Posted by FastMoney666 > 2023-10-07 22:39 | Report Abuse

P.S YTL also buy back a lot of shares prior to 2019 at the market price....I have not summarized those but if company is disciplined enough - they should not buy back when it is "expensive" during this period, they can actually pay cash dividend.

Posted by FastMoney666 > 2023-10-07 22:40 | Report Abuse

We don't have to choose share buy back or cash dividend but it can be share buy back AND cash dividend. Don't fall into the trap of choosing OR

Posted by FastMoney666 > 2023-10-07 22:54 | Report Abuse

In the case of distributing it as share dividend and not retiring the treasury shares, I think the concern of losing controlling interest is addressed. But of course if a major shareholder wants to buy more shares, they can always do so after selling the dividend shares, receiving cash dividend or forking out own money.....worries will never end. 😂😂

Posted by FastMoney666 > 2023-10-07 23:29 | Report Abuse

Will DRP achieve the same effect? I think there are some minor differences - it's done 1 time per year so whether shareholder gets the best price will depend on luck. In share buy back, given the active investing management skill of a fund manager, surely they can time better than a corporate finance manager. 😂😂 You can't provide liquidity when it is needed the most. When you have odd lots, it is quite difficult to sell. 1,000 shares x 0.10 =
$ 100 dividend / 2.54 = 39 shares. but could be same also with share dividend e.g. 1 share : 30 share ordinary share. may get 33 shares.

Posted by FastMoney666 > 2023-10-08 11:09 | Report Abuse

....................

Posted by FastMoney666 > 2023-10-08 11:15 | Report Abuse

Not all share buyback created equals. The catalyst for good share recovery ultimately is rooted on financial performance.

Going back to YTL

RM million**Profit from operations**Profits for the period
2019/3** 596** 12
2019/6** 563**87
2019/9** 583**100
2019/12**556**96
2020/3**549**129
2020/6**336**-321
2020/9**437** 49
2020/12**497**86
2021/3** 463**93
2021/6** 400**-555
2021/9** 587**178
2021/12**421**63
2022/3** 1231**828
2022/6** 499**103
2022/9** 597**123
2022/12**727**196
2023/3**1337**659
2023/6** 1935**1071

Posted by FastMoney666 > 2023-10-08 11:16 | Report Abuse

Prior to Covid 19 that started around Q4 '2019, profits from the operations were quite stable around 500 mln +/- before it started to rocket in the last 2 quarters 2023 with billions of Ringgit. Profits for the periods were quite volatiles but it was a bit more convincing in the last 2 quarters 2023 due to strong performance mainly from its utilities business.

Posted by FastMoney666 > 2023-10-08 11:17 | Report Abuse

Share buy back did help to do damage control while a major shareholder was exiting a big position as they perceived YTL is gone already especially from its hospitality business. But the ultimate catalyst for the share price recovery was due to strong financial turnaround. If it can go to demonstrate another 3-4 quarters with billions of profits, the share price has more legs to run.

YTL Corp is having a very strong balance sheet, as at 30/6/2023, they have more than 11 billions in Fixed deposits and another 3 billion cash and bank balances. For them to spend about 60 million plus in the past few years were just chicken feet.

Posted by FastMoney666 > 2023-10-08 11:20 | Report Abuse

I think iCap people is reading quietly our comments judging from what they posted in the newsletter....they wrote an update on iCapital company analysis. I think we should de-escalate and reduce tension as all have a common interest, we are talking about RM 140 million market cap locked as discounts that big or small shareholders should joint hands to unlocked this.

Posted by FastMoney666 > 2023-10-08 11:32 | Report Abuse

They broke down iCap into 2 distinct phases and kinda acknowledge cash holding was one of issues.

2005 - 2013 NAV compounded at 14.85% and share price 11.67% (Putting a lot of cash to work)
2014 - 2019 NAV compounded at 0.7% and essentially zero return from share price(Average cash level 63.4%)
2020 - Sept 2023 NAV compounded at 5.06% and share price 6.73%(cash has fallen to 26.4%)

Now will have see his stock picking skills already. If 74.6% of the stocks he has picked start to perform, we then can talk about performance and giving a much better catalyst for iCapital share price to run.

