REF – A 1 cent fully franked dividend was confirmed recently. Whilst I fully expected this sometimes I feel the stock is priced such that the market expects management to waste the cash on some ridiculous acquisition. So to see the dividend actually declared is still pleasing.

The results met very recent guidance so not much to expand on then. Initially trades went through at 12.5 cents (cum dividend) but there have been some sellers about even at 11 cents (cum dividend or 10 cents ex). The comments around the trend of 1800 reverse earnings is probably showing more of the deterioration towards the last few months of the reporting year. At a guess those selling might have been disappointed with that, but personally to me that is what I imagined would be the case. I fully expect 1800 reverse earnings to decline quite quickly. I just believe over the next year or so we will likely to see a similar profitable bolt on acquisition to the contact lens side, and overall the very high fully franked dividend currently in place may well be able to still continue.

UOS – UOS operationally never seems to give you much to be concerned about, and their recent results were no exception. I am glad to have topped up my holding not that long ago before the 2.5 cent dividend, from memory those shares may have cost me effectively 46 cents at most. For a lot of this year it has felt there has been a persistent seller at or just below 50 cents. After a usually large number of shares changed hands in July hopefully that selling pressure has cleared, and the huge discount to asset backing can compress. I say hopefully because on the balance of probabilities I probably don’t plan on buying too much more. Yet the fact that the share price does not seem to follow the company’s excellent performance over the last year or so has enabled me to slowly get comfortable buying shares such that is now amongst my larger positions. So hopefully being somewhat a laggard can be a blessing for me in this instance perhaps. For the first time in over a year it now seems difficult to obtain stock sub 50 cents.

SSM – The result was once again very solid beating its own recent guidance. Given it wasn’t that long ago that they guided the market I am a tad surprised the share market has reacted so positively. I would say it goes to show when a company gets on a streak of over delivering it can soon become a market darling which SSM seems to be right now. Of course ideally I would not have sold half my stake at 79 cents, after writing myself on the blog I thought the stock was actually on the cheap side at 80 cents! Of course I have ridden this since trading in the mid/high 20 cents level and my belief is this strategy of occasionally booking some profits helps myself, despite seeing some potential gains lost in SSM & RMS this year. Trust me there have been others in the past where I wished I booked some profits but didn’t, only to see the stock fall. This will now turn into one of my rare cases where I will eventually likely exit this stock as it is falling, thus placing a trailing stop on this. The ASX has been dreadful the last year or two for “mum and dad” stocks in the big caps, but the smaller section of the market has shown signs of almost boom like conditions at times. In such an environment I am willing to see how far SSM can take me with the other half parcel I am hanging onto. If it can go to trading at expensive levels from here it could go much higher. It is generating stacks of cash so when you look at EV multiples it is certainly not necessarily demanding you need to sell this stock urgently at all.

PTB – This company operationally wise is ticking all the boxes, though despite that is probably not getting totally rewarded in terms of share price appreciation. Nonetheless having gone into this at 38 cents and received a 5 cent full franked dividend this year I am quite comfortable remaining a holder. I put this down to being an unfashionable company in terms of the industry it operates, but that is what I often believe can produce good investment results. Investing is not a competition for the story to sound exciting. A P/E of 7, fully franked yield of 11%, price to book under 0.6 it should come up on other’s quantitative filter searches. Normally then you would think there would be a “catch”, but in this case I don’t really think there necessarily is.

MEL – Rather than commentating on their results which is straight forward as they have mainly just been sitting on cash, it is worth noting the share register movements of late. I actually don’t know enough about the two new substantial shareholders but just wanted to point out they have acquired a total of around 21% between them of late. They must be keen with their plans as the stock has moved from 5.5 cents recently (my entry price late last year), to 6.4 cents. A big block trade actually seems to have gone through for 7.5 cents so I don’t really want to sell, even though I don’t quite get what all the buyer’s motives and plans are yet. The asset backing though still should be around 7.2 cents, about 2/3 comprising cash.

APW – After my long winded rant not that long ago I suppose I should be pleased the company has announced an on market share buyback of up to 10% of stock. I must be too cynical in my old age but I’ll reserve my happiness until I see in writing at some stage in the next 12 months that they did in fact did buy back 10% of the capital.

As far as the results go I can’t see any nasty surprises at all. They even had some decent valuation uplifts in the unlisted space. Being priced quite cheaply in my view in the lead up should hopefully see the downside limited here.

One key thing I feel in the investor presentation that tells a story about management is their removal of a slide when we look back at the investment presentation from the half year results in February. The slide in February was titled “Prudential Capital Management”, with a bar chart seemingly proud of how they reduced the discount to NTA from extreme wides shortly after the GFC. Suddenly that slide couldn’t make the cut to get into the latest presentation! I wonder why? Silence is deafening.

The date in which they can buy back shares is approaching very soon, and how they go about this in the next few months will also tell a major story. I unfortunately predict that they will buy about 1% of the 10% allowed under the buyback over the next year. Hopefully I am pleasantly surprised. On balance I still feel that if a resolution was put for a wind up vote and AIMS was excluded from voting, such a wind up could succeed. From that point the NTA looks reliable enough to me that unit holders could get quite close to what is reported from a slow realisation of assets. That would produce an attractive return from these current levels. Of course I may have missed something here, but I’m just making the point I haven’t really come across a strong argument to suggest that a wind up could not succeed.

On the other hand, an aggressive buyback where the 10% actually gets bought back at a cheap level on market, together with ramped up distribution payout policy with promotion, and leaner cost leakages for admin and the R.E. could arguably be another reasonable alternative. Therefore, time will tell on this recently announced buyback.

MVT – The last two I’ll comment on are LICs so it’s more an NTA comment rather than on their financials for the year. Not always easy working out what these guys hold. If we assume some of their holdings in the investor presentation on May 20 are still in the portfolio they should be going ok. Stale data I know (holdings from Dec 31 2015), but they do tend to sit on their positions in stocks for long periods so may be a fair assumption. Results period for MVT should have treated them kindly in August at a glance firstly INA did OK ex div. Other “potential” holdings they may still have are perhaps more exciting. RIS, JYC, CLT, AFY, SMR. I’ll be interested to see them report the August NTA in a couple of weeks’ time.

TOP – These guy’s had a cracker July with their portfolio being up over 8%. That is hard to repeat but I feel they have made a great attempt at least in August! Key holdings that reported their financial results in August included SSM, MNY & AMA which are their 3 largest holdings. The three results were really good and the market seemed to agree so I also look forward to TOP releasing their NTA in a couple of weeks’ time.


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