Forum Topics HM1 HM1 Bull Case

Pinned straw:

Added a month ago

New Yorker Saba Capital, best known for picking fights with BlackRock and Citadel over under-performing funds, has been quietly expanding its Australian portfolio, its disclosures show.

Saba is sitting on stakes in Chris Mackay’s $2 billion MFF Capital Investments; the circa $392 million Platinum Capital; Geoff Wilson’s $769 million WAM Global; and two LICs from overseas fund managers that trade on the ASX – WCM Growth and NB Global Corporate Income Trust.

The activist fundie remained below the 5 per cent mark at each of the five LICs, meaning its arrival has gone unnoticed on Australian shores. That’s despite it being spelled out in the disclosures of its two NYSE-listed Saba Capital Income & Opportunities Fund vehicles as of January 31. It made a splash when it popped up above the substantial shareholder mark last year at VGI Partners Global InvestmentsPengana International Equities and the Hearts and Minds Investments LIC.

No prizes for guessing what is the common thread among the new entries. As of January end, MFF was trading at a 15.4 per cent discount to the underlying portfolio value, while Platinum Capital was at 15.1 per cent and WAM Global was at 13.2 per cent. The WCM and Neuberger funds were at 11.3 per cent and 8.4 per cent respectively. Funnily enough, the fox in the henhouse is not immune to trading discounts either.

We’ll hazard a guess Platinum would be the one most nervous about the New Yorker’s arrival at its LIC, which returned just 5.1 per cent to MSCI World’s 21.4 per cent last year. As for Saba’s already public targets, it appears to be concentrating its efforts at Hearts & Minds Investments, where it has built a 9.4 per cent stake as of January 10.

UlladullaDave
a month ago

About time someone got activist on these LICs. A lot of them are run like glorified lifestyle businesses. Once you have raised the money it's captured and won't go anywhere.

As for HM1, if I want to donate money to charity why in God's name would I do it through that thing?

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100% agree. This thing is structured so poorly in terms of how they construct the portfolio.

FGG and FGX have a much better method for constructing the portfolio and donating to charities but are both still performing badly.

Just put your money in something with low fees and donate 1% to charity yourself.

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UlladullaDave
a month ago

It's just a marketing exercise that lets fund managers take the glory of "we donate our fees to charity" when it's the investors who are actually ponying up the cash.

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Scoonie
a month ago

Hi UlladullaDave, it gets a little more opaque than just being a marketing /socialising exercise for the in-crowd at the Fund Manager Club.  As an example, HM1 in November 2022 changed their investment mandate away from listed entities, or in their fund manager speak: “…... we amended the portfolio investment guidelines for the Core Portfolio to provide additional flexibility to access the expertise, style and investment performance of our Core Fund Managers”.

Exercising their expertise, one of the investment committee managers thought it would be a splendid idea if HMI shareholders invested in the unlisted Guzman y Gomez takeaway chain. The investment manager had previously loaded up his own fund with them, and clearly felt compelled to spread the joy.    So HM1 shareholders are now the proud owners of an undisclosed amount of this little pearl.  See links below.   Assuming you are a HM1 shareholder it must make you wonder just where your charity dollar is ending up.  

Or better still, is the wonderfully reassuring words from the Chairman’s own lips at the HM1 2023 AGM:  “The change (to include an unlisted mandate) permits HM1 to gain exposure to the highest conviction strategies of our Core Fund Managers, whether via listed or unlisted securities. The change is expected to provide performance and diversification benefits whilst retaining the essence of a high conviction portfolio.” Yeah right.

GYG: Guzman y Gomez puts IPO plans on ice as losses widen to $3.9m (afr.com)

Guzman y Gomez sent CEO Steven Marks to ‘cult-like’ life coach, ex-manager Greg Creed alleges in US court filings against the Mexican-themed restaurant chain (afr.com)



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"Exercising their expertise, one of the investment committee managers thought it would be a splendid idea if HMI shareholders invested in the unlisted Guzman y Gomez takeaway chain. The investment manager had previously loaded up his own fund with them, and clearly felt compelled to spread the joy. "

yes @Scoonie well said! how kind of them to spread the joy. :)

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