Posted by stockraider > 2023-10-08 11:36 | Report Abuse

The good performance in 2023 could be just a mirage mah!

Posted by FastMoney666 > 2023-10-08 11:51 | Report Abuse

My second comment is on his quote on Warren Buffett letter to shareholders demographics, that was written in 1985 -- about 38 years ago....a lot things have changed.

Quote " ......This unusual result has been achieved by a shareholder group with unusual demographics: virtually all of our shareholders are individuals, not institutions" Unquote

That was 38 years ago, today if we Google it.....

% of shares held by all insiders : 38.7%
% of Shares Held by Institutions : 19.24%
% of Float Held by Institutions : 31.27%
Number of Institutions Holding Shares : 1,234

Let's have an open mind.....understand the fear of institutional gang up to do bad things.....the fund manager also can use their other funds to increase the stakes until it becomes a major controlling shareholders. The rest of us can sleep soundly at night....

Or the fund manager can attract the likeminded institutions that focus on Value....

We can learn too from Berkshire for example has Tweedy Browne Global Value Fund.

Posted by FastMoney666 > 2023-10-08 12:04 | Report Abuse

Last comment: we should show restraint in making comments.

For example "While it is the fund manager's responsibility to manage its net asset value(NAV), it is important to note that the share price of a fund is determine by investors, and not a responsibility of the fund manager."

It's not helping. We can spin these sentences and start a war. 😂😂 But we all peace loving people....

Regardless of whatever tools we use, it cannot solve all the problems. Ultimately it's still the stocks that have been picked and will be picked must perform. This is the bottomline.

Posted by stockraider > 2023-10-08 12:10 | Report Abuse

If u manage a close end fund....the Fund manager is responsible for share price mah!

Why leh ?
Bcos close end fund is looking at the mkt everyday mah!

They should compare the cost v benefit of investing in share v putting into FD v Buying back own share mah!

Thus a good fund manager will never neglect his duty to create wealth for its shareholder loh!

Posted by dumbMoney > 2023-10-08 17:00 | Report Abuse

There was once a property trust managed by PNB listed on Bursa that was consistently trading at around 50% of book value, with 35% of it in cash, but the 65% of it in properties were under-occupied and thus underperforming. Clearly it was the fund manager's job to generate better returns to bring up the share price, rather than for the shareholders to do it. Left to the shareholders, they moved to liquidate the fund and ultimately realised full value of the NAV. If you don't want proactive shareholders, management will have to be proactive themselves. Paying out dividends depending on the price discount is reactive, not proactive.

Posted by dumbMoney > 2023-10-08 17:02 | Report Abuse

@FastMoney and Fairplay, please check your private message box.

Posted by FastMoney666 > 2023-10-08 21:17 | Report Abuse

https://asia.nikkei.com/Spotlight/Market-Spotlight/Japanese-companies-embrace-shareholder-activism-as-never-before

Posted by FastMoney666 > 2023-10-08 21:18 | Report Abuse

"It was a dramatic change for a company that used to be totally unresponsive to shareholder demands," said Oki Matsumoto, CEO of Monex Group, a leading online broker. Cross-shareholdings are widely seen by activists as contributing to low capital efficiency.

The move sent DNP shares to a 17-year high and up about 50% so far this year. The plan challenges the company to lift its stock price, which has stayed below its book value for the past 10 years.

Posted by FastMoney666 > 2023-10-08 21:26 | Report Abuse

In such a conservative culture embracing shareholder activism is unprecedented. 😂😂

Posted by FastMoney666 > 2023-10-08 21:44 | Report Abuse

When sentiment is negative and grip with extreme fear, dividend alone cannot help. Let me give you an example, ICBC(1398.HK) listed in HKSE, it's one of the largest banks in the world & well managed, ROE consistently above 10% but it has a bad label with it.....no need for me to elaborate more la.

Year *** Dividend (HKD) ***
2019 ** 0.2953
2020 ** 0.2874
2021 ** 0.3199
2022 ** 0.3432
2023 ** 0.3292

Nice growing dividend trend, right? If you translate that into yield will be almost 9-10%

Price in 2019 was about HKD 6. Last traded was HKD 3.60. Total return was -14%

Price/Book 0.35

If would have bought an ETF that mimics Hang Seng Index 2800.HK, it's a physical ETF with regular dividend payments.

