Or better still, stop wasting time and money fighting COL in court, just let the funds buy to their heart's content. The SC and the court so far has decided that no one has breached the 20% individual shareholding limit.

@TheContrarian, of course, we all do. The question is, if iCap is so good and management is buying, why not let the company buy back its own shares too? So many other listed companies are doing that.

The comparisons are made for this specific period solely because that is the only time the Dow Jones data are available readily on line, so it is entirely incidental, not on purpose. For different time periods, the comparisons will be and can be quite different.

Just to make it clearer, iCap share price is added here, in brown https://1drv.ms/b/s!AgLvGZpm89YslnnPbk3lijgSid-G

KLCI only adjusts for capital changes of the component stocks, i.e. bonus, splits, rights etc, while a total returns index also include reinvested income, i.e. dividends. There is no easily available total returns index for Bursa, but for a while, there is the Dow Jones Malaysia Total stock market total returns index for the period up to July 2017. This computes the total returns of the total market, instead of just the selected index component stocks, both capital changes and reinvested dividends. A comparison gainst the iCap NAV and KLCI has been graphed here https://1drv.ms/b/s!AgLvGZpm89YslnheH4Pml_EpVbmN?e=fIjVkA

The numbers above don't line up properly when cut and pasted. They are under two columns, KLCI and the Emas Index. The link is here https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=FBMKLCI&IsManual=false

For any other listed company, shareholders' returns are measured by share price difference plus dividends received, if any. NAV is an academic number as long as it cannot be cashed in. Why keep comparing against the market index which excludes dividends declared by the component stocks? That's around 4.31% for the KLCI and 3.77% for the Emas index, which if added back, will prove the fallacy of superior iCap share price performance against the index.
Index Characteristics
Attributes FTSE Bursa Malaysia KLCI FTSE Bursa Malaysia EMAS
Number of constituents 30 312
Net MCap (MYRm) 492,360 700,485
Dividend Yield % 4.31 3.77
Constituent Sizes (Net MCap MYRm)
Average 16,412 2,245
Largest 66,532 66,532
Smallest 3,444 15
Median 11,170 310
Weight of Largest Constituent (%) 13.51 9.50
Top 10 Holdings (% Index MCap) 62.64 44.03

This is how upside potentials are calculated from price discount to NAV:
A 30% discount means 70% cost, 30% discount = 43% upside
A 35% discount means 65% cost, 35% discount = 54% upside
A 40% discount means 60% cost, 40% discount = 67% upside.
At $2.17 market price and 3.37 NAV, price discount = 35.6%

@WingsOfMercy Thanks for the comparisons. If it is any consolation, there is no performance fee payable by iCapital like in the other funds mentioned. Otherwise, such fee is payable from a zero base, i.e. from the first dollar of NAV increase over the high water mark. So for funds that are placed in FD, the 10% performance fee is payable on top of the management fee, all without any management effort. The huge trade off is that the units can be redeemed at NAV any time after 1 year without the back end load redemption fee of 5%. If an iCapital shareholder sells his share in the market, the NAV discount accrues to the buyer, but if the company buys his share through a share buy back program, the discount is captured by the company and accrues to the remaining shareholders as an increase. How many shares are out there in the market where you can buy and sell (i.e. cancel) for an immediate gain of 50%? There are now mainly 2 classes of shareholders in the company. Those who are locked in because they cannot bear the loss of the price discount, and those who are attracted by the deep price discount. Even though they may appear to be on opposite sides, they are actually on the same page, both aiming for the share price to close the discount gap.

Another thing that shareholders may not realise is that while the 1.5% p.a. management fee is based on NAV, the value to shareholders is based on market price, and with the current discount at around 40%, the effective cost of the management fee is around 1.5 times the nominal amount, or 2.25% p.a. So the price discount has a double whammy effect on shareholders.

A lot of shareholders are now locked in involuntary bondage because of the deep price discount. They are not happy with holding the shares, but to leave now means giving up on more than $1 in NAV at the current market price, so have no choice but to stay and hope for things to improve. Do the BOD care? They pass the buck to the manager. Like in the present political situation, if voters keep voting for the incumbents, they only have themselves to blame. These shareholders are TTB's safe deposits, just like immigrant workers, with their passports held by the agent/management, in bondage.

And this was how the whole self liquidation movement of CEF's in Singapore started https://1drv.ms/b/s!AgLvGZpm89YslnanZSYxH-UUabGT

After persistent 'harassments' by foreign fund Laxey Partners over price discount, UIS, the last of the Singapore big bank managed CEF finally threw in the towel and went for self liquidation. https://links.sgx.com/FileOpen/UIS-ANN-ConveningofEGM-11Dec2013.ashx?App=ArchiveAnnouncement&FileID=47631&AnncID=0455C6DDAEFEFF8A48257C2200304CA7

In more developed markets, passive funds have overtaken active funds in market share because the latter have not outperformed the former after costs. Singapore used to have 4 CEF managed by the Big 4 Banks (reduced to 3 later following the merger between OUB and UOB), but one after another, they all went into voluntary delisting because they have no solutions to persistent price discount to NAV. Same for Amanah Small Cap Fund and the two AHP property trusts here. iCap will be the last of the Mohicans, once foreign vulture funds smell blood in the water.

@Integrity - According to the latest 2021 30 largest shareholders list, the local investors have 25 million shares, foreign shareholders have 29 million shares, so the swing votes depend on the smaller shareholders out there.

@Integrity - As long as shareholders can only receive market price and not NAV when they want to realise their investments, shouldn't share price be more important than NAV as a measurement of fund performance? NAV is only realisable upon liquidation of the fund, otherwise, it is just an nice to know number, you can't take it to the bank.

@Nepo For the record, all that COL has done is to vote against the election of certain directors at AGM, which is a basic right of every shareholder. They have not indicated any intention to "fire TTB and liquidate iCap". It is just someone's paranoia and scare mongering. If they had wanted to do so, could have done it already any time after acquiring more than 10% shareholdings for its funds under management.

COL has been around for more than 10 years, and yet is not welcomed, how? Not long enough?

@integrity....COL is the only party (not shareholder) that can call for an EGM to change the BOD any time, which is an existential threat to TTB. The present court case is academic as even if won, the cap is still at 20%, so won't make any difference. The next threshold is the 33% parties in concert rule when a MGO must be made. By which time, the battle would have most probably been lost already, so this is essentially just a rear guard action to prevent this.

The previous injunction was given on the undertaking by the company to pay damages arising from it. If the share price goes up while COL is prevented from buying, that's potential damages if the company loses the case.!

The company, or rather, TTB using company's money, to appeal against the High Court's decision that in law and the company's own constitution, COL is not a shareholder. It has yet to explain why is it against the shareholders' interest to have foreign funds, not COL, as shareholders? It is going to be an expensive and futile attempt to argue the point that COL is a shareholder, as defined by the four corners of the relevant documents.

@observatory COL already has more than 20% and may buy more after the injunction is dismissed. Only needs another 10% to neutralise this 43 million block.

Like Biden would say, regime change?

How can the company want to label COL as a shareholder when the latter's name does not appear anywhere in its share register and does not fit the definition of a shareholder in its constitution? The $30K is only for costs for the other side, what about its own legal costs todate? If COL decides to sue the company for damages for wrongful injunction, there is another cost to pay.

Conventional wisdom says hold stocks for the long term, because returns beat most other forms of investment and stock markets generally come back higher the next market cycle, but not to hold on to the same stocks that have no future, like Kodak and Polaroid in US. The current market leaders in US are not there 20 years ago, having replaced names like GM, GE and Sears. Parkson is a very good example here.

https://www.dropbox.com/s/3p4uih30cxqz1s1/iCapital%20price%20discount.pdf?dl=0 This is the chart showing the historical performance of the company's share price, NAV and price/NAV, adjusted for reinvestment of the two dividends declared in the past. From just a small 5% discount way back in 2009, it has widened to around 40% now. Should management be concerned? Or as someone has tried to explain, this is due to the potential overhang depressing the price if COL decides to sell down its accumulated position if they lose the judicial review sought by the Company.

Dr. Neoh Soon Kean's Dynaquest was started in 1980, compared to Capital Dynamics in 1989, so who is the first independent fund manager in the country? And that certainly did not make TTB the only Malaysian fund manager to have experienced all those stock market cycles claimed by him. https://my.linkedin.com/company/capital-dynamics-group

@RealValueInvestor The 1972 local bull run partly funded my post graduate studies, so that quantified my 'experience'.

https://events.icapital.biz/event/the-investment-talk-that-you-should-attend-now/
He was born in 1954, which means he was only 19 years old in 1973, during the first oil crisis. So how can he claim to have experienced it while still in school or university as a student. Was he already a fund manager or serious investor then? Otherwise anyone born before 1973 can also make such a claim on experience.

Nowadays, the only reason why an investor would pay someone a management fee, plus perhaps a performance fee on top, is for superior returns. If the manager is unable to do that, may as well just invest in a low cost index fund and save all the trouble. Superior returns are measured on total dividends and or realisable gains, not on paper, as otherwise plenty of deep discount stocks listed on Bursa can also claim to have outperformed the market as measured by NAV. Performance track records can always be massaged, by choosing the most favorable period for comparisons, so there is no assurance that a hot fund manager can remain hot forever, or worse, fudge by comparing against a price benchmark index and not the total returns index that includes dividend returns...

@Dimiri Ivanov COL is not an activist investor. They may vote on resolutions such as election of directors, but they will not be the prime mover for such actions like proposals to remove directors or liquidate the fund. Someone else has to do that.

So now you know why the company is so against COL as a shareholder, because this is the only one who can call for an EGM any time to pass a resolution to change management, and there is nothing the company can do to stop it. That's why it went to court, but the limit is 20%, so no help there even if they succeed in stopping further purchases.

@kisord To propose a resolution at an AGM requires shareholders with 1) at least 2.5% of the issued share capital or 2) at least 50 members holding not less than $500 each, as per Section 323 of the Companies Act. To propose the resolution at an EGM, other than AGM would require 10% shareholdings, which at this moment, only COL can do so.

@kisord Look at your i3 Messenger for PM.

@kiscord Also, you asked why no shareholders ask to wind up the company. TTB's answer to that is the discount is due to shareholders actions, so it is their problem, not management's. If they want to sell the shares at a discount, it is entirely up to them. But fund manager's job is to increase shareholders wealth, isn't it? So proactive fund managers should try to reduce the discount instead of washing their hands completely and leave it to the shareholders to sort it out.

@kisord To get the fund liquidated, the first step is to change the board of directors, as TTB has previously threatened to resign if someone else gets elected without his approval. If he no longer gets the support of the board, his days are numbered. New directors can be appointed two ways. One is for COL with their block of shares, to call for an EGM to vote on board changes. This can be done any time as they have more than the required 10% shareholdings. The other way is for any shareholder to nominate candidates for election before the AGM. There is no shareholding requirement for this, other than sufficient notice given to the company before the AGM date. You want to bell the cat?

@kisord There are a bunch of large local shareholders who are content to just sit on their shareholdings for the past 8 years without doing any thing, and getting no returns except for a 2 sen share price appreciation on paper. They are the core long term shareowners that the company welcomes, and not some foreign funds who want to increase their shareholdings to take advantage of the discount with a view to its liquidation. These two blocks are about even in numbers, so the fate of the company is in the hands of the retail investors, the majority of whom are die hard believers in TTB as the Malaysian WB wannabe.

For those who understand the implications of the M&M theory of dividend policy, there is no difference between a shareholder receiving a 20 sen dividend and having the share price adjust downward by the same amount, or selling 20 sen worth of his shareholdings for cash. Similarly, for the company, there is no difference cash wise between paying the dividend or buying back the same amount of shares in the market, except for one crucial difference, the share price discount on NAV. With the share buy back, the NAV backing per share is improved, i.e. after spending the same amount of cash, shareholders wealth is better with the share buyback. One of the author of the theorem got his Nobel Prize in economics for this important insight. How can management not know this? For iCapital, a share buyback is not to support the share price, but to improve the NAV per share, which is the main objective of the company all this while, and from that, to indirectly reduce the share price discount.

Obviously management of iCapital has not heard of the irrelevance of dividend policy on share price as expounded in the M&M theorem, which most finance students would be familiar with.
https://efinancemanagement.com/dividend-decisions/modigliani-miller-theory-on-dividend-policy#:~:text=Modigliani%20%E2%80%93%20Miller's%20theory%20is%20a,the%20valuation%20of%20a%20company.
The only impact here is because of the deep discount on cash if kept in the company instead of paid out as dividend, where it is no longer discounted, plus no longer subject to management fee.

Sure, after the share price went ex-dividend and dropped by 20 sen, are shareholders any better off? The only gain is that they no longer have to pay management fee on this amount and get the full interest if placed in bank deposits instead of left with the manager.

From the above, total investor's returns is measured by (realised price - cost price) + dividends received. NAV don't figure in this equation because it is academic unless realised, and in the example of IBM vs Standard Oil, even though IBM outperformed in share price returns, when dividends are included, it lost out to slower growth Standard Oil. iCap has all this while, used NAV as the yardstick when compared against the market index, and ignored the dividend yield of the Index components. Is this a fair comparison?

https://klse.i3investor.com/blogs/kcchongnz/2015-08-21-story-h53230644-What_drives_the_return_of_your_stock_investment_Growth_or_Value_kcchongnz.jsp

https://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/2013-11-02-story39934-Fama_3_factor_model_vs_kcchongnz_portfolio_return.jsp

From Efficient Market Hypothesis came Fama-French 3 factor and 5 factor models, with the former incorporating small cap and value as factors contributing to a portfolio's performance. A fund manