MGF have made the offer to buy back 500m worth of options (expiring march 2024) at a price of $0.10c. It’s the highest they have traded at….ever.

But it’s a discount to their value so large and depressing I actually don’t want to calculate it. The options give the holder the ability to convert it into a share of MGF at a 7.5% discount to NAV. Problem being is that the shares trade at roughly this anyway.

Magellan have stated they are doing this to cover their balance sheet exposure to this, as they fund the discount.

@Bear77 I'm particularly interested in your thoughts.

I feel like they are trying to reduce the risk of them having to fund that at the current share price, or even worse for them whilst better for us. The actual NAV.

I guess the real question is what do we think the chances of a better payoff later are? I think it’s a 50/50 gamble at best.

I would say that based on the below they have no intention of engaging in this and will be trying to avoid any activism based on realizing the value in any of the options to exercise shares at discount to NAV. I think I read somewhere that I’d this happens they are on the hook for circa 140m.

This from the board today following other closed unit trusts in the process of converting to open class units.

If it went through it would see a rise of about 20% to unit holders pre announcement.

There are also a significant amount of options listed (MGOF) which allows holders the option to convert that option into an MGF unit at 7.5% discount to NAV. So I await to hope that this does go through.

Not sure if this is a case of a broken clock being right once a day, or hopefully more a case of the new management team delivering to us long suffering holders.

At the very least it reverses a long downward trend of underperformance. Hoping this is a new dawn under the new team

“You only lose if you sell”. A quote by Hamish Douglass during his embattled ending at Magellan.

I am just chuckling to myself noting that Facebook, one of the largest Magellan holdings around 18 months or so ago, is up approx 180% since he left. I remember reading as part of the handover process that Nikki Thomas at Magellan who took over part of funds management saying “we like companies that report earnings that start with 10b”, but apparently not enough to keep it in their largest holdings.

Whats that other saying from a famous investor? “Be greedy when others are fearful”?

Oh well. Despite all this it has been nice to finally see some improved performance and uptick in the share price of late :)

I am hoping that @Bear77 might tear apart the annual report?

The only moat that exists on this stock is the persistent moat between its NAV and share price. Always at a discount.

I don’t know why, but I just continue to not be able to bring myself to sell the mongrel, telling myself that at some stage the benefit of having a money manager will protect me on the downside. I know it’s foolish to just keep holding it, but surely at some stage that moat has to close?

Or maybe I need the scrutiny and collective criticism of this forum to tell me it’s never going to happen