Portfolio (May 21) +3.4%

Yellow Cake 17.4%

MLX 8.9%

VTG 7.2% (Increased holding)

BSE 7.0%

KAR 4.6% (sold out by early June 21)

Cash 50%

NGE LIC monthly update. 

Increased holding in VTG and decreased it's holding in KAR and they had fully sold by early June.

NTA before tax is $0.872 so still considerably higher than the current share price of $0.675.

The AGM for NGE, an LIC with a market cap of only $23m was today.

The chief investment officer (CIO) David Lamm holds 11.05% with Raphael Lamm holding 8.76%.  The portfolio manager holds 3.53%.  So management are aligned in terms of thier shareholding.  

Performance for CY20 was disappointing at -8.0%.  YTD in 2021 is 7.7%.  Since inception the return is 12.1%.  

NGE has a potential future tax benefit of $12m or $0.33 per share of which only $1.9m ($0.052 per share) has been recognised at 31 Dec 20.

If the fund manager grows its FUM in the future then the performance fees will need to be revisited. Short-term incentive for the CIO and Portfolio manager is  10.0% share of growth in NTA before tax subject to a high water mark.

Employment Services Agreement (ESA) with David Lamm with fixed annual remuneration of $240k pa.  

ESA with Adam Saunders with annual remuneration of $130k pa.

Directors continue to buy on market with both directors making significant purchases.

As the LIC is very illiquid, the significant director purchases have pushed the share price to 12m highs.

However it is still trading at a huge discount to the pre-tax NTA of $0.843 (@ 30 Apr 21) excluding the potential future tax benefit of $0.33 per share.  Current price is $0.65.

Significant insider buying

10 May 21: Lamm +110,000 for $71,500 [3.61m] @ $0.65

10 May 21: Saunders +275,000 for $173,159 [1.28m] @ $0.63

27 Nov 20: Lamm +550,000 for $286,000 [3.5m; 350,000] @ 52c

28 Aug 20: Saunders +128,474 for $66,697 [959,888]

20 Aug 20: Saunders +88,629 for $44,758 [831,414]

Considerable change in the portfolio in 1 year.

Sold down KAR and new positions in MLX and VTG.  Cash is still at 47% which is very high. 

If you are high conviction, you better get it right. 

@ 30 Apr 21

YCA 16.6% (Uranium)

KAR 13.2%

MLX 7.9%

BSE 6.7%

VTG 3.9%

Undisclosed 2.0%

Silver ETFs 1.8%

U 0.6%

Cash 47%

@ 30 April 20 - Exposure to oil and Uranium.  Highly concentrated portfolio

KAR 25.9%

Yellow Cak plc 21.2%

BSE 4.3%

HZN 1.8%

Cash and other 46%

NGE February 2021 update.  Pretax NTA of $0.81 +7.6% for the month.  The most significant change in the portfolio in the past year.  Holding in KAR has been halved to 18.8%.  New position in MLX at 8.2%; VTG 3.3% and Silver ETFs at 1.2%.  Net cash and other still at 44%.

Good to finally see some portfolio action and good monthly performance.

NGE still trades at a significant discount to pre tax NTA of $0.81.  It popped this morning +17% on the update to $0.65.

[Disc: I hold but sold down a part of the holding.  I am looking to exit the holding eventually but at closer to NTA.  Initially bought for the steep discount to NTA but have lost patience with the inaction from the managers]

NGE is a high conviction concentrated Listed Investment Company (LIC).  They had poor CY20 with a return of -8%.

Annual report commentary:-

Admits to being too cautious in 2020 averaging 43% cash from late Apr to end of 2020.

Overly long oil going into the pandemic.

Year end Portfolio:

KAR 38.6%, Yellow Cake 17%; BSE 7.3%; Cash 36.2%.

Post year end taken a position in MLX, 3 silver ETFs, a small home builder and VTG.

I like their investment philosophy (see below), but in the end most of their big bets didn't payoff in 2020.  If you make such big bets then you better be sure that you get it right.  Otherwise don't take such big bets.

I hold only because they still trade at a significant discount to their NTA of $0.753.

Mangement hold 13% but sometimes I think they use NGE as their own private investment vehicle rather than running for the benefit of the other shareholders. 

Investment Philosophy

1. Target strong returns with adequate margin of safety

2. Hold a high conviction, concentrated portfolio

3. Invest based on Fundamental Analysis

7 Aug 19: @ 31 Jul 2019.  Highly concentrated portfolio with resources prominent.

Karoon Energy (KAR) makes up 41% of the portfolio 

United Company RUSAL (HKE - Hong Kong Exchange) at 23%. 

Yellow Cake plc 13%

Horizon Oil (HZN) 7.4%

Base Resources (BSE) 5.9%

7 Aug 19: LIC Australian and International small cap investment.  Very concentrated portfolio.  Trading at significant discount to NTA of $0.914 (31 July 19)