ARG - Argo Investments

[TjamesX]

This is my first ever post on any forum board!!! ever!! so get excited

History....

I arrived here as a result of lurking around Propertyinvesting.com and somersoft and so recognise quite a few names around here, but as I am not interested in property (at the moment) I have decided to start investing in shares. I have just started purchasing in the past month and currently have;

2000 AMC (@ $7.28)
4800 ARG (@ $4.88)
300 NAB (@ $26.40)
517 BHP (given by a great grandmother - had since I was a born)

Also I bought and sold ION for a $300 loss. I am planning to hold all of these for the long term.

My question regarding ARG (Argo Investmnets - Listed Investment Company) is this; Currently ARG as trading around 4.85 - 4.89. On Aug31 they reported that net tangible asset backing was 4.91 (excluding capital gains liabilities). So they are trading a little below NTA. However their largest shareholding Maquarie Bank (MBL) has risen around 13% since Aug31 as well as a number of other large shareholdings and ARG has not moved ?????????? I don't care in the short term because I wish to hold these for a long period, I am just curious

TJ

[Jett_Star]

Me too.

http://www.asx.com.au/asxcharting/CisServGif?RequestType=ByName&UseSession=False&GifResponse=image&fresh=false&extgif=true&caller=sharenet&volval=VOL&periods=D6&spread=LAST&siafsec1=S&sec1=ARG&divn1=0&siafsec2=I&sec2=XJO&divn2=0&siafsec3=I&sec3=MA&divn3=0&extcsv=false&reducefact=80&fromdate=15/03/2004&todate=15/09/2004

[TjamesX]

Correction on earlier post.

After looking at the ASX chart of MBL again - it has only moved about 5-6% since Aug31 (my mistake ;) )

Does anyone know any website that provides free charts better than the ASX website?? I can't chage the timeframe - although I have found a tricky way;

www.asx.com.au/asx/research/chartsSearchResult.jsp?asxCode=MBL&TimeFrame=D6&compare=index&indices=XJO

By changing the D6 in the chart window address to D3 or D1 you can get 3month or 1month charts :xyxthumbs

However, I am still curious as to why ARG hasn't moved :confused:

TJ

[GreatPig]

TJ,

Here's a longer term weekly chart for ARG.

If you want, you can download the free FCharts (http://www.spacejock.com/FreechartsSE.html) software and free EOD price data from float.com.au (http://www.float.com.au/) and view your own charts.

Cheers,
GP

[GreatPig]

And here are the others:

NAB

[GreatPig]

AMC weekly

[GreatPig]

BHP weekly

[ghotib]

This is my first ever post on any forum board!!! ever!! so get excited
Wooohooooooo!!!!! Is that excited enough ;-)


History....

I arrived here as a result of lurking around Propertyinvesting.com and somersoft and so recognise quite a few names around here, but as I am not interested in property (at the moment) I have decided to start investing in shares. I have just started purchasing in the past month and currently have;

2000 AMC (@ $7.28)
4800 ARG (@ $4.88)
300 NAB (@ $26.40)
517 BHP (given by a great grandmother - had since I was a born)

Also I bought and sold ION for a $300 loss. I am planning to hold all of these for the long term.
Why did you sell a stock after less than a month when you bought it for the long term?


My question regarding ARG (Argo Investmnets - Listed Investment Company) is this; Currently ARG as trading around 4.85 - 4.89. On Aug31 they reported that net tangible asset backing was 4.91 (excluding capital gains liabilities). So they are trading a little below NTA. However their largest shareholding Maquarie Bank (MBL) has risen around 13% since Aug31 as well as a number of other large shareholdings and ARG has not moved ?????????? I don't care in the short term because I wish to hold these for a long period, I am just curious
TJ Short answer: nobody knows. LiCs have gone out of style? The market is busy chasing MBL too high? The market is riding the MUL whirlwind? The rise in MBL is outweighed by the rest of the portfolio?

Speaking as an investor in another LiC with a similar investment philosophy, I suggest you go back and read Argo's "Owner's Manual" again, then ask yourself what you mean by "long term". From some perspectives, there's no difference between investing in businesses and investing in properties.

Ghoti (halfway through reading "The Intelligent Investor" and increasingly aware of how much I don't know)

[TjamesX]

First of all - Great Pig, thanks on the charting software and data, I've checked it out and am pretty happy with what I see. :)

Ghoti


Wooohooooooo!!!!! Is that excited enough)

Yes, maybe could have had a couple more o's ;)


Why did you sell a stock after less than a month when you bought it for the long term?

The short story is, I am doing a course at the Securities Institute and one of the lecturers blurted out that he thought ION was oversold. So I looked at the company and did a little research (not Much!) and decided to by for the med term. Then two things happened i n the space of a couple of weeks;

(1) they got rid of the CEO guy Salthouse, who basically built the company buy himself by buying a couple undervalued companies.

(2) a director sold half a million $ worth of shares below market price

These didn't sit entirely well with me (being inexperienced) so I decided not to wait and see what happens and took a loss.


Speaking as an investor in another LiC with a similar investment philosophy, I suggest you go back and read Argo's "Owner's Manual" again, then ask yourself what you mean by "long term". From some perspectives, there's no difference between investing in businesses and investing in properties.

