I suppose Mackay and the current market which again tries the old overall high on the s+p 500 seen nearly 12 months ago .... Douglass has a weighting 150% the one Mackay had on face-book. both like many caught in the downgrade and brutality of it. Difference for Dougless is he took a hit, despite being 80% invested v Mackay at 100% .... took a hit of 1.2% or 20% on 6% whilst MAckay took a hit of 0.8% .... such is the nature of the business. Where from here and what to do when the remaining portfolio for one is TECH light in the the case of MAcaky
Just looking I can see 100% of the MFF holdings and a mere 10% between 0.5% in Apple and holdings of Alphabet of 5.3% and Facebook of 4% is what MFF had in total 30th June 2018. Whilst holdings its NOT much.
Only able to see the top 10 .... of the MFG holdings ,,, Aplhabet 6.8% .... Facebook 6.6% ... Apple 5.1% ... Microsoft 3.7% ... thats ALREADY 22.2% held in HIGH p/e Lala land ...
Digging a bit further I suspect there is another 3-5% of the mere 80% they have invested in similar techs ... holdings in IBM and INTEL for MFG ring a bell and a chip maker .... will have to dig for them however ... MGE March 2018 quarterly portfolio disclosure ....
Oracle 3.4% , ebay 2.7% sap 1.6% and 0.8% Alphabet class A shares. So in total .... I was wrong .... this IDIOT and I mean complete idiot has 82% invested and 8.5% plus 22.2% PRE Facebook = 30.7% of this guys funds are in stocks with massive P/E's and thats out of a mere 82% invested.

When one fund manager comes second .... or in this space is in say the top 500 ...out of 10,000 and the other is number one ,,, or very close to it out of 10,000 similar fund managers .... since I know via results one fund manager has never even come close to beating the other I remain as always a fan of Mr Mackay. Who is the tennis number 500 ? and should I care ?

Thats how wide the divide between these two are. A divide that is LOCKED in and reported profits over the space of the last decade.
One produced far far more, with far fewer draw downs or volatility than the other.
Of course maybe I am bias for those who know why. Then again my contributions to talks about cycles and value based investing date back to 1996 and over 3,000 odd posts here and other sites so pre date MFF and MFG by a decade, not that I know anything, not taking anything away from an amzing result for MR Mackay



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All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.

Said 'Thanks' for this post: jeeves  
 
nipper
post Posted: Jul 27 2018, 10:37 PM
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In Reply To: kahuna1's post @ Jul 27 2018, 06:28 PM

Thanks k1, for bringing this one up.

As a LIC, the assets in MFF don't suffer distortion from mandate inflow and outflow. I reckon that stability is a plus for performance.

Chris Mackay is Hamish Douglass's old partner, when they set up Magellan at the beginning. He had early access to the same info and research ....but now running his own shop.



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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

Said 'Thanks' for this post: kahuna1  
 
kahuna1
post Posted: Jul 27 2018, 06:28 PM
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Hi,
classic fund managers annual report .. or lic in this case. Back to back 20% plus returns .... AFTER tax ... whist morningstar worlds worst rating agency for funds ... cant work out this lic returns correctly.
fund manager ... chris mackay .. owner of a heap of mff and mfg shares as per usual regarding idiot morninstar and fact this lic seems to be possibly the highest returning fund out of over 10,000 funds in the 10 year period according to some others who can count . With a few issued shares and options ... along with dividends paid ,,, seems the 10 year return ... again over the 20% mark or very close.
an astounding return ,,, index was half that /// the usa benchmark

buffett could only under perform the index by 3% about 33% of this guy


well done



--------------------
All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
nipper
post Posted: Oct 26 2017, 08:31 AM
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QUOTE
The board of MFF Capital Investments talks about Amazon at every meeting, even though it doesn't invest in the category killer, [with CEO Chris Mackay telling] shareholders at the annual meeting on Wednesday, "we have a standing item to report each meeting on the so-called Amazon effect. It's very important."

Mr Mackay owns Visa, MasterCard, Home Depot, Bank of America and Lowe's in his portfolio, and has a smaller position in CVS Health. [While taking] a more cautious view on global markets than a year ago, but concluded, "it remains rational to be optimistic".

"At the moment markets are being driven by momentum. Some people might say the compulsive addiction of momentum," he said, suggesting it would be unwise to challenge this force. "Empirical studies and investor track records demonstrate that when momentum exists, it continues on average."

Quoting Columbia Business School professor Bruce Greenwald, a value-investing expert, Mr Mackay urged "accept the positives of momentum". "Take the benefits of the flow but prepare the ground for the market – Ken Fisher's great humiliator – to change course decisively in a way that can't be predicted."

MFF has bought Alphabet again, growing more comfortable with its capital allocation. "Google we owned quite a lot of at earlier stages. Wrongly, we, I, became over-concerned about their capital allocation policies. They were launching a heck of a lot of bets on opportunities which may or may not have come off and at the time we were cautious about very rich young men with complete freedom to allocate capital," the fund manager said.

Selling the stock was a mistake, he admits now, because the business went on to dominate on mobile as another MFF stock, Facebook, did too.

"We're big fans of female chief financial officers, I have to say, they [Alphabet] hired Ruth Porat, ex-Morgan Stanley. She was the adult in the room," Mr Mackay said of his high regard for the executive who tightened cost control and capital decisions. "They need to show returns within a reasonable period and have bought back some of the stock.

