Also there is NOTHING special and irreplaceable about icapital.biz Berhad. It is a fund constituted as a company and it exists solely to serve the interests of its investors. ALL of them, not just those that TTB approves of! In more developed markets there are 100s of such funds and so there is no room for sentimentality of the kind expressed by JohnD0ugh. If a fund doesn't continue to serve the needs of its investor base then it no longer need exist. It is a financial ecology and closed end funds where the board does bothing effective to deal with their discount are the lame ducks of that ecology!

He is fairly well paid though isn't he as his business group get two lots of fees so we probably shouldn't feel TOO bad about TTB putting a shift in.

https://www.theaic.co.uk/sites/default/files/documents/QC-Investment-Trust-Engagement-Report-Jul23.pdf

Pages 13 and 23 are interesting reading in the context of ICAP.....

@JohnD0ugh you quoted from the Company: "A stock is not just a ticker symbol or an electronic blip; it is an ownership interest." Isn't this exactly why owners should engage with Companies and be treated respectfully and listened to when they do? Of course in THIS companies case:
1. the Company uses shareholders' money to unsuccesfully take shareholders to court;
2. the Board appoints the investment manager (who, of course and correctly from his narrow point of view, has one eye on his fees) to talk to shareholders in the board's place.
So it is highly likely that the proper connection between the owners and the board is broken!

@Patient Investor The NAV would have gone up a lot more if the fund wasn't heavily liquid! What do you mean by "what will happen to the portfolio by now?"?

@Patient Investor That's for operating companies! For closed end funds which IS what the quote relates to the first two suffice. What could be better than buying a portfolio you already like at a discount? Then if you cancel the shares you enhance the NAV of the remaining shares. What responsible management wouldn't want that?

Here's a quote from a piece of research by Numis: "We believe that buybacks can be a useful tool in the fight against discounts, although stress they are never going to be a “silver bullet”. Instead, we believe they can be a very powerful signal from a Board that it is focused on shareholder interests, as well as benefits including NAV accretion, limiting discount volatility and demonstrating confidence in the NAV." A Board that it is focused on shareholder interests - that would be a good thing!

IF you believe JohnD0ugh, Tang Teng Boo is some kind of financial superman icapable of the impossible, the improbable and the outright ridiculous all at the same time!

@dumbMoney surely that's illegal as well as incredibly poor corporate governance!

"CEFs are structurally far more democratic than UTFs or ETFs" Hmmm maybe, at least investors in an open ended vehicle or ETF can get their money back when they want at NAV!

@ JohnDough "improved corporate governance". You are joking aren't you?

@JohnD0ugh Re: "The explanation of icapital.biz Bhd's superior performance" It's very hard to objectively assess the fund manager's performance when the period's presented by the fund manager are so selective! Why choose to show numbers "for the two years ended 25 July 2023"? Where are the numbers for 1, 3 and 5 years? ,Why 25 July 2023?

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3374054

Hopefully the board and management of this fund will now stop spending time and money on fighting with their shareholders through the courts and will focus their energies on maximising shareholder value.

If they would like a hint, then the easy win is through taking action to substantially reduce the discount to NAV at which ICAP trades....

thetruthseeker where is the news about paying a dividend coming from?

Is anyone else unimpressed with the flat NAV move from 18/7 to 26/7? Is it even correct? For comparison the FTSE Bursa Malaysia KLCI was up 3.3%!

ICAP Fan Club! You couldn't make this stuff up! Welcome to the surreal world of John "TTB" Dough.

There are many causes for discounts, and many possible cures but not having a fan club and deciding to invent one is a very odd route to choose

Dumbmoney - you are SO right! TTB must believe that the current portfolio has a margin of safety else why would he own it. So the same portfolio at 60% of value has a BIGGER margin of safety and so, putting aside reducing the size of the fund and the effect on management fees, surely TTB should like it MORE!?

Well Mr Money, it's not just Warren's teachings, it's Warren's actions!! Looking at the recent annual report:
https://www.berkshirehathaway.com/2022ar/2022ar.pdf
Page K-32 has a table of share repurchases for the last 3 months of last year. During that quarter Berkshire repurchased over USD2.8 BILLION worth of shares AND YET the Company still exists!

https://www.berkshirehathaway.com/letters/2022ltr.pdf

An extract from Warren Buffett's 2022 letter to shareholders, source above.
"When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive)."

Makes you wonder which one of those applies in the case of ICAP!

JohnD0ugh - Thanks for pointing out the excellent returns to shareholders from a reduction or elimination of the discount! Maybe you could have a word with your mate TTB and get him (and the board) to do something properly constructive to achieve such a wonderful outcome for investors. In fact, why not point out to TTB that buying ICAPs own shares at a 42% discount means he would be buying a portfiolio that he must believe in, 42% cheaper than is possible any other way?!