Year ** Dividend HKD
2019 ** 0.93
2020 ** 0.75
2021 ** 0.67
2022** 0.64
2023 ** Not yet declare full dividend...Ist interim 0.10 but let's assume it's same like 2022 0.64

Price in 2019 was roughly HKD 27, last traded HKD 17.84.....Total return = -20%

ICBC may still outperformed the index but the point is dividend alone is insufficient to drive higher price/book value of which is very common measure in evaluating banking stock.

Posted by FastMoney666 > 2023-10-08 21:50 | Report Abuse

To be honest, if I'm a dividend investor seeker, there are many competitive stocks out there...so iCap can only be attractive by driving capital gains either via NAV growth a lot faster or narrowing the discounts.

Posted by FastMoney666 > 2023-10-08 22:19 | Report Abuse

We should also be aware of a major shift with the recent advanced economies inflation that had driven up much higher interest rates. In return, the higher risk free return is raising the bar for active fund managers with many competing products. Retail investors are getting more and more knowledgeable each day .... My child is a lot smarter than me. They ask difficult questions. I personally hope that we can look into all these inputs in a positive light. We are not instigating shareholders revolution but hope to see iCap is a reflection of progressive Malaysia we all can be proud of, as the fund manager always inspiring his followers.

Posted by FastMoney666 > 2023-10-08 22:21 | Report Abuse

By the way, please do not shoot the messenger. 😂😂

Posted by JohnD0ugh > 2023-10-08 22:35 | Report Abuse

The Malaysian stock market has not been performing for a long time. While many are still stuck being unwilling long-term investors of the overhyped gloves and semiconductor stocks since the pandemic, let us see how ICAP, to some, a boring and unexciting stock, has performed and what is up for its share owners in the future.

Cash is key.

Cash is the only raw material which can generate capital gains and income for ICAP. Asset allocation plays an important role in the fund's performance. When the market is overvalued, it is the strategy of ICAP's fund manager to hold more cash and wait until the market is undervalued with plenty of opportunities to invest.

While it is the fund manager's responsibility to manage its net asset value (NAV), it is important to note that the share price of a fund is determined by investors, and not a responsibility of the fund manager.

Since the pandemic, ICAP's cash level has been dropping steadily as it has been making additional investments. The fall in cash level implies an appreciation of its NAV.

This is observed when its NAV appreciated 5.06% and its share price grew 5.80% during the pandemic up until 27 Sep 2023. Both have outperformed the MSCI Malaysia index, which plunged by 4.66%.

It is ICAP's strategy to invest only in undervalued stocks.

For example, ICAP became one of Capital A's largest shareholders, accounting for 9.71% (RCUIDS and warrants inclusive) of the fund's NAV as at Sep 2023.

Being South-East Asia's largest low cost carrier which was one of the most severely impacted industries during the pandemic, Capital A not only survived without a single cent of grant from the government, but has transformed and expanded further.

With such an undervalued stock portfolio that ICAP is holding, the prospects of the fund is indeed promising.


i Capital Newsletter Volume 35 Issue 9

Posted by FastMoney666 > 2023-10-08 22:35 | Report Abuse

😨😰😭☹

Posted by FastMoney666 > 2023-10-08 23:10 | Report Abuse

Hi John, Thank you for sharing...I considered myself lucky because upon returning again to iCap with a small position, I was in the 3rd bucket but someone just warned me it could be a mirage. May that warning NOT come true😁, just on the lighter side. There are also many others from the phase 2, may their luck will change soon. Jia Yu. 😉

Posted by FastMoney666 > 2023-10-09 11:39 | Report Abuse

I reflected on a question by dumbMoney's post.
>>>>
The bone of contention here is not the portfolio or how it has been managed, but more on the discount, and the fact that shareholders sells on discount prices, but managers get paid on full NAV value. But then, the problem arises when the discount is fixed and COL leaves and look for discounts elsewhere, then what is going to happen to their block of shares?
>>>>

The block of the shares will have to taken by somebody else, could be small inventors and can also be big investors……future investors.

