@FastMoney "between COL and iCap who is the house?" Whoever is on the right side of the law is the house. This is civil case, so only on balance of probabilities, 51% beats 49%. If I am a betting man, I will bet on COL, strictly on probabilities, not on ethics.

@FastMoney, The SC did think of such a thing as a single shareholder controlling the fund, that's why there is this 20% single shareholder limit in both the guidelines and the company's constitution. What they didn't count on is a fund manager controlling different funds, which each fund counting as a single shareholder. So only the 33% parties in concert rule applies, not the single shareholder limit. COL's lawyer just need to ask one simple question, show me where COL's name appears in the shareholders' register? None. Same thing with this foreign shareholding limit, where's this clause in the constitution? Let's see if the company will take COL to court again on this issue? More fees for the lawyers.

@FastMoney If you are familiar with company laws, the company has went to SC 1 round and the courts 3 rounds, all involving lawyers. If there is such a restriction in the constitution already, don't you think any competent lawyers would have spotted it and used it instead of stretching the definition of a single shareholder which got thrown out?

@FastMoney Another thing, don't play poker with someone who has a much bigger bankroll than you, because he can call your bluffs more times than you can call his, and he getting it right just one time can bankrupt you. I used to count cards in BlackJack at Genting in my younger days, but when they changed the rules and I no longer had a slight odd, I stopped, because a short run of bad luck can be a disaster for me, and I can never bankrupt the casino.

@Fast Money Did you read that I have already read the constitution 3 times. Posting misleading announcements on Bursa is a rule infringement, can get the BOD a yellow card or a red card, depending on the severity and or culpability. And if a SC license holder, then the SC may need to get involved, as different rules and laws then apply.

@FastMoney Are you saying the company is talking about a hypothetical foreign shareholding limit that may be applied instead of an existing one already in the books? If the latter, then it can be misleading and confusing to investors reading the announcements, thinking that finally they found a legal loophole to stop COL after failing to get the injunction with their novel legal interpretation of what defines a shareholder beyond the 4 corners of the company's constitutions.

Even though conventional wisdom has not been defined, it is generally accepted that such concepts as modern portfolio theory, M&M Theorem on corporate finance, efficient markets, index funds, FF 3 Factor and 5 Factor models form the core of what I was taught, because that's what came out from the School's research findings.

@fairplay Even though payment of a 'final dividend' requires approval by shareholders at a general meeting, there is nothing to stop the board from declaring an 'interim dividend' at any time at their fancy, like just before the AGM, as this don't require approval. Bursa only recommends that interim dividends if any be announced together with results, but this is not mandatory. So don't rule out the dividend yet. On the same note, stock markets are supposed to discount what is known about a company in arriving at its share price. So according to the announced unique and innovative dividend policy, if the price discount is say 24%, the dividend, if declared, will be at 4%, the rate quoted in the announcements by the company. So if such a dividend is then declared at the expected time (this is where the board can play games with the timing, haha), you think the share price will move up by 4% just because of the announcement? If not (because conventional wisdom says prices only move on new information, not what is already discounted), then when price goes ex dividend, will it adjust downwards by the amount of the dividend, as again what conventional wisdom says it should? Then where is the price change and discount narrowing effect? Maybe the foreign experts imparted some unconventional wisdom to justify their fees?

@FastMoney Yes, DumbMoney is already taken. Smart Money is still available though.

And like they say, making the first million is always the hardest, the critical base to make meaningful compounding of returns, and it is far easier to lose a million in the stock market than to make a million.

With the magic of compounding, it is more how long you hold than how high is the rate of returns. A dollar invested in the year 1 AD compounding at a modest 5% annually would amount to $1.87E+42, i.e. 1.87 followed by 42 0's in 1995. How big is that? A million has 6 0's, a billion 9 0"s, a trillion 12 0's. Don't believe? Enter this into your spread sheet (1+0.05)^1995. Why is this so difficult to make a fortune? because in a geometrical progression, percentage losses far outweigh percentage gains. If you lose 50% of your portfolio in a crash, you need to gain 100% to recover to the previous level, and if you lose say 90% as in the 1929 Wall Street crash, you need to make 9 times that to recover. For some, this might be a few life times, given the long term average returns of the US markets is in the low double digits.