Funny you mentioned that, I did read it a couple of nights ago. Can't remember what it said exactly - but I will now twiddle my thumbs and wait for them to outperform the index over the next few years.

I did buy Argo because they have a long track record of doing that (outperforming). And my mum told me a story about when she knew the guys who set it up years ago (Patterson was one, she didn't know them that well), but anyway she said he used to write on the backs of scrap paper rather than wasting new ones - its that kind of penny pinching attitude I like :p

[TjamesX]

Oooh I forgot to mention that as an Adelaidean, I got them because the're a good old Adelaide company that doesn't need to relocate to bloody Sydney just to keep on the pulse in financial markets!

Go Adelaide Go

Oh and bTW for tonight - GO THE POWER, st kilda will go down

Who said buying shares shouldn't be emotional?? :eek:

[still_in_school]

This is my first ever post on any forum board!!! ever!! so get excited

History....

I arrived here as a result of lurking around Propertyinvesting.com and somersoft and so recognise quite a few names around here, but as I am not interested in property (at the moment) I have decided to start investing in shares. I have just started purchasing in the past month and currently have;

2000 AMC (@ $7.28)
4800 ARG (@ $4.88)
300 NAB (@ $26.40)
517 BHP (given by a great grandmother - had since I was a born)

TJ

Hi TjamesX,

some of the stock you have mentioned, i had been holding for the upside,

687 AMC (@ $7.28) exact same price coincidently
NAB - when its been dipping or and technical indicators are showing signs of a blowoff or downtrend have, been successfully buying puts and selling them off very quickly
BHP - sold this morning at 13.50, though the market had opened quickly to my surprise and was unfortunate to move the trailing profit target up in time, though i currently holding BHP15 Oct Calls, lets just hope it can break this $13.60 barrier...

the most stock, im excited about is AMC... could see it go to $9.00 over the medium term, though i see this stock as low risk, but medium to long term views...

Cheers,
sis

[ghotib]

Yes, maybe could have had a couple more o's ;)
OK: oooooooooooooooooooooo ;)


The short story is, I am doing a course at the Securities Institute and one of the lecturers blurted out that he thought ION was oversold. So I looked at the company and did a little research (not Much!) and decided to by for the med term. Then two things happened in the space of a couple of weeks;

(1) they got rid of the CEO guy Salthouse, who basically built the company buy himself by buying a couple undervalued companies.

(2) a director sold half a million $ worth of shares below market price

These didn't sit entirely well with me (being inexperienced) so I decided not to wait and see what happens and took a loss.
I'm inexperienced too, so maybe we can learn a bit from each other. For starters, I'm impressed that you were willing to sell when you saw changes to the stock. I think I would have dithered for a while.

I came here from PropertyInvesting too, via the link in SiS's sig (thanks SiS). I looked hard at property for most of last year, and got a lot of practice at assessing yield and risk and keeping my money in the bank. The really good part of that was that it helped me work out an overall investment framework that I'm now trying to build on.

I'm not finding many shares at the moment that fit my framework. I think Argo follows a strategy similar to the one I'm trying to work with, which is based on the thinking of this Benjamin Graham guy I'm reading at the moment and also of Warren Buffet. I don't know enough to talk about this very clearly, but one thing I'm trying really hard to get into my head is that I only buy into any investment vehicle if I have excellent reason to believe I will earn more with it than with cash or bonds. It's going to take me a while to really understand what "excellent reason" means, but it's a lot more than rising share price and /or optimistic forecasts from management and analysts.


Funny you mentioned that, I did read it a couple of nights ago. Can't remember what it said exactly - but I will now twiddle my thumbs and wait for them to outperform the index over the next few years.

I did buy Argo because they have a long track record of doing that (outperforming). And my mum told me a story about when she knew the guys who set it up years ago (Patterson was one, she didn't know them that well), but anyway she said he used to write on the backs of scrap paper rather than wasting new ones - its that kind of penny pinching attitude I like :p
Fair enough. Just don't expect them to outperform the index (which index?) every day or every year. You can probably learn a lot from their shareholders' reports as well as from what they do with the portfolio.

Cheers

Ghoti

[GreatPig]

ARG is offering a few shares to existing holders at $5.79 a share.

Given that the price has only been above this for less than two months, and it's well above the longer term trend line, I'm not so sure it's such a good deal.

I do want to get some more ARG at some point, but I think the chance is reasonable of getting them cheaper than this.

Just my opinion :2twocents

Cheers,
GP

[TjamesX]

I have sold all remaining my ARG shares at 6.00 after they went ex div and my 12 months were up, obviously they will tend to track the over all market, which IMO will be due for a reasonable correction within 12-18 months. They are also trading pretty close to their NTA....

[transit]

Does anyone think these kind of stocks (LIC's) are back in flavour?

Although i don't know much about reading charts i can see that ARG and AFI have had a good run the last couple of months.

How does one find the NTA of a LIC? Does the ASX website or Comsec have this info?

Do people think that LIC's should be held in an investment portfolio for the long term (buy & forget)?

Are these stocks mostly used for growth or income?

[reece55]

Transit
There is one reason why the LIC sector is booming - because the whole market is moving upward. The NTA of all LIC's are announced on a monthly basis, about 10 - 15 days after month end. So, if you are using comsec, just go to announcements and review whats listed there.

At the present stage, ARG trades at a premium to both its exclusive and inclusive of deferred tax NTA. For instance, their January NTA was excluding unrealised tax was 7.74, which is a fair way off the the 8.88 trade on Friday. ARG has always had a larger NTA premium than say that of AFI however, because it has been long proven that ARG have a history of bigger returns. To be honest, I always wanted to get myself some ARG shares, but the NTA premium always convinced me not to. However, the gap is even wider now.

Cheers

[transit]

Thanks Reece, i just found the document you talked about under 'announcements' in comsec. It also seems that LIC's are not really good for income given that the current yield is only 2.6%. But i guess you can sell down shares to provide an income if that was the goal.

I'm looking at putting some money into some managed funds with some Aussie stock exposure but these LIC's look more attractive with the lower management fees. I guess the trick with these is to try and buy some when the NTA premium isn't so big.

cheers



Transit
There is one reason why the LIC sector is booming - because the whole market is moving upward. The NTA of all LIC's are announced on a monthly basis, about 10 - 15 days after month end. So, if you are using comsec, just go to announcements and review whats listed there.

At the present stage, ARG trades at a premium to both its exclusive and inclusive of deferred tax NTA. For instance, their January NTA was excluding unrealised tax was 7.74, which is a fair way off the the 8.88 trade on Friday. ARG has always had a larger NTA premium than say that of AFI however, because it has been long proven that ARG have a history of bigger returns. To be honest, I always wanted to get myself some ARG shares, but the NTA premium always convinced me not to. However, the gap is even wider now.

Cheers

[drmb]

Transit
There is one reason why the LIC sector is booming - because the whole market is moving upward. The NTA of all LIC's are announced on a monthly basis, about 10 - 15 days after month end. So, if you are using comsec, just go to announcements and review whats listed there.

At the present stage, ARG trades at a premium to both its exclusive and inclusive of deferred tax NTA. For instance, their January NTA was excluding unrealised tax was 7.74, which is a fair way off the the 8.88 trade on Friday. ARG has always had a larger NTA premium than say that of AFI however, because it has been long proven that ARG have a history of bigger returns. To be honest, I always wanted to get myself some ARG shares, but the NTA premium always convinced me not to. However, the gap is even wider now. Cheers
I hold ARG, AFI and DUI in my smsf as a set and forget. I have problems with DUI because it is so illiquid, there is hardly any volume traded and some days zip. So even though I buy at a premium to NTA when I sell DUI (as I did because I was way overweight with them after a rights issue) I either have to wait days for a sale or take a 10-15% hit on nta. Other respected lics to check are AUI, MLT, CHO, BKI .

If you do decide to put some of your portfolio in LIC spreading them around gives more distinct opportunities to participate in SPP's, Rights etc. These LIC's have quality portfolios and low management expense ratios 0.1 - 0.3%, run by people with respect from an operational business backrounds rathre than just financial backgrounds such as stockbrokers, etc.

If you want to do more research go to www.asx.com.au and use the "search", eg for "LIC ARG". One of the recent links was to http://www.asx.com.au/investor/pdf/lic_nta_report.pdf which will give an analysis of the LIC situation including sp to nta. One other lic that I liked but never got was ALR. It was trading above its nta but now has gone a little flat. It's attraction is a better div than my others. I would also caution against just using sp to nta, look at ELI Emerging Leaders Investments NTA to SP -22.92%, FAT Fat Prophets Australia NTA to SP -23.95% and HIC Huntley Investment -16.33% for example, it is a hefty discount and you would think it is an undiscovered gem, but when it came to sell you would also be selling at a discount to nta.
LICS provide me with an opportunity to pack away about 30-40% of my smsf without worrying to much about investment strategies, set and forget, and allows me to have a bit of fun with stocks such as pdn, bmn, smm, inl, imd, etc, and they are always there in case I kick the castle over with my speccies

[transit]

Thanks drmb, can you please tell me what SPP stands for? Is this some type of share issue particular to LIC's?

Someone recently mentioned Whitefield (WHF) as another quality LIC to keep an eye on. Looks like they are heavily into the banks. They last closed at $4.68 but have a NTA of $5.20 as of Jan 31st 2007 (10% discount):

http://imagesignal.comsec.com.au/asxdata/20070208/pdf/00691699.pdf



.....

If you do decide to put some of your portfolio in LIC spreading them around gives more distinct opportunities to participate in SPP's, Rights etc. These LIC's have quality portfolios and low management expense ratios 0.1 - 0.3%, run by people with respect from an operational business backrounds rathre than just financial backgrounds such as stockbrokers, etc.

If you want to do more research go to www.asx.com.au and use the "search", eg for "LIC ARG". One of the recent links was to http://www.asx.com.au/investor/pdf/lic_nta_report.pdf which will give an analysis of the LIC situation including sp to nta.

[tybutler]

LIC's are usually very conservative and most will tell you that they are medium or long term holds. I think they're great to include in any portfolio.

Personally, I like to read the annual reports of these types of companies as an educational tool (portfolio make-up, recent purchases etc.). A good example is Clime Capital (CAM), whose director, Roger Montgomery, makes a point of keeping investors updated and educated about their methodologies.

They do tend to track the ASX200 though, so I wouldn't expect outstanding gains. Over time you should do well however.

Worth looking in to.

Ty.

Hold AFI, CAM, WAM (all LIC's)

[Judd]

.........can you please tell me what SPP stands for?

SPP = Share purchase Plan. Within every 12 months (calender?) companies are allowed to offer current shareholders the ability to purchase up to $5,000 worth of shares. The Co's do not have to issue a prospectus to raise these new funds.

Last year AFI offered 1020 shares @ $4.90. CHO will be offering an SPP at a price still yet to be determined (normally is the averaged weighted price over the period between the ex-dividend date and the record date.) If history is anything to go by, it is possible that that MLT, CHO's stablemate, will offer a SPP at the September/October reporting period.

ARG usually offers an SPP of $2,500 every dividend time but this year has a 1 for 8 renounceable rights issue at $7.20 per share to current shareholders. Shareholders can also apply to take up any shortfall if other shareholders do not take up the rights issue. Back in early 2004, ARG had a 1 for 10 rights issue at $4.40 per share and had to limit applications for additional shares to 1000 shares for each applicant. Could happen again.

[drmb]

Thanks drmb, can you please tell me what SPP stands for? Is this some type of share issue particular to LIC's? Someone recently mentioned Whitefield (WHF) [/URL]
SPP - Judd answered above. If you decide to put part of your investment into LICs then it is worth considering spreading them around the elite ones because you get a limit of $5000 worth of discounted shares every 12 months. It's like another 2-3% dividend. But the point is you get the option whether you hold 5000 or 500000 shares. So by spreading between say arg, afi, dui, aui, cho, ect., you can maximise the return you get if you take up the spp.

I don't know WHF, but you can do some initial research by comparing its performance against some of the others. I just did a quick comparison and it seem to be in between ARG and DUI, another reason to spread them around if you are a defensive investor. Past performance is no guartee of future performance etc, etc

I suggest you do what I didn't when I started investing, and that is do some research, eg check each site and check the major investments, they usually publish a top 25. If you feel comfortable with the spread then that fund may be OK with you. I just put money into whatever the financial advisor said to, or the stockbrokers tips and ended up with a lot of slow performers, such as PRV, and WIL. These 2 seem to be moving now but I spent months and months watching them stagnate while there was a bull market booming. Could've been ahead! But now I'm sorted out. Also look at the size of the fund, you will find ARG is sitting near the top with total funds under investment. What impressed me right from the start with arg is its annual reporting is very low key brochure, its not 100 pages of glossy paper with lots of earnest people in hard hats looking at shovels. Keeps the costs down!

[transit]

Thanks for the info Judd and drmb. I just checked the sp for ARG and it's dropped quite a bit recently with todays close at $8.08 which is still a premium to the NTA of $7.74. Does anyone know if this is considered fair value at this price. I would like to get some ARG but not sure how to determine what amount of premium i should be paying to the NTA.

[drmb]

Thanks for the info Judd and drmb. I just checked the sp for ARG and it's dropped quite a bit recently with todays close at $8.08 which is still a premium to the NTA of $7.74. Does anyone know if this is considered fair value at this price. I would like to get some ARG but not sure how to determine what amount of premium i should be paying to the NTA.
Value is such a personal thing! ARG to me is a long term investment that if I wanted to buy more I probably would not even look at the NTA premium or discount, since it's an elite LIC with a proven track record. Have a look at the top 20 holdings (as published on the arg website as of today's date) and see if it fits in with your perception of value, whether you think these companies are going to increase in value with time (the figure after is the market value that ARG holds). If you bought them in the same proportion, how much brokerage would you have to pay to get the same spread? -

Macquarie Bank Ltd. 306.2
Milton Corporation Ltd. 181.8
BHP Billiton Ltd. 164.1
National Australia Bank Ltd. 149
Australia and New Zealand Banking Group Ltd. 124.1
Australian United Investment Company Ltd. 118.2
Telstra Corporation Ltd. 111.5
Rio Tinto Ltd. 99.5
Wesfarmers Ltd. 96.7
Westpac Banking Corporation 92.1
Commonwealth Bank of Australia 88
St. George Bank Ltd. 83.6
Woolworths Ltd. 75.8
AMP Ltd. 65.2
Rinker Group Ltd. 59.9
Westfield Group 50.8
Foster’s Group Ltd. 50.4
QBE Insurance Group Ltd. 42.7
Woodside Petroleum Ltd. 42.3
Origin Energy Ltd. 42

You'll notice 2 elite LICs in the top 20, Milton and AUI. Milton's top holdings

Westpac Banking Corporation 135,466
National Australia Bank 94,806
Commonwealth Bank 89,369
Bank of Queensland Limited 70,802
Choiseul Investments Limited 70,615 (an elite LIC)
St George Bank Limited 59,635
Wesfarmers Limited 46,967
ANZ Banking Group Limited 46,821
Perpetual Limited 46,057
Washington H Soul Pattinson 42,207
Bendigo Bank Limited 41,160
Suncorp-Metway Limited 39,398
Woolworths Limited 36,104
Campbell Brothers 32,139
BHP Billiton Limited 28,242
Trust Company of Australia Limited 26,385
QBE Insurance Group Limited 24,740
Brickworks Limited 24,615
Macquarie Bank Limited 22,388
CFS Retail Property Trust 20,604

AUI top holdings

1. BHP Billiton Ltd 53,650 7.7%
2. Rio Tinto Ltd 46,680 6.7%
3. ANZ Banking Group Ltd 46,533 6.7%
4. Woodside Petroleum Ltd 37,400 5.4%
5. National Australia Bank Ltd 35,160 5.1%
6. Diversified United Investment Ltd 31,735 4.6% (another elite LIC)
7. Westpac Banking Corporation Ltd 31,428 4.5%
8. Alumina Ltd 29,362 4.2%
9. Tabcorp Holdings Ltd 24,320 3.5%
10. Wesfarmers Ltd 21,198 3.1%
11. Woolworths Ltd 20,150 2.9%
12. Commonwealth Bank Ltd 19,985 2.9%
13. Brambles Industries Ltd 19,800 2.9%
14. Orica Ltd 17,917 2.6%
15. Westfield Group 17,330 2.5%
16. AXA Asia Pacific Holdings Ltd 15,675 2.3%
17. Suncorp Metway Ltd 15,480 2.2%
18. Perpetual Trustees Australia Ltd 14,630 2.1%
19. QBE Insurance Group Ltd 14,350 2.1%
20. St George Bank Ltd 13,198 1.9%
21. Alesco Corporation Ltd 11,933 1.7%
22. Southern Cross Broadcasting (Aust) Ltd 10,500 1.5%
23. Iluka Resources Ltd 9,825 1.4%
24. Australian Gas Light Company Ltd 9,630 1.4%
25. Bluescope Steel Ltd 9,540 1.4%

There was a 1:8 renouncable rights announced 5 Feb and the reason for the apparent drop in value is due to the shares going ex rights on 12 February - the entitlement is 16 February but the rights are already trading as ARGR, and were 0.71 at close today. Arg closed at 8.08 today. Add those together and you get 8.79 for a holder on the 11 February.

In conclusion up to you to decide what to buy but ARG forms part of the untouchable base of my SMSF. It's one of those shares that Warren Buffett might well say "hold forever". Don't buy it to trade in a few weeks or months because it's a "keeper" imo.

[Garpal Gumnut]

Thanks for the info Judd and drmb. I just checked the sp for ARG and it's dropped quite a bit recently with todays close at $8.08 which is still a premium to the NTA of $7.74. Does anyone know if this is considered fair value at this price. I would like to get some ARG but not sure how to determine what amount of premium i should be paying to the NTA.

Dear transit and drmb,

Thanks for the informative posts.

There was an interesting article in the Weekend AFR about the rights ARGR and ARG.

I was considering buying the rights and then applying for shares for my SMSF, however the shares from the rights miss the div in March and existing shares are now ex div.

So I may wait and see how broader market goes for a while , or look at other LIC's

Garpal

[transit]

Drmb, thanks heaps for taking the time to post this and educate me a bit more about LIC's and ARG in particular.

As you pointed out, it's interesting to note that a lot of LIC's hold other LIC's in their portfolio such as Milton Corp holding Choiseul Investments Limited, and AUI holding Diversified United Investment.

I also noticed that ARG have a large holding in Milton Corp (MLT) as well. I guess this strategy allows LIC's to be even more diversified as well as spread their risk a bit more with their portfolio.

[Judd]

And MLT and CHO have on board people who have a deep interest in Soul Pattinson, ie the Milners. And DUI and AUI have the same chairman who has an interest in the ANZ; Charles Goode. Seems to be wheels within wheels.

Here is a link to matters LIC/property trusts/others on the ASX.

http://www.asx.com.au/investor/lmi/tools/research.htm

[drmb]

Drmb, thanks heaps for taking the time to post this and educate me a bit more about LIC's and ARG in particular.
No probs

As you pointed out, it's interesting to note that a lot of LIC's hold other LIC's in their portfolio such as Milton Corp holding Choiseul Investments Limited, and AUI holding Diversified United Investment. I also noticed that ARG have a large holding in Milton Corp (MLT) as well. I guess this strategy allows LIC's to be even more diversified as well as spread their risk a bit more with their portfolio.
I did used to get worried about the "circular holdings" which if you did a reducto ad absurdum, would mean that each LIC only held other lics in the portfolio with apparently no income! And no growth. And one wonders which is the chicken and which is the egg? Here are some typical LIC cross holdings with "parent" and "child"
ARG hold DUI, AUI, MLT, CHO, BKI
AUI hold DUI
BKI hold MLT, CHO
CHO hold MLT
DUI hold nil other LICs
MLT hold CHO

I guess it is done as a way of diversifying and spreading risk. If all LIC's trade at discounts the cross-holdings work in the holder and the LIC's favour since the 'parent LIC' has its NTA calculated by marking the 'child' NTA to market, but this understates the true worth of the 'child' LIC. If LIC's trade at premiums to NTA the cross-holding work against you. However I don't care now! I just hold and watch grow.