I got it now, it’s a governance system and how do we institutionalize a discounts management system. Shareholders can come and go, there should be a set of EFFECTIVE systems or policies that run forever.

My thoughts/comments:

The fund manager is responding. The answer is instituting a dividend policy, payout policy is 1% base rate+8% discount between NAV and average 4 weeks iCAP’s share price. Give the investor an option: take the cash or reinvest them. Sorry, I disagree.

Share buy back mechanism should be considered. My personal strong view: trigger it when iCap is selling at irrational discounts. Don’t interfere when it’s in the reasonable range like 10%, leave it to the market forces to deal with that. Our aim should NOT be zero discount. Provide liquidity at the time of distress(it’s kind of like a “national team”).

A discounts management system must not be at the expense on the fund growth. The fund manager always has an implied goal of 15% in the way he speaks and writes, but I will be extremely happy with 7-10%. Definition of fund growth = portfolio invested in shares + cash AT 7-10% CAGR. I can agree to that, no qualm about it. We don’t have to argue % of portfolio and cash, but it must be taken as 1 body when measuring the performance. I care only the results not the allocation weightage.

Fund liquidation is the last option. IT SHOULD NOT BE USED unless we are in a HOPELESS situation. What is my definition of hopeless: Indifference management and NAV is persistently underperforming the benchmark index and iCAP share price is selling at irrational discounts for a long time.

We are tough on the issues not on the person. 💗💗

Posted by remus > 2023-10-09 15:54 | Report Abuse

refer to iCAP latest div policy, if price & NAV stay at current level 2.54 & 3.40
means div = 1% of 2.54 + 8% of 0.86 (3.40 - 2.54) = 0.1028 or DY 4.05%, correct ?
means if buy now at 2.54 (with NAV maintain), investor can keep getting 10.28sens div while waiting for potential capital gain when the price catch up the NAV?
what's the catch?

Posted by dumbMoney > 2023-10-09 16:01 | Report Abuse

@remus No catch, just that under conventional wisdom, the share price will drop by the same amount of the dividend when it goes ex-dividend, so there is no net gain. The only possible gain is the elimination of the discount and management fee and income tax (individual shareholders don't pay tax on interest from bank deposit, companies do) on the surplus cash transferred from the company to the shareholders hands.

Posted by dumbMoney > 2023-10-09 16:06 | Report Abuse

This is the bird in hand theory. A dollar in the hands of the shareholder is better than it being kept in the company, which does not apply to WB, because it is the reverse then.

Posted by i3gambler > 2023-10-09 16:48 | Report Abuse

A dividend with 10% discount DRIP is not a real dividend,
but rather a mini scale bonus issue, an useless exercise and wasting admin work cost.

Those who:
1) want to have extra units, will go for DRIP.
2) want to have cash, will also go for DRIP, and then sell the extra units in the open market.

Only those who own very small quantity of units will opt for cash because DRIP option need stamp duty of RM10 (if not mistaken).

Posted by FastMoney666 > 2023-10-09 16:52 | Report Abuse

Investors should be aware that issue under discussion is eliminating irrational discounts via dividend policy....the expected result is if after implementing this hypothesis....it will reduce irrational discounts(30-40%) to normal discount 10% or a possibility of premium on iCAP share. By intuitions, what do you think?

Posted by FastMoney666 > 2023-10-09 16:57 | Report Abuse

Assuming you are being ask to vote in AGM - Yea or Nay 😂😂

Posted by i3gambler > 2023-10-09 17:07 | Report Abuse

Only the following actions will reduce the discount:
1) Share buy back whenever the discount > 20%.
2) TTB himself buys whenever the discount > 20%.
3) ICAP's fans buy whenever the discount > 20%, for this, if ICAP pay real dividend without DRIP, it will help.

Posted by i3gambler > 2023-10-09 17:16 | Report Abuse

The big discount has been there for many years, unit holders will be very reluctant to buy more when the discount is around 20%, worry that the discount could bounce back to 30-40%.

