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BKI Investment Company Limited (BKI)

Discussion in 'Listed Investment Companies (LIC) and Trusts (LIT)' started by austing, 17th Sep, 2016.

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  1. austing

    austing Well-Known Member

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  2. austing

    austing Well-Known Member

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    Last edited: 18th Sep, 2016
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  3. unwillingwillis

    unwillingwillis Member

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  4. austing

    austing Well-Known Member

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    Yes, I owned it in the early days but got frustrated with the high exposure to New Hope coal and eventually sold. Silly me. As I've said a number of times my biggest mistakes have been "selling" ones!
     
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  5. trinity168

    trinity168 Active Member

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    upload_2016-9-18_21-24-36.png

    Close to 52 week low. Buying opportunities?
     
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  6. Anne

    Anne Member

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    Next week there will be a couple of events: Bank of Japan decision on rates then US Fed rates decision and NZ rates decision so there might be more movements to keep an eye on
     
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  7. austing

    austing Well-Known Member

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    Based on adjusted NTA since previous month's end it's at a bit of a premium. But if you're buying it as a long term holding paying a few cents more for it is unlikely to matter too much.

    I'd like to see it closer to $1.50 as a start. But I already have a reasonable holding.

    Given the US central bank's impending decision this week and upcoming US election God knows what the market will do. My crystal ball is unreliable unfortunately. If I had to take a guess there may be the possibility of a correction in the next month or two. But a guess is all it is!
     
  8. twisted strategies

    twisted strategies Well-Known Member

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    austing,

    i have a modest holding in this , bought recently ( cum-div. )

    your $1.50 looks possible ( but not certain)

    somewhere close to $1.50 would have me considering adding extras as well .

    how the shareholder's react if the market corrects will be important hear , it may become a de-facto safe(r ) haven in a rout .

    i find boring and disaster-resistant attractive in this LIC ( i hope the market thinks differently )
     
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  9. twisted strategies

    twisted strategies Well-Known Member

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    austing ,

    all the clever investors have some regrets , they make errors and learn from them ( as best they can )

    without saying you should buy it ... watch NHC , it is diversifying in some careful but interesting moves
     
  10. bingomaster

    bingomaster Active Member

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    I'm not sure how to post ASX updates here, but BKI just made an interesting announcement. They are externalising management, even though it's the same management personnel. One of the reasons given was to preserve their low MER. According to the announcement, they are capping the MER at 0.1%. This is very, very low and even lower than it was, from memory!
     
  11. austing

    austing Well-Known Member

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    Uummm, very interesting. Will take a look. First WHF, now BKI.

    All sounds a bit strange. Will reserve further comment until I've investigated and / or others here can offer further info.

    Here's the announcement:

    http://www.asx.com.au/asxpdf/20160926/pdf/43bg9ht9mysy6b.pdf
     
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  12. Il Falco

    Il Falco Active Member

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    Quick look through, its the management fee at 0.10% , not the MER. Sounds like a possible stitch up, what are the other costs being borne by BKI currently (need to look through the annual report).
     
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  13. Il Falco

    Il Falco Active Member

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    There is a difference between a management fee and MER ;)
     
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  14. austing

    austing Well-Known Member

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    Ah yes. All company related fees INCLUDING DIRECTORS RENUMERATION, accounting, auditing, admin, share registry, insurance and brokerage fees are to be paid by BKI NOT THE NEW EXTERNAL MANAGER.

    The external mgr's main expense are travel, research and analysis, marketing and office expenses.

    So yes it's a bit of a stitch up. But that said the overall MER is likely to continue to be competitive. However as FUM grow "CONTACT" owners (including SOL) are likely to be better rewarded compared to if the LIC management was kept in-house.

    I wouldn't be surprised also if CONTACT does like WHITEFIELD and use the management company to offer other services to facilitate multiple streams of income into a single structure.

    Uuummmm suddenly the GENUINE oldies like AFI and ARG are looking more honest!
     
    Last edited: 26th Sep, 2016
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  15. pinkboy

    pinkboy Member

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    Management fee is going to be ~1 million pesos per annum (paid monthly). Still a good chunk of cash out.

    pinkboy
     
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  16. Il Falco

    Il Falco Active Member

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    The big winner is Will Culbert. And good on him. The Millners must like him and want him in the stable.
     
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  17. austing

    austing Well-Known Member

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    Last year's "internal" expenses for BKI were $1.479 Mil of which a reasonable amount will still be paid by BKI in addition to the 0.10% external management fee of around $1 mil. So I doubt it's going to be as cheap as the current internal MER of around 0.16%?

    But keeping this all in perspective it's still damn cheap compared to the new breed external Mgrs.
     
    Last edited: 26th Sep, 2016
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  18. bingomaster

    bingomaster Active Member

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    Oh... thanks for clarifying that @Il Falco - i just glanced at it quickly
     
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  19. trinity168

    trinity168 Active Member

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    Apologies for being a pain but, I don't understand what the implications are, when it looks like it is the same folks running it?

    Thanks.
     
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  20. austing

    austing Well-Known Member

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    The main issue is usually fees. External Mgrs tend to have noticeably higher fees than internally managed LICs. Internally managed LICs employ their own staff and all profits go to shareholders. In this case the MER may reduce as FUM increase.

    With an external mgr there is a high probability of more of the profits going to to the mgr given their fee is fixed. As FUM increase the fee can't reduce as it is set in stone as per the management agreement.

    However the fee being charged by BKI's new external mgr is quite low. My guess is that under the old internal arrangement the MER with increase in FUM overtime may have reduced to say 0.12 - 0.14%. However under the new agreement it's MER is probably more likely to sit around the 0.16 - 0.18% range. Time will tell, I may be completely wrong.