If you are looking at other LICs take into consideration volume since when it comes time to sell you may find your LIC is illiquid. Eg AUI, DUI would seem to be a problem. In these cases the discount to NTA persists when you try to sell and you may be selling at a greater discount if you are impatient and want the sale on the same day or even same week. Check DUI sales for example - the market depth sit on the bid below NTA and there are typically very few, very few sellers and sometimes none. Along you come wanting to sell but find no buyers at the price you want so you wait, and wait since most sales are on the bid.

This is not a problem with eg ARG and AFI since the sales volumes are considerably more each day.

Anyway take care and remember your choice of LIC is a longer time horizon than say with other stocks, take a 5 - 10 year approach!!! Also note I am not an expert, I just have DUI, AFI and ARG as about 30% of my smsf.

[Bluebeard]

Anyone still monitoring ARG or the other LIC's and can give a view? Im also interested in finding out if there are LIC's out there that focus on internationally based shares.

[Ken]

From what I have read ARG expects a correction, and have been holding off on a number of investments as they see the market over valued in certain areas.

They have been a consistant performer with a dividend re-investment plan that is good for long term investors, and that suits me.

Whether they are overvalued now I don't know.

Its a stock that I will be accumulating when the market has any minor corrections.

If you like the look of the stocks they hold then I guess you'd invest in them.

[Prospector]

I have been accumulating Argo for many years now. They just keep on keeping on, no great surges, no great dips. One of those almost Blue chip shares!

[Ferret]

Bluebeard,

TGG is a LIC that invests in international shares. Only found out about it recently when AFI put in a notice of being a substantial holder.

I am keen to diversify out of the Australian market and I like LICs (hold a reasonable amount of AFI), so I've now got TGG on my watchlist. However, before I buy I'll wait until I feel the $A has topped and its effect washed through the share price of a LIC like TGG.

Ferret

[Judd]

Note that TGG does not hedge its holdings against the $AUS. Hold TGG as well as (low cost) Vanguard International Indexed (Hedged) and PMC which takes the bets and shorts as well. Also hold AFI, ARG, DJW and WAM (the last not really being an LIC but is classified as a trading company by the ATO so cannot pass on discounted LIC capital gains)

[Ken]

Monthly CHart of ARG for the past 10 years

http://www.asx.com.au/asx/research/ChartsSearchAndResults.jsp?postback=true&asxCode=arg&compare=index&indices=XJO&compareCode=&TimeFrame=M10&chart.x=0&chart.y=0

Interesting that it has always outperformed.

[Ken]

ARG the life time stock.

Purchased 2007 sold never.

This stock is tucked away BHP would not find this one in my drawer.

[Prospector]

ARG the life time stock.

Purchased 2007 sold never.

This stock is tucked away BHP would not find this one in my drawer.

Purchased in 1989! Never to be sold. Always accumulating in their wonderful SPP :p: :p:

[prawn_86]

this is actually the only stock the college i used to live owns. they have held it for about 5 years now and that is how i first heard of it. nice little dividend and excellent capital gains. plus they are adelaide based :D

[Judd]

It's generally boring and true to its aim - to increase dividends overtime at a rate greater than inflation. This lot, combined with the dividends from other LIC's we hold, mean that each year, we do not scramble around for funds to pay: rates; house/contents insurance; car registration and insurance or health insurance. And there are still funds left over to buy a few more now and then.

[Kravis]

Hi all,
This has been a great thread to read through.
I dont own arg but do believe the best LIC going around is aui. Very tightly held by only a handful of shareowners and own a quality portfolio of other businesses. Interested to hear other posters who own aui or thoughts on LIC's.

[drmb]

[QUOTE=Kravis;184713][FONT="Arial Narrow"][COLOR="Blue"]Hi all,
This has been a great thread to read through. I dont own arg but do believe the best LIC going around is aui. Very tightly held by only a handful of shareowners and own a quality portfolio of other businesses. Interested to hear other posters who own aui or thoughts on LIC's. [QUOTE]

I hold DUI, ARG, and AFI in my SMSF, and they are about 15% of my shares portfolio, about 8% of total investments. I have been reducing DUI although it has been the great performer of the 3 since liquidity is the big problem with DUI and its allied lic, AUI. When it comes time to sell unless you are prepared to wait days or weeks for a sale, you may have to sell at a substantial discount to nta.

ARG is a steady performer for sure and I use the SPP with all of them, its a no brain way to invest. But not as exciting or interesting as some of the speccies, which in the bull market have evened out with wins and losses at about 3x the LICs. Come Monday that may all change though if the Dow continues to misbehave, although now I am very thankful to have sold out of RIN to Cemex for a good profit, given the problems with the subprimes in the US.

