At end Nov 2012, almost 10 years ago, iCap share price closed at $2.33. Today, 10 years later, it is $2.00. Add back the 9 and 20 sen dividends, it is $2.29. So long term shareholders who held their shares had gone through a 'lost decade' with nothing to show for it. The coming AGM will be a good indication how solid this 'fixed deposit' base is? Did someone just pressed the panic button?

@nhy6 https://www.thestar.com.my/business/business-news/2012/11/09/not-a-hostile-takeover/
For the record, United International Securities was the last of the Big 4 Singapore bank managed closed end funds to went for members liquidation because of the persistent price discount. So these are the results of shareholders activism where every one managed to exit their investments at fair market value and not at a discount.

Read the shareholders structure of Berkshire Hathaway B shares, the more liquid and affordable version, here - https://money.cnn.com/quote/shareholders/shareholders.html?symb=BRKB&subView=institutional Look at the % of individual shareholders.

Minority Shareholders Watchdog Group should look into the position of directors elected on the basis of active canvassing by the fund manager whether they can still be considered as independent in terms of good corporate governance.

Since the company itself does not have any admin staff other than the investment manager, one can only then assume it is the latter that is now canvassing for proxies for the AGM. Is it in its job functions to influence the voting for directors? The latter are supposed to be looking after the interests of the shareholders and theoretically oversee the manager, if they are truly independent. But if their positions depend on support of the manager, how to effectively carry out the corporate governance functions?

So the price discount is attributed to the purchases by institutional investors. But who has been selling to them in the first place, other than individual investors? If the sellers are other institutional investors, there would have been no net change in their percentage share ownership. Better to blame the discount to disillusioned individual shareholders who sold out to the foreigners. If they didn't sell at a discount, the foreigners would have been forced to buy at higher prices. It is all supply and demand. There being more sellers than buyers. Also, COL has been owning the shares for more than 10 years now and still wants to buy, is that still considered short term?

Yes, but the fund manager's AUM is reduced by 6%, and his fees by $420K. That's the problem! At say $50K a year for a junior analyst, that pays for 8 of them.

@RealValueInvestor That's the difference between WB and the other WB Wannabes.

@RealValueInvestor We call this selective memory and taken out of context, something we are very familiar with here. The so-called management's efforts to narrow the discount, to this day, they have not given a proper explanation on how the aborted multi-million dual listed fund effort was supposed to work, and why is it in the shreholders' best interest to take COL to court over their continued purchase of shares?

And who says management and shareholders cannot do anything about deep price discount?

Prior to the AHP2 announcement, the share price was hovering around 50 sen. The final realised returns to shareholders was around $1, so happy ending all round. Years later, AHP, the sister company of AHP2, was also trading at a persistent discount of more than 30%, but this time, PNB wised up, instead of waiting for shareholders to try another liquidation proposal, they proactively took the company private at the issue price and close to NAV. Unlike other major shareholders of discounted listed companies who try to 'steal' the company from minorities with unfair and unreasonable low ball offers, PNB did the right thing with a fair and reasonable offer. So no more disgruntled minorities, and PNB no longer need to mark to mark its unlisted investment to market.

@observatory I give you a real case study of shareholders' apathy. When minority shareholders of AHP2, a then listed property trust managed by PNB, called for an EGM to vote on the voluntary liquidation of the trust, PNB affiliated funds were prohibited from voting because of the related party clause in the trust deed. There was a minimum quorum clause in the trust deed which was 25%, and excluding PNB related shareholders, there was not enough members present or in proxies to make up the quorum and the resolution would not be passed. So PNB, even though the trust can escape liquidation because of this lack of quorum, signed in as attendee and made up the required numbers, and even though they cannot vote, they decided not to stand in the way of the outside shareholders and let them decide. So the resolution was carried. Why PNB did that, to allow their fund to be liquidated? Because it is the biggest shareholder and the liquidation allowed them to get out of a perennial discount and realised full value for their investors, and the trust was of no importance to them in their greater scheme of things, and instead of a loss of face, they gained brownie points from investors for corporate governance, acting in the best interest of their investors. How I knew all this? Because I was there.

@observatory No need to look so far. Historically, there were 4 CEFs (later became 3 through the merger of UOB and OUB) managed by the Big 4 local banks in Singapore, and the Amanah Millenia Fund here, managed by MIDF Amanah Asset Management Bhd, plus a property trust AHP2, managed by PNB, the largest unit trust management in the country. All were trading at a persistent discount and amid shareholders discontent, management decided to proactively let the shareholders decide on the fate of their investment by calling for a vote on the voluntary dissolution of their funds. All were liquidated this way and no more hassle and distraction for the managers, who all got bigger other businesses to run. Here at iCapital, COL is the only group who collectively have enough votes to move such a resolution and that is why they are taken to court to stop them buying more shares. Let's see how COL is going to vote this coming AGM. If they can defeat any of the resolutions, the writing is on the wall.

Haha, shareowners, here you heard it, the deep share price discount is all your fault. It is like you get the government you voted for, no one else to blame but yourself.