@Patient Investor The rules on SICDA are clear enough, but where in iCap's constitution is the prescribed limit of 20%? I have read through it 3 times and still can't find it. Please enlighten.

OK, sorry, my mistake. My old HP calculator died on me after more than 40 years, so can't calculate the FV of the annuity off hand.

FastMoney, even though that's your name, still you can't make money multiply that fast. Using the rough rule of 72, 10 years to double your 36K, 20 years to quadruple that only gives you 144K lah.

And this comes with an auto-reinvestment plan by default, just leave the dividends in the account. No need to hire foreign consultants to devise discount reducing plan, because there is never any discount nor premium to start with. Even the Ma Cik and the Pa Cik from the kampongs can understand, no need spend money on Investors Day to educate them.

https://mykmu.net/2021/12/23/sejarah-dividen-asb-dari-tahun-1990-2021/

If you are a bumi, you can buy the PNB ASB units, buying and selling price is always pegged at $1, so theoretically, there is no downside risk because you can always sell back the units at the same price you paid for. So price volatility is zero. It is the returns that varies. From inception in 1990 to 2009, the minimum dividend returns paid out annually was 7% before additional bonus units, This includes during the Asian Financial Crisis and the Great Financial Crisis, where the local markets lost a big chunk of its value. PNB must have some of the best fund managers in the world to maintain such a positive track record. If ever there is such a thing as a free lunch, this is it.

Sharpe Ratio gives you risk adjusted returns, returns/volatility.

@FastMoney666 On Risk Adjusted Return, iCap has claimed to be a low risk high returns stock, you agree?

In the 1990's there was only 1 "Index Fund" unit trust available in Malaysia, and what it did was just to invest in the index component stocks, not to track the index itself, and the full sales charges applied.

So after all the intensive research, innovation and consultation with foreign experts, the company has come out with a dividend reinvestment plan as part of the new dividend policy. How innovative and unique is that? I already told them so earlier, what others have been doing all this while. Pay the dividend with new shares. Those who need the cash can sell their shares, simple as that. Wonder how much the consultants are charging the company for this?

As I wrote in my book, for a non-professional golfer, if someone can guarantee you par for the course without trying, just grab it. This is what index fund is offering to the non-professional investors.

@FastMoney If you take the risk free rate at around 3.15%, the average dividend yield of the index from Jul 2009 to Aug 2023 is 3.08%. So any price gains on the index itself will be your market risk premium. Now you see why it is so easy for any fund to just beat the price index without accounting for the dividend yield. https://www.ceicdata.com/en/malaysia/bursa-malaysia-dividend-yield/bursa-malaysia-dividend-yield-ftse-composite-index

@FastMoney666 You really live up to your nick as FastMoney. COL has been around for more than 10 years and yet they are being treated as public enemy No. 1. In comparison, you should be shot on sight then, haha..

@Dehcomic01 A more polite way to put it is statistically, a reversion to the mean. That's why almost all funds will add the disclaimer that past performance is no guarantee for future success. At iCap's launch, they were boasting of historical returns of 20-22% p.a. https://www.icapital.my/files/images/plaunch-media/2.jpg Maybe iCap should also adopt such a disclaimer.

Or just KISS, convert it to a passive index fund, then no arguments over manager's fees and performance. Low cost no frills investing.

@i3lurker Haha, when TTB vehemently refused to do just a 10% share buyback because it will cut his fees by 10%, you think he will take a 50% haircut? That's more than the 40% that shareholders took when they sold their shares at 40% discount earlier. Shareholders will need to do it at gunpoint.