If you like LICs then it is probably best to spread your investment amongst several of the better performing ones, since you can participate in the $5k share offer at a discount each year that most offer. Another LIC that I should probably get into is ALR, since it seems to have same steady growth but with better divies. I also remind myself that these LICs are a LOONNNGGG term investiemnt, don't even think about them for the first 5-10 years!

Do some research and the easiest is on www.asx.com.au, use the search function and enter eg "AUI", "DUI", and "LIC" and you will get a lot of information, eg the sp to nta price. Personally I do not go too much on that these days as you think will get a bargain with eg 10% discount to nta, only to find when you sell, it evens out!

Good luck

[Kravis]

Thanks for the post drmb.
I agree with your issue on the liquidity issue, but in my mind when I purchased AUI I had no exit strategy in mind. I still consider to buy, hold and reinvest the earnings and hold a significant chunk.
AUI has performed well and will continue to do so, as will other quality LIC's such as ARG.
The downside as you mentioned was the spp and the ability to invest $5k or whatever the max may be. In that case, thats why I also hold CHO. Another quality to have in the stable particularly heavy on banking.

[drmb]

Thanks for the post drmb.
I agree with your issue on the liquidity issue, but in my mind when I purchased AUI I had no exit strategy in mind. I still consider to buy, hold and reinvest the earnings and hold a significant chunk.
AUI has performed well and will continue to do so, as will other quality LIC's such as ARG.
The downside as you mentioned was the spp and the ability to invest $5k or whatever the max may be. In that case, thats why I also hold CHO. Another quality to have in the stable particularly heavy on banking.

CHO and AUI are definitely elite LICS. Agreed, IMO you can't go wrong holding these long. I also figure I have exposure to these through ARG, since AUI and Milton are in top 25, and CHO is held by milton. Cheers

[Judd]

Given this day of carnage when the ASX 200 was, at one stage, down 300 points to below 5500, a thought struck me. I hold ARG and I recall that in its latest report, it was sitting on over $420M in CASH.

I wonder if it has been in the market over the last few days with its ears pinned back? If so, I may have even more reason to take up the SPP which is on offer.

[Ferret]

Its great that ARG is sitting on plenty off cash at the moment. But at the same time MBL was their biggest single holding by far. It is sure to have given the asset backing figure a big jolt this month.

I prefer to sit on the sidelines and wait until the market digests ARG's 31 August asset backing before considering buying.

[Ken]

I have read that ARG has been loading up on stocks.

They rarely sell stocks.

They are long term investors.

The NTA will be interesting next month.

But I suspect they are buying not selling.

There NTA would have lost a fair bit, but over the long run short term pain for long term gain.

This is what ARG was after a correction.

And this was what that big capital raising was for.

I think 7.70 is a little expensive though I think the NTA might be somewhere around $7.00-7.30 at a guess.

Because they have MBL and heaps of em.

[Ken]

This stock is not going to trade above its NTA I wouldnt have thought so might as well wait for the next announcement.

[Ken]

argo investments 10 year returns averaging 14% last 3 years has averaged 19% last 5 years 18 %.

last 12 months just 7.3%

what is this telling us? Either they are investing in the wrong things? Which I presume they aren't if you look at there holdings, or it is out of favour.

Uncertainty if the something people fear most in the market, so whilst there is uncertainty over the US, and the ARG are stagnatge, it appears a great time to accumulate the stock.

[prawn_86]

I have actually met Rob Patterson briefly and he is a very intelligent man.

I like Argo as a stock, especially if you are looking for diversified exposure. More of a managed fund than a stock.

Although the market doesnt ever seem to rate it heaps highly so i dont own any. :)

Good defensive stock imo.

[intheblack]

last 12 months just 7.3%

what is this telling us? Either they are investing in the wrong things? Which I presume they aren't if you look at there holdings, or it is out of favour.

Keep in mind the total dividend of $0.27 paid out in the past year, as well as the 1-for-8 renounceable rights issue in February, and the SPP offered at a discount to market price. This brings the return for the past year to 10%+.

Most LICs have underperformed the index in recent times due to their underexposure to the resources sector, which is considered more volatile than other sectors and tends to pay smaller dividends.

Interestingly, LICs tend to be steadier than the broader market, because they are largely owned by buy-and-hold investors (often SMSFs). For example, in today's 3.5% drop in the S&P/ASX200, ARG fell only 0.2%, MLT fell 0.5%, CHO 0.3%, AFI 1.5%, DUI 0.5% etc.

[brettc4]

For those ARG shareholders;
ARG is, as usual, allowing existing shareholders to purchase some additional shares up to $2,500.

The price these shares will be provided at is $7.39.
Unfortunately, the current price is at $7.21.

Do you think many people will buy shares, and if they do not get much of an uptake, it is likely that future Share Purchase Plans will either:
a) go back to $5,000
b) be priced at a greater discount. The current discount is 2.5% but they can go to 5%.

Cheers,
Brett

[Prospector]

For the first time in many years, I wont be taking up the spp. Arg hasnt really done all that much in comparison with other shares so I have even lightened my portfolio.

[prawn_86]

Yes it is also the first time that a business i am involved in will not be taking up their rights issue.

ARG to me has always been pretty much an index tracking fund and not much else really.