"More likely than not, [Alphabet and Facebook are] going to maintain their leadership if not dominant position for at least the forseeable future, that's three years or so, in their core business. Of course when you've got Amazon ... there's some scope for disintermediation down the track."

MFF raised its dividend guidance, promising 1.5¢ a share as the new "minimum" level, with a target of getting to 2.5¢ a share. The 2016-17 final dividend of 1¢ will be paid November 10. This has been facilitated by some portfolio sales, roughly 10 per cent, in the financial year to date.

"History shows that on average in past bull markets it was worse to be six months too early than to be six months too late. Most people don't realise that," Mr Mackay said. "We expect the next few years to require adaptation as market disciplines periodically impose objective acceptance of prevailing realities rather than forecasts hopes or fears." By adaptation, he meant risk controls, patience, focus, understanding and discipline "which frankly have not been necessary for successful asset ownership in recent years". "The economic cycles are booming. Central banks often as recoveries come through get behind the pace. It's arguable that they are a long, long way behind the pace."
- MFF is a LIC accessing similar research to Magellan, but independent allocator.



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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
 

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nipper
post Posted: May 22 2017, 11:29 AM
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MFF Capital Investments Limited (ASX code: MFF)

QUOTE
This LIC is managed by Chris Mackay who is a co-founder of Magellan with Hamish Douglass. As per the 2016 annual report, Chris and his associates owned more than 10% of MFF (the BRW Rich List names Chris as having wealth of over $600 million).

Previously, this LIC was known as the Magellan Flagship Fund, however the name was changed to MFF Capital Investments in 2016. Magellan Financial Group was originally the manager of MFF. Recently there has been a widening of the relationship, with Magellan still providing research and other services, however the fees payable to Magellan have been reduced considerably, with Chris Mackay being the managing director and portfolio manager. The LIC employs some gearing, and is currently invested mostly in large, liquid US equities.

It currently has a market capitalisation of circa $900 million, and is likely to be $1 billion by the end of the year when the options expire (currently well in the money). The performance has been excellent, and the managers interests are definitely aligned with investors. Despite all this, it currently trades at more than a 20% discount to NTA, and more than a 15% discount to diluted NTA (post option exercise).




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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 17 2016, 05:28 PM
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Magellan Financial Group co-founder Chris Mackay is seeking shareholder approval to remove the Magellan name from his listed investment company, which trades as Magellan Flagship Fund.

Ahead of its annual meeting on October 27, the board has proposed a name change to MFF Capital Investments Limited.

This is to avoid any confusion with the larger Magellan Financial Group and its expanding stable of Magellan-branded funds. But it is also a "precondition" of a revised agreement with Magellan that will see the smaller fund manager pay no more than $5 million a year in service and performance fees. In 2015-16, the fee was $9.86 million for services alone.

Mr Mackay is the chief executive and portfolio manager of the soon-to-be MFF. His Magellan co-founder, Hamish Douglass, is the CEO and head of investments at the $40 billion asset manager and has not had a board seat at MFF since 2013. Magellan still pays Mr Mackay $250,000 a year for consulting.

Until December 31, MFF has to pay a $2 million performance fee to Magellan if MFF's compounded annual total shareholder return exceeds 10 per cent measured over four different periods beginning July 2013. Performance fees were paid in each of the past two financial years, and a further one could be incurred in 2016, but that arrangement expires January 2017.

Under a new services arrangement taking effect at the same time, MFF will continue its arrangement with Magellan for a further three years at a fixed fee. That is: $1 million as a quarterly "base" fee; plus a $1 million annual performance fee if MFF's total shareholder return exceeds 10 per cent in a year, compounded annually from the start of next calendar year.

MFF has a market value of $795 million. The name change was disclosed in the company's notice of meeting lodged late last month. Chairman Dick Warburton referred questions about the proposal to Mr Mackay, who was unavailable for comment. He is based in Magellan's Sydney office.



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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 31 2016, 10:21 PM
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In Reply To: nipper's post @ Aug 4 2015, 11:51 AM

Although we note and respect the desire of some shareholders for higher dividends, we also note that MFF’s retained funds continue to be put to good use with strong medium term returns. MFF remains small compared with both its cost base and investment universe, and shareholders who need or want higher levels of Immediate income from their MFF holdings, in the context of their overall portfolios, have ready markets in both the MFF options and shares

(.,.... So there)



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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: Aug 4 2015, 11:51 AM
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In Reply To: nipper's post @ Jun 4 2012, 11:11 AM

from Magellan's listed company MFF - hardly a 'wonderful world' out there:
QUOTE
“Do nothing” has appeared to remain broadly sensible for the portfolio in comparison with alternatives.

Simple, low risk actions do not exist in these market conditions.

More companies are stretching their businesses, stretching their accounting and stretching their manner of presenting their results to gain or retain market favour. Politicians, bureaucrats and regulators are also stretching as more grab for higher taxes, fines on business, “user pay principles”, goods and services market interventions and tougher wider more consequential regulations in response to challenged, unsettled electorates worried about government debt levels but more reliant upon the services and payments. As well as very important social and political ramifications, this activity has subdued some private sector activity and reinforced disappointing nominal growth rates, and may eventually trigger an equity markets downswing, despite some benefits for some business incumbents.




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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
 
 


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