Another common share valuation formula is the Capital Asset Pricing Model (CAPM) taught in Finance 101, where Cost of Equity (Ke) = Risk-Free Rate (Rf) + Beta (β) × (Market Risk Premium).
Here, risk free rate and market risk premium are beyond the control of the investor, leaving only β, the sensitivity of the price of the portfolio to overall market movement, or the systemic risk of the portfolio. A high beta means higher risk and corresponding higher returns in an up market, but also higher downside in a down market. This can be tweaked in two ways, one is by selecting high beta individual stocks to outperform the market, which is well and good in a rising market, but will be the reverse in a down market. Given that in the long run, markets generally go up, a manager with a high beta portfolio can usually outperforms the market index. Another way is to gear the portfolio with borrowings, with lower cost than the cost of equity. With 2x gearing, the portfolio can outperform the index by two times before borrowing cost. In the case of iCap, the cash holding becomes negative gearing, lowering the beta, and the risk/reward ratio, resulting in a lower share price.
A more complete evaluation of a fund manager’s performance, like Morningstar, can include the historical alpha and Sharpe ratio metrics to give a peer to peer comparison, rather than the one size fits all composite index. In the Fama/Fisher 3 Factor and 5-Factor Models, value and small cap stocks can outperform the market, so iCap, being a value portfolio, has a built-in advantage against the KLCI already, before adding in the handicap of dividend yield not included in the latter.
All the above ramblings are for the benefit of the mom and pop investors who are not professionally trained investors. For the latter, not trying to teach grandmothers to suck eggs here, lol. And sorry for the free plug on Fama/Fisher and Morningstar here, they are my fellow alumni.

Here is a very simple explanation for the share price discount. One common measure in valuation of a firm is the economic or enterprise value EV, which is given by the formula
EV = Market Capitalization (Equity Value) + Total Debt + Minority Interests + Preferred Stock - Cash and Cash Equivalents.
In iCap’s case, the EV is the NAV, which are essentially the share portfolio + cash, as the other asset items are not significant. On the other side of the equation, there is no debt and minority interest, so just left with market cap - cash.
The equation can then be simplified as portfolio + cash = market cap – cash.
Removing cash from both sides of the equation (e.g. setting it to 0), we are left with portfolio = market cap. So the cash is discounted from the valuation, like magic, so does the price discount, haha.

Paying a big dividend will not save the share price or discount due to bad results or corporate governance, it is that simple.

It is a company's performance that determines share price and price premium or discount, not dividend policy. The BOD should read up on Modigliani & Miller's theorem on capital structure of the firm to get a better understanding of corporate finance. It is simple enough even for non MBA's to understand. Share price will react to results announcements, but when share price goes ex dividend, it usually adjust downwards by the amount of the dividend, so there is no net gain overall. This is why when they report share price change ex-dividend, it is net of the dividend amount. Basing dividend policy on share price discount rather than profitability is indeed unique and innovative, but does it work? You have the perverse result that when a company makes plenty of profit and share price is at a premium, shareholders are rewarded with the minimum dividend of 1%, but if it is losing money and share price is at a big discount, shareholders get a bumper dividend.

The higher the discount, the higher the yield, there is no incentive for investors to narrow the discount. If I want a 6% yield on my shares, to match the REITs and EPF, the discount needs to be around 35%.

This dividend formula is more reactive rather than proactive in solving the price discount, because it depends on how wide is the discount and then try to reduce it. The expected yield of 4% implies an average share price discount of 25% as per the calculations shown here, not much help! https://1drv.ms/b/s!AgLvGZpm89YsvQntvGsVIZnlQeNF?e=V1kgTs

To further explain the relationship between retained earnings and share price, take the example of a company that is selling at a PER of 10, so $1 of earnings is valued at $10, which for simplicity, is also its NAV. So if an extra $1 in retained earnings can generate $0.10 in new earnings, which will then also increase the share price by $1, at the same PER of 10, a 1:1 change. But if the new $1 in retained earnings can now generate $0.15 in extra earnings, this will produce a share price increase of $1.50 at the same PER of 10, in spite of the NAV increasing by only $1. If the new $1 in retained earnings is now parked in cash, which earns only $0.05, the share price increase is now only $0.50, less than the NAV increase. Now you know why share price discount develops even though NAV goes up.