Posted by dumbMoney > 2023-10-09 18:16 | Report Abuse

The value of the firm is the discounted value of its earnings capacity. You determine the earnings capacity, the value of the firm will adjust itself, whether it is premium or discount to NAV, as simple as that. So you want to fix the discounted share price, you raise the value of the firm. NAV is just a historical book keeping entry. Lots of listed public companies are trading at a fraction of their NAV or book value, so why should iCap be different? This is because iCap's asset has a market price that everyone can look up in the newspaper, unlike the book value of a glove factory. Here's the catch, you can have the market value of the portfolio shares, but your reported earnings can only include the dividend received. Appreciation or depreciation of investment holdings go into reserves, i.e. only realisable upon sale of the investment, then only it can be booked as profits. So it is like holding Top Glove shares at its height, the NTA may look nice, but it is not money in the bank until it is sold. Same with iCap. One can only count NTA when it is realised, not its current market value. So the discount is what investors apply in their own valuation of the realisable value of the portfolio. The bird in hand theory.

Posted by dumbMoney > 2023-10-09 18:23 | Report Abuse

The NTA is a theoretical value if the company is liquidated today, which as things stand, is not going to happen in the immediate or near future, so whenever there is uncertainty, you apply a discount factor to it. Again, Finance 101.

Posted by FastMoney666 > 2023-10-09 18:25 | Report Abuse

Who will stand to lose if they don't go for DRIP with incentive say 10% price discounts?

Here is the data based on 2023 Annual Report Analysis of shareholders

No of shares ** # of holders**%
1-99** 132**4%
100-1000** 1,022**32%
1,001 – 10,000** 1,183**37%
10,001 -100,000**640**20%
100,001 to less than 5% of issued shares**221**7%
Total shareholders**3,198


There are 2,337 or 73% of shareholders hold 10,000 shares and lesser....like i3gambler said, those with small quantity usually will elect cash dividend....those with higher quantity will more likely to adopt DRIP. So it will favor those big holders with increasing ownership over the years while the tiny guys/gals of 2,337 / 73% of the shareholders will see their ownership to reduce.

Take another vote again, do you think this will increase the liquidity of the stock over time? 😂😂

Posted by FastMoney666 > 2023-10-09 18:44 | Report Abuse

😂😂Ohh....not really..... only a few hundred of investors +/- 900 of the shareholders(27%) may adopt DRIP, the rest may go for cash and see their ownership diluted(not in absolute but % wise)

Posted by FastMoney666 > 2023-10-09 18:47 | Report Abuse

rich gets richer, poor gets poor......pure capitalism and not common prosperity....not because it was unfair but that is how people's will make their choice given how the question being framed to them.....

Posted by FastMoney666 > 2023-10-09 18:52 | Report Abuse

The devil is in the details... Ensure tiny guys/gals sign up... Unfortunately all shareholders have to suffer a bit per i3lurker😂😂

Posted by dumbMoney > 2023-10-09 21:25 | Report Abuse

While Berkshire is similar to a CEF holding a portfolio of businesses, it has been able to trade at a premium to book value because of accounting rules. Berkshire's assets are usually held as subsidiaries or associates. With the former, the accounts are consolidated, i.e. the earnings is taken into the consolidated accounts. If as associates, i.e. more than 20% equities holdings and board representation, it can do equity accounting and take in its share of the earnings. In iCap's case, the shares are all investments, so only dividends received are reported as income, and unless the investees are paying the majority of its earnings out as dividends, dividends are only a portion of the earning capacity of the portfolio investments, and for those shares not paying a dividend, there is no income to report. So iCap is an asset rich, but income poor operations, So in terms of dividend paying capacity from reported income, there is a limit to what iCap can do, other than to draw from retained earnings from the past, Remember that the 1.5% management expenses have to be deducted from dividend and interest incomes before they can be reported as earnings, on normal PE basis, it is at a handicap compared to other income based investments. So investors in iCap have to rely on realised capital gains for the bulk of their returns, and increased book NTA is not earnings until realised, and hence discounted. This is where the divergence between fund management and investors interest arise. The former looks at NTA for their fees, the latter look at reported earnings and dividend, which can be negative and zero respectively, while NTA increases if the investee companies pay very little dividend during the period.

Posted by FastMoney666 > 2023-10-09 22:08 | Report Abuse

Yearly, typically iCAP will have about 4 million interest income(sitting on about 120 -140 million cash) and ranges 3-7 millions dividend from the shares it owns.....so earning capacity is about 7-11 million, it just nice to cover the management fees, your AGM party fees, income tax and etc...for most of the time. To pay about 14 millions on its investment about 300 million plus, it needs to realize about 4% gains/yearly.

I guess the selling point for iCAP will be dividend paying fund with long term capital gain to attract people to pay more. How much more, we all know price has inverse relationship with yield. 0.10/share dividend on purchase price of 2.54, dividend yield will be about 4%. If they chase the price up to 2.8/share(then we are narrowing the discount to 20% based on NAV of 3.53 ) but then the dividend yield will drop to 3.5%....will people willing to do that comparing to other alternatives? Ya may be possible from this perspective, if they are hungry enough and have great faith in the fund manager for the future capital gains.

Posted by FastMoney666 > 2023-10-09 22:21 | Report Abuse

Ladies and Gentlemen, boys and girls, so I would like to welcome more iCap fans. We are not thrashing for the sake of thrashing.....we are all just regular guys working from 9 am - 5 pm...try to earn 2 bowls of rice a day. If you are an iCAP fan, don't have to be offended, just drop by regularly .... here is just another outlet for your to hear alternate views.....we are no Zhu Ge Liang....just regular naughty stooges. Have a nice day & good night. 😎

Posted by dumbMoney > 2023-10-09 22:57 | Report Abuse

@FastMoney If I were to offer to sell you a million $ worth of quoted shares, some profitable and paying dividends, some losing money and some just marking time, with the condition that you have to hold them until I give you permission to sell them, what price would you be willing to pay me, or what discount would you want from me? This is exactly the same situation with iCap shares. Shareholders have no control on the realisation value of the portfolio in the future. The NTA is only an indicative value if liquidated now.

Posted by dumbMoney > 2023-10-09 23:02 | Report Abuse

Or put it another way, if you have been holding this $1 million worth of shares, with no income from it for the past 10 years other than 2 dividends, and if I were to offer you a price that you can still make some profit, even though it is at a discount to the market, would you sell?

Posted by FastMoney666 > 2023-10-09 23:29 | Report Abuse

@dumbMoney - great explanation on why there will always be a discount to NAV/NTA because the investor need some margin of safety for something has not be realized. Who knows tomorrow the portfolio will drop 20% or may appreciate 10%. That is why usually 10% will be quite normal in a normal market situation.

Posted by FastMoney666 > 2023-10-09 23:39 | Report Abuse

My post was directing to what will be the narrative iCAP will sell to new investors or fans to pay for more to close the irrational discounts from 30% to 20%. To close the gap is even a harder sell. Selling the story from dividend yield + future capital narrative is possible. But between this strategy and sharebuy back, I prefer sharebuy back as it is more flexible and don't have to die die commit to pay fix amount of funds in terms of dividend. Human is a very funny creature, if you receive money year in year out, suddenly you stop or reduce the money, they will throw tantrum and send the share price to irrational zone again. Is there a bullet left to bring up the price. ? Was trying to analyze their earning capacity vs how much they need to realize the gains or even sell off some dogs to pay yearly dividend that they committed.

Posted by FastMoney666 > 2023-10-09 23:39 | Report Abuse

**To close the gap to 10% will be even harder

Posted by FastMoney666 > 2023-10-09 23:50 | Report Abuse

Just to inform iCAP fans that we will not have a fixed mind or Not Invented Here syndrome, if there an idea coming up, we will examine it and not thrashing for the sake of thrashing. We won't reject the idea of dividend idea to close the discounts gap......it is possible to some extend to sell the story of dividend yield. But then, when newbies on-board become oldbies, what's next then? Just like old shareholders original were full of enthusiasm eventually will start selling(due to many reasons), sending it to such an irrational discounts zone. What's next, offer more sweets asking them stop crying? Don't cry, give you higher dividend ya... 😂😂 This is my long answer to my this morning short answer, I disagree.