I strongly argued against taking up the SPP and i was glad the other members saw my point of view.

[rick62]

May I ask a basic question? I gather ARG had a capital return [over and above dividends] of, usually, $1/year for the years 2002-6. Was this a straight payment to share-holders and why did it cease?
I may be misinterpreting this but I did receive a straight capital return, about 2 years ago, for another stock I hold.
Also, please, how does NTA fit into your assessments of ARG?
Comments welcome
Thanks
This is from Etrade:
Dividend History
Type Cents per share Frnk % Ex Dividend Date Dividend Pay Date
Interim 14.00 100 12/2/2008 4/3/2008
Final 15.00 100 14/8/2007 5/9/2007
Interim 12.00 100 12/2/2007 9/3/2007
Capital Return 1.00 100 17/8/2006 8/9/2006
Final 13.00 100 17/8/2006 8/9/2006
Interim 11.00 100 20/2/2006 10/3/2006
Final 11.00 100 17/8/2005 8/9/2005
Capital Return 1.00 100 16/8/2005 8/6/2005
Interim 10.00 100 21/2/2005 11/3/2005
Capital Return 0.50 100 16/8/2004 8/9/2004
Final 9.50 100 17/8/2004 8/9/2004
Interim 8.50 100 23/2/2004 12/3/2004
Capital Return 1.00 100 18/8/2003 12/9/2003
Final 8.50 100 18/8/2003 12/9/2003
Special Cash 0.50 100 18/8/2003 12/9/2003
Interim 7.50 100 21/2/2003 14/3/2003
Special Cash 0.50 100 21/2/2003 14/3/2003
Capital Return 1.00 100 19/8/2002 13/9/2002

[intheblack]

I gather ARG had a capital return [over and above dividends] of, usually, $1/year for the years 2002-6. Was this a straight payment to share-holders and why did it cease?

Those years had a capital return of 1 cent, not 1 dollar. Unfortunately I became an ARG shareholders after these capital returns, but I understand they would have been paid with dividends (i.e. as either cash or to be reinvested in the DRP, as per shareholder preference).


Also, please, how does NTA fit into your assessments of ARG?

If ARG's share price is below NTA, this means that you can purchase $1 of assets for less than $1, and thus signifies that you are getting good value. However, the ratio of share price to NTA varies continuously from a discount to a premium, so I wouldn't get too hung up on what the ratio might be at any particular time. As John Bogle (founder of the Vanguard Group) says, the best time to invest in a quality company (like ARG or a low-cost index fund) is when you have the money to do so.

[brettc4]

I went to the Argo Shareholder meeting today here in Adelaide (we don't have a lot so I thought I would go)

This was my first AGM and I thought I would share a few of my observations:

1. We were at the Adelaide Convention Centre and the room they organised was almost packed out, I would guess in excess of 750 people attended.

2. At 32, I was definetely in the young crowd, there was a lot of grey or balding heads in attendance. I actually feel that a lot were there for the free sandwhichs and cake at the end.

3. On the whole, the audience was happy with the directors over the past year, with a record profit, albeit since the end of last finance years, things have continued to go down hill in terms of share price, and the prospect for dividend increases.

4. There were not a lot of questions, but this may be normal.

5. They showed their top 20 holdings as of the 30 Seoptember. They also said they have $200m+ in cash at the moment which is actually the biggest holding.

Point 5 begs the question, when will they start buying, unfrotunately, there was now answer provided.

Cheers,
Brett

[robert toms]

What were the nibblies like...they say that the oldies got to AGM's for the refreshments.
Are the quality of the nibblies an indication of the strength of the company?
I am not far from the oldie category myself and wonder whether I would do better with a Vili's pie ?

[brettc4]

They looked like gourmet triangle sandwhiches and the only desert I saw was a mini chocolate eclair thing.

My problem was I couldn't get past the hungry masses to even get near a table. I do think a fairly large portion are there just for the free lunch, or maybe it was afternoon tea for some of them :)

If the fare was a little more to my liking I may have stuck around and tried to get closer to a table.

Cheers,
Brett

[Garpal Gumnut]

This favourite of the blue rinse set on a monthly chart is very interesting.

The recent Feb/Mar 09 lows bounced off a long term up trend and the ecstasy of early 2007 shows the beginning of a downtrend from that high.

Both lines are approaching a meeting.

Perhaps an indication of "consensus value."

It will be interesting to see how this golden oldie performs next year.

I may even buy a few if it touches the lower line in October.

gg

[venger]

Just thought i point out Argo's recent announcement - new executive team...

good to know that R.Patterson is joining the board after retirement..

[brianwh]

Can anyone explain why the SP for ARG has fallen by about 6% in the March Qtr while funds that track the S&P 200 such as STW have actually risen a % or 2. I know there is a 12 cent dividend which came out, but the SP has fallen a lot more than 12 cents. As I understand it, not only are you paying Management, but there is also a premium to NTA in the price. I have seen estimates of this premium as high as 15%! - although this figure is not recent.

I hold ARG in my SMSF but am looking for an exit point.

[Ken]

any thoughts on why its trading below NTA at present.

market has risen since August 31, yet ARG seems to be lagging....

could be some value here...