The Company director who is Chairman of MSWG has a clear conflict of interests and should consider resigning from one of those two posts. If ever there was a situation where the MSWG should take action ICAP is it!

I don't suppose for a second that John Dough can or will answer that. In fact, John Dough's just regurgitating from ICAP corporate documents again. Anyone would think he had something to do with the Company!!! Surely not, but maybe he just lacks wit and/or imagination, else he wouldn't be SO DULL!

Investors only get to profit FULLY from NAV when the discount is zero. While the discount remains then an investor who wishes to sell only receives the price which right now at 1.98 is very different from the NAV at 3.48. Investors are being robbed of 1.50 by the continued presence of a 44% discount. Something needs to change. Maybe ICAP should hire the FAKE TTB?

People want to impersonate Tan Teng Boo?!! Why?

An extract from a note by Liberum on Bellway (a UK REIT) - The headline is "£100m buyback signals confidence" They note "The shares currently trade at 0.76x P/TNAV, so the company can buy its own shares at a significant discount to book value or invest in land at 1x." They compare compare the £100m share buyback with two alternatives, holding the cash and investing in land. and this shows that the buyback increases EPS by 3.8% whereas the land investment increases it by 2.9%. They conclude that "The capital return is therefore the better option and is a sign of confidence from the most cautious management team in the sector."

Bear in mind this is an investment vehicle with illiquid assets and yet they are carrying out an earnings (and NAV) enhancing buyback whilst ICAP, with liquid assets, runs the same old and (proven to be) ineffective investor education progress.

The board are asleep at the wheel and in breach of their fiduciary duty!

www.taml.co.uk/blog/special-paper-no-11/?utm_source=rss&utm_medium=rss&utm_campaign=special-paper-no-11

Now here's a thing that some people would tell you is IMPOSSIBLE! A closed-end investment fund (Personal Assets Trust) whose board have implemented a discount control mechanism which has kept the fund in a premium/discouint range of +2.98% to -1.97% over the last 10 years (source: Morningstar) and since 1999 has allowed the Trust to grow from £68m to £1.9bn, lowered the Trust’s ongoing charge ratio from c. 1.2% in 2009, to 0.67% today and enhanced the Trust’s NAV by over £17m 2009.

Also, and as you do know or at least should, there is no longer any such person as "Andrew Pegge of Laxey Partners". There used to be but there isn't now!

"In short, the more ICAP shares are in the hands of institutional investors, the worse the discount gets."

JohnDough, you seem to have zero understanding of how markets work if what you have written above can be taken as correct! Still never let the truth get in the way of a good story! Have you considered a career in politics? I here the UK conservative party are recruiting and you would fit right into the zenophobic deceitful ways.

Why do shares get cheap? More sellers than buyers! How do share ratings improve? More buyers than sellers! That's markets 101 and if you don't get that then you shouldn't be involved in markets.

JohnD0ugh may I refer you to Jeremiah {5:21}? "Hear now this, O foolish people, and without understanding; which have eyes, and see not; which have ears, and hear not." It might help with your condition.....

https://www.cnbc.com/2022/11/05/berkshire-hathaway-q3-earnings-brk.html

Headline:
"The conglomerate spent $1.05 billion in share repurchases, bringing the nine-month total to $5.25 billion."

dumbMoney - say it's not so! Who might be motivated by such a thing?

Meanwhile, imagine the case of a closed end fund where the price is 2.00 and the NAV is 3.27. It is therefore trading at almost a 40% discount. It has 140,000,000 shares. Enlightened management, guided by proper corporate governance as they perceive it, therefore decides that the right thing to do is to carry out a buyback of 10% of outstanding shares, or 14,000,000.

Imagine this can be carried out at the prevailing price of 2.00, so it costs 28,000,000 to carry out the buyback.

After the buy-back there are now 126,000,000 shares left in issue (140,000,000-14,000,000).
Total net asset value has fallen from 457,800,000 to 429,800,000, a drop of just over 6%, but remember shares in issue has fallen by 10%.

Everything else remaining the same, what does this do to the NAV? Well, if we divide 429,800,000 by 126,000,000 we get a NAV per share of 3.41 or an increase of in NAV of 4.32%

To put it another way, imagine you’re a genius investor and you can’t find a better portfolio than the one you have already bought. Now imagine you could buy it at almost a 40% discount. Every part of your perfect portfolio but nearly 40% cheaper!

Wouldn’t that make A LOT OF SENSE?