@drken91 https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=220608&name=EA_FR_ATTACHMENTS

If the company's performance has been as good as claimed, it begs the question of why the persistent discount, when it should be trading at a premium instead? What gives? Shareowners don't know what's good for them or there is a trust deficit?

The biggest shareowner's persistent buying has been stopped by the company from buying more shares and here, TTB is asking people to buy more shares. More like election campaigning.

@observatory You forgot to mention that WB's Berkshire also buys back shares below a certain threshold, and that is supposed to destroy shareholders value? A higher share price means a lower cost of equity capital. For the same required ROI margin, a company with a lower cost of equity capital can consider investments with a lower absolute ROI, which also usually means lower risks, for the benefit of shareholders.

The last time the share traded at a premium to its NAV as in 2008, so for the greater part of its existence, the share trades at a discount. Is this going to be permanent, only time will tell, but for the Big 4 Singapore bank managed closed end fund and the only other CEF fund listed here, shareholders and management decided that enough is enough and went into voluntary liquidation, so that everyone, including the banks themselves, as major shareholders, can exit at NAV. While not a CEF, AHP2, a listed property trust managed by PNB, the largest fund manager in the country besides EPF, also self liquidated because of the persistent discount. For these funds, the market have spoken and management decided not to fight it.

For the latest financial year, total dividend and interest income came to $7,099,433 and management and advisory fees came to $7,124,484, so there is no surplus income left to shareholders. Are management's interest aligned with that of the shareowners? From the list of 30 largest shareowners, quite a large number of them have been loyal shareowners holding the shares for more than 10 years. At the end of September 2012, 10 years ago, the share price was $2.25. On the same date this year, the share price is $1.97. Add back dividends received of 9 and 20 sen, the adjusted share price is $2.26. So for 10 years, do shareowners feel any richer? If they decide to walk away now, they have nothing to show for holding the shares, unless the price/NAV discount improves. What can, or what should they do? If they had invested the dividends into bank deposits, at least they can earn some interest on them. But if they had reinvested the funds into iCap shares, the way total returns on shares are usually calculated, won't have made any difference because the share price didn't move. Just remember, management fees are based on NAV, shareholders returns are based on share price and dividends, two different things entirely. How to be on the same page?

@Noni, you asked "You think is so easy to move it up 0.20? Market will sell and you going to end up holding more of the same thing". If the company announces a share buy back or a capital repayment, will the market buy or sell?

@bryantfc According to the Nobel Economic Prize winning M&M Theorem on corporate capital structure, dividend policy has no bearing on a company's market value. https://www.investopedia.com/terms/m/modigliani-millertheorem.asp#:~:text=The%20Modigliani%2DMiller%20theorem%20states,was%20introduced%20in%20the%201950s. For dividend paying companies, the role of dividends is as a signaling tool, an increase in payout is a signal that the company is optimistic on future earnings growth and vice versa. If a company can reinvest earnings at a higher returns than the cost of capital of its investors, like Berkshire, then not paying a dividend is optimal. And vice versa. Similarly, if the company's ROE is higher than what the market is rating it at, then a share buyback is suggested. For example, if the dividend yield is 5% and the company can borrow at 2.5% or lower, like during QE2, US companies were rushing to buy back their shares with cheap borrowings and boost their EPS and achieve higher share prices.

This is reposting of my earlier comment, because of typing errors: @bryantfc Dividend payouts will not have much impact on shareholders' wealth because the share price will theoretically adjust for it ex-dividend, so it is just left pocket and right pocket. However, just raising the share price by 20 sen by reducing the price discount to NAV is real money you can take to the bank, and it is a win/win thingy for TTB also as there is no reduction in management fees payable, unlike a dividend payout.

@bryantfc TTB's argument against dividends is that his counterpart (since he is supposed to be the Malaysian equivalent) WB's Berkshire also doesn't pay a dividend. iCapital's two previous dividends were one off, the first one is to use up the dividend franking credit, and the second one of 20 sen is a pacifier to shareholders before the AGM, a special Covid handout, like the Government's financial relief. @Noni, you said it, not me, haha. If TTB is not going to do it, shareholders can DIY with a liquidation. Your choice!

That's 28 million a year in dividend and $420K a year reduction in management fees income.

So the share price discount is all investors and investment analysts' fault then, go fix it yourself, TTB has done his part admirably well and earned his fees. Good for him.

The only other Malaysian listed closed end fund also suffered the same fate some years back because of the price discount. This is an existential threat to a CEF if not addressed by management.

The elephant in the room is not NAV performance, but share price discount. Blaming it on shareholders is management passing the buck. There were 4 listed closed end funds in Singapore in the past, but all ended up in members voluntary liquidation because of persistent share price discount, which management was unable or unwilling to address.

Until the share price discount to NAV is normalised, shareholder returns based on NAV is academic. What you see is not what you get. There are plenty of other companies on Bursa selling at deep discount to NAV, how do their shareholders calculate their returns on investment?

BTW, the company was listed on 19 Oct 2005, didn't quite make it 18 years and 8 months yet. Want to give it a longer and more impressive track record? The same performance stretched over a longer period will reduce the CAGR.

