I honestly like NAOS, whenever they speak on podcasts I find them level headed and very well informed, but come on guys....
More than 4% of NTA going out the door every year and it's excluded from the performance fees that they report.
What's worse, is that if things do come good and they shoot the lights out, existing shareholders will get diluted by the convertible notes which are convertible at $1.15.
Notes (NCCGA) YTM is about 9% at the moment, if you have a time horizon of 3 years + it makes no sense to hold the equity...
SP is starting to come down to my valuation from last year. Holding NCC over the past year would have been a diabolical decision.
NCCGA are still good value on a risk adjusted basis, provided you're willing to hold to maturity. I hold IRL.
NAOS need to stop reporting gross performance (from memory they even exclude interest on the convertible notes) and focus on shareholder outcomes. That means putting all capital management initiatives on the table.
The MER (management expense ratio) is through the roof on NAOS' small LICs.
NCC has battled recently but nccga (the illiquid but listed convertible notes) look like really good value to me, with a YTM of over 8%. The recovery rate would only drop below 100% if NTA went to $0.1-$0.2 per share. The embedded option is worthless at this stage for valuation purposes.
There is further upside if NAOS decide to buy the notes back, whether that be on or off market.
Has outperformed it's benchmark since inception (even after fees) and I like the strategy they employ. It's problem is that it's small, has high fees and there are about 5,000,000 options still yet to be exercised at a price of $1.02. On top of that there are a bunch of convertible notes out on the stock with a conversion price of $1.15 which would put a dampener on things if performance continues to be strong. Interested