JohnD0ugh's at it again! Claiming Buffet like status whilst COMPLETELY ignoring the FACT that Berkshire Hathaway DOES have a policy of buybacks which they ACT upon when they believe their stock to be cheap. This BTW is a lot more expensive than the SCANDALOUS 39% that ICAP was trading at at the close yesterday......

Scottish Mortgage Trust Annual 2022, page 7 -

"The Board recognises that it is in the long term interests of shareholders to manage discount/premium volatility. Whilst the Board believes that the primary driver of discounts over the longer term is performance, the relationship between the Company’s NAV and share price can be impacted in the shorter term by an imbalance of buyers and sellers in the market.

The Board does not have formal discount or premium targets at which shares will be bought back or sold respectively, as it believes that the announcement of specific targets is likely to hinder rather than help the successful execution of a buyback/issuance policy. However, it will undertake to aid the efficient functioning of the market in its shares in normal market conditions, by acting when such a significant imbalance in supply and demand for the Company’s shares exists.

In furtherance of this policy, during the year the Company bought back a total of 12,437,319 shares into treasury. Between 1 April and 16 May 2022, 81,088 shares were bought back. During the
year the Company issued from treasury 34,950,000 ordinary shares at a premium to the net asset value. Between 1 April and 16 May 2022, no further ordinary shares were issued."

Why does TTB chose to ignore this?

https://stpukswebsharedmedia.blob.core.windows.net/mws/5f0cmds2/638012677305061178baillie-20gifford-20scottish-20mortgage-20investment-20trust-20factsheet-200922.pdf

3.6% discount.

Feel free to draw your own conclusion.

https://pershingsquareholdings.com/performance/net-asset-value-and-returns/

And the strategy is working nearly as poorly for PSH as it is for ICAP. End October Discount £35% and that's with ongoing buybacks!

JohnDough thinks he invented "the strategy of attracting more individual investors" as well as value investing!

Berkshire Hathaway Annual - Page K-31

Common Stock Repurchase Program
Berkshire’s common stock repurchase program permits Berkshire to repurchase its Class A and Class B shares at any time that Warren Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer, and Charles Munger, Vice Chairman of the Board, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined. Repurchases may be in the open market or through privately negotiated transactions.

In the last 3 months of 2021 alone they repurchased own shares at a cost of over $6.7billion or circa 1% of shares in issue!

Now that is responsible stewardship!

Thanks observatory... DMA is a similar market cap to ICAP but its holdings are less liquid that ICAP's being real estate and unquoted funds, so it SHOULD trade on a wider discount than ICAP!

ICAP's discount rather than being the fault of shareholders is the fault of the board for delegating the management of the discount to the manager, who likes to blame shareholders and continues to pursue a method to close that discount that hasn't worked for all the years he has tried it.

Yep me too! I experienced it.

Meanwhile Mr Dough, when are you going to stop doing a TTB and just claiming others greatness by quoting them? What do YOU think, assuming you do?

That said whether dissolution or another solution some means needs to be found to deal with the ongoing issue of ICAP's discount to NAV.....

Actually @Dimiri Ivanov If you're talking about Scottish Mortgage TTB quotes an example of a fund where the discount closes but not due to any magic but because the board of that fund, in stark contrast to the board of ICAP took action and bought back a material amount of shares. Have a look here: https://www.investegate.co.uk/scot.mort-inv-tst--smt-/rns/transaction-in-own-shares/202201181732148715Y/

Mr Dough nobody buys stocks in order to hold them forever, so it seems to me that Phelps is, at least in part, talking nonsense!

Not sure just quoting from other investors including TTB really gets the debate anywhere, especially as he (TTB) at least is frequently inaccurate, either through commission or omission in what he writes!

JohnDough The Company itself can take part in the market and buy its own shares. Like Buffet's Berkshire Hathaway did and DOES AND like Scottish Mortgage did and DOES!! TTB wants shareholders to think that he can do nothing to reduce the discount. That is NOT true. He is tasked by the board with dealing with the discount but does nothing because to do so, by means of tender offers and/or buybacks would reduce the size of ICAP and thereby his fees.

By the way why ARE two fees paid to TTB's companies for doing one job. They add up to over 1.4% a year. Scottish Mortgage, pays under 0.3%. Berkshire Hathaway will pay even less.

From Berkshire Hathaway Annual Report 2020:

Operating earnings are what count most, even during periods when they are not the largest item in our GAAP total. Our focus at Berkshire is both to increase this segment of our income and to acquire large and favorably-situated businesses. Last year, however, we met neither goal: Berkshire made no sizable acquisitions and operating earnings fell 9%. We did, though, increase Berkshire’s per-share intrinsic value by both retaining earnings and repurchasing about 5% of our shares.

The REAL Warren Buffet buying back shares in his Company while ICAP's equivalent sits on his hands and a huge pile of cash!