The standard disclaimer of most fund managers is that past performance is no indication or guarantee of future performance. Why stop at only 15% per annum, why not 20%? What is the CAGR since listing? Anywhere near 15%?

@WilliamWilkerson You have to excuse TTB's memory some time as he has mistakenly said that the Slater Walker boys were also controlling Sime Darby during the late 1960's and early 1970's in a recent interview. Can't blame him, as he was only a school boy then, but already dabbling in the stock market.

As to who is the first Asian global investment firm, readers can check up Value Partners here https://www.valuepartners-group.com/en/about-us/overview/

For a fair comparison with a dividend yield of say 3 and 3.5% annually for the KLCI and compounding for 10 years, the dividends would generate an extra returns of 34.4 and 41.06% respectively. With compounding for 16 years, which is the duration for iCap since listing, the figures would jump to 60.5 and 73.4% respectively. Hardly a level play field comparison.

@cnman53 To be fair, you need to add back dividends paid out by the stock over the years when calculating returns. Cannot be like TTB, always comparing against the KLCI without adding back the dividend yield of the component stocks.

Of course, if the company, or rather TTB keeps fighting COL in court, the latter may decide it is not worth their while pursuing if they are not welcome and turn sellers one day. Then you can blame them for selling. They have been buying for more than 10 years, have the share price been falling all this while because of them?

If you ask any market commentator what causes share price movements, besides fundamental factors, the most basic explanation is supply and demand. When there are more sellers than buyers, prices get depressed. Why should buyers push up prices when there are plenty of sellers willing to sell at lower prices? COL's objective as buyer is to collect shares at the cheapest prices possible, why blame them for this?

With COL buying, share price (discount) went down, so without COL buying, as happening now because of the injunction, share price (discount) will go back up? For every share that COL bought, some local shareholders must have sold. Why not blame the sellers? If there were no sellers, COL would not be able to accumulate their block of shares in the first place.

Any finance student who has studied options pricing will tell you there is no such thing as a free call option with no expiry date. The longer the expiry date, the more valuable is the option. The authors of the BS Option Pricing model got a Nobel Prize for it. Anyone who can disprove it deserves another one.

@Nepo The 1.24 price discount can be attributed to the cash portion of the portfolio, the 'free call option' which is not earning anything for shareholders after paying management fee and tax. How do you put a price on it?

Some companies are selling at less than the cash backing per share, e.g. MAA, make you wonder why?

A lot of old shareholders are trapped because they cannot afford or reluctant to leave the $1.24 discount on the table if they were to sell now. Who is going to bail them out?

The usual saying is "price is what you pay, value is what you get", here it is "value is what you have, but price is what you get" when you want to sell.

@Nepo, if you want to liquidate the fund, no need to wait till 2025 that long. All you need to do is to vote in a new Board of Directors and TTB will quit and close down the fund and take back the name with him.

COL wanted to buy more shares but is prevented by the company's injunction. So if share price goes up in the meantime, and the company loses on the injunction bid, damages may be payable to COL for missed bargains.

@Integrity There is no need to contact COL as the company's announcement to the exchange itself clearly provided the grounds of the High Court judgement:
(1) The High Court finds that the Defendant is not a member of the Plaintiff and is therefore not caught under Clause 21(1) and 8(y) of the Plaintiff’s Constitution. The Plaintiff’s Constitution provides a clear meaning of “member” and thus, the High Court found that the mischief rule ought not be applied.

(2) The High Court takes note of the Plaintiff’s concern that the ultimate control in the shares of the Plaintiff is with the Defendant. However, the Court is not prepared to go beyond the four corners of the Plaintiff’s Constitution or to imply any term under the circumstances as this will cause confusion in the meaning of the word “shareholder”.
In plain English, the court has found that COL is not a shareholder of the company as defined by its own constitution, which is the main point of contention in the company's action. As I have mentioned before, COL is not in the list of the substantial shareholders of the company, as per the annual reports. So if this now disputed by the company, then it has been publishing a false list of shareholders all this while. Is the company arguing that all of a sudden, COL becomes a shareholder, from zero to above 20% overnight?

@Nepo If iCapital is such a bargain, why aren't local investors increasing their shareholdings, as shown in this analysis of the 30 largest shareholders' movements over the years. Only major buyers are foreign funds, which now have overtaken the locals in the latest top shareholders list, and this is why the company is going to court to injunct them. https://1drv.ms/x/s!AgLvGZpm89Ysly1THGRIwnoteTOz?e=DFeF86

@Nepo The irony is that COL wants to buy more shares for its funds and it is the company that is refusing to allow it.

For transparency, just publish the full court judgment on the injunction application and let shareholders understand the basis of the rulings.

Both the SC and the courts so far have ruled that COL per se is not a shareholder of the company, hence the question of exceeding the individual shareholding limit did not arise. If 'control' can be deemed ownership, then all the GLCs and government institutional investment funds like EPF, Khazanah, PNB, Tabung Haji, LTAT are also owned by a single shareholder, i.e. the Government, and the same rules on ownership will apply.