Thursday, January 4, 2007

LIC Portfolio Update

Welcome to the first portfolio update of the Australian Investing Blog's LIC Portfolio (read more about it's origins here).

I am making the first purchase for the portfolio. I am using the NTA figures from the end of November 2006 as the December figures aren't available yet.

The first purchase is LinQ Resources Fund (ASX:LRF). The discount to Net Tangible Assets after tax of LRF was -31.79% at the end of November. I will be buying 4,878 shares of LRF at today's closing price of $1.025 for a total of $4,999.95.

The following is taken from the company's website.
LRF is an actively managed resources fund, which specialises in investments in small to medium resources companies both in Australia and overseas. The Fund may invest in companies at all stages of development from exploration through to production, however the Fund typically focuses on investments in companies that are in the later stage exploration and economic evaluation phases, between discovery and completion of bankable feasibility studies. Companies in these stages are often valued substantially lower than producers. The Fund aims to provide both yield and capital growth for its investors.
The website was experiencing technical difficulties when I looked at it so I couldn't delve any deeper than the first page. However, looking back over the LRF's announcement to the stock exchange over the past year, there does not seem to be anything untoward.

Although this is basically a mechanical exercise, I wanted to make sure there were no skeletons in LRF's closet. While my analysis was far from comprehensive, there appear to be no drastic problems with the company. The discount to NTA is probably a function of the large amount of un-invested funds, and investors looking through the resources cycle and maybe allowing for a loss in value for some of LRF's holdings.

This post should not be considered investment advice. This portfolio is hypothetical in nature. Professional advice should be sought before making any investment decision.


Paul Smith said...


I just wanted to say unfortunately in LIC's (as is the case in most investments) you need to delve into the data a bit more. I had a look at LRF and unfrotunately they have used dodgy figures to persuade you to purcahse them. The NTA discount is only 19% not 31% as indicated after options are taken into account.

I have written a followup to your blog post on my own blog at

Still this is a good idea and you should follow it through ... just make sure the data you get has options taken into consideration.

Good Luck Investing.