@Integrity These are the possible scenarios for the $1 of profit retained. 1. If the $1 can be reinvested at the cost of capital of the firm, the share price increases by $1. If the new investment can earn more than the cost of capital, then the share price increases by more than the $1 retained. If the new investment earns less than the cost of capital, e.g. parked as cash, then the share price will increase by less than $1. WB's reason for not paying dividends is that Berkshire can invest the $1 retained better than the same $1 paid out to shareholders as dividends, so shareholders' wealth is better off without the dividend, but shareholder can create his own synthetic dividend by selling part of his share, which has then increased in price by more than the $1 retained.

@FastMoney666 The announcement is targeted at COL, but it being also a shareholder, other shareholders become collateral damage from the share price.

How many days of limit down will that be?

Most probably just another excuse to take COL to court again and get an injunction to stop the latter from accumulating more shares.

While the fund manager is busy hammering out his unique and innovative dividend plan, here is an existing one that has been managing the price premium/discount of a CEF within a narrow range with its built-in mechanism. How do I know? I am a shareholder.
https://www.dropbox.com/scl/fi/qvjjqr9zeo4vtgtaf7lie/Dividend-with-reinvestment-model-post.doc?rlkey=kj5im29kv9n91vk5mg8t9rc1s&dl=0

Re the 'prescribed limit' on foreign shareholdings. This is what the regulation says : "“prescribed limit” means a quota, restriction or limit on the ownership of shares by a foreigner imposed on the issuer by the
memorandum and articles of association or any other constituent
document of the issuer. Where is such a restriction in the constitution?

Do you all remember this quote " if the cash portion of the portfolio is taken out, the performance would have been even better".

Unless you have bought up all the shares available at $2, there must be plenty of others doing that too, including TTB.

@speakup COL would have bought up all the shares available at that price then, but was blocked. So the share price could have been much higher then. Lucky for you to be able to buy at that price all because of the injunction.

Very simple, at the AGM, just ask the board whose decision it was to take COL to court? The designated person's mandate is only on the management of the portfolio. Dispute with the shareholder is within the purview of the Board. All that we have heard about the harm of COL's presence has been from you know who so far. Get the board to explain the basis of the court action, other than the 20% shareholding limit, which was already thrown out at the SC level as without merits.

I have already suggested a dividend with automatic investment plan that is in use in the market with success by other funds. Let's see how much better will TTB's version be after his extensive research and innovation. Just hope it is not another exercise to reinvent the wheel.

Also, SBB is limited to only 10% of a company's share capital, so there will still be plenty of cash left in the kitty for other bargains. Besides, the option is there to keep them as treasury shares, so the question to ask is, why is buying the existing portfolio at a 40% discount not such a good idea, if the reason for the cash hoard is that there are no bargains out there?

@Patient Investor Please read COL's investment philosophy that I have posted earlier, it is self explanatory. I never claimed their intention is never to liquidate it, it is just that so far, it has not indicated any such intention. I cannot read their mind, can only see what their actions are so far.

The 'free'call option is not exactly free after all, there is an opportunity cost attached to it. Sure, it allows the fund to buy, but at what 'strike' price? Buying at 10% higher than 6 months ago is not such a bargain then.

A fund manager cannot have it both ways. When sitting on a pile of cash and market goes down, he can claim how smart he is by playing it safe. If it goes up instead, he cannot turn around and claim how much he has made with his shrewd investments, without mentioning the opportunity cost of the cash reserve.

The whole point of investing in the stock market is to earn the market risk premium. So if the NAV has gone up say 10 million at 60% invested, how much would it have gone up at say 85% invested?