March 23:

The SP is quite close the the strike price on the options and it looks like a few of them are getting exercised. All else being equal, more equity means that the the credit risk in the listed convertibles will be lower. It also means that the imbedded option is worth less, but I would argue that was already worthless anyway.

I maintain my view that NCC and NAC are poorly structured vehicles that need some serious scrutiny. The convertibles of both units offer a nice illiquidity premium if you're willing to batten down the hatches for a few years.

Don't touch NAOS LICs with a barge poll.

Both convertibles (NACGA and NCCGA) have a YTM of approx. 10% with very little credit and risk and acceptable duration risk (18 months and 30 months to step up dates respectively). You just have to be willing to endure the poor liquidity.

Dec 23:

1 for 5 Bonus options issue with a strike price of $0.67. These options will decrease the value of the imbedded option in NCCGA, but it was probably worth nothing anyway.

As I've said previously, I like NAOS when I hear them in podcasts and interviews but the results and products they produce are rubbish. Why anyone would pay NTA for this thing? Please don't say the dividend yield....

NCCGA still represents good value but the illiquidity is a bit of a concern. I also can't rule out NAOS letting NCCGA "step up" to a higher interest rate post the first call date in a bit under 3 years time. The reason being that NAOS charge a fee based on gross assets, so repaying the notes will decrease management fees to a material extent. Alternatively, maybe this option issue is NAOS deciding that they'll need to replace funds that will be lost when the notes are repaid...

The above also applies to NACGA, which is in a similar position.

NAOS need to lift their game.

Oct 22:

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...

May 23:

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.

Nov 22:

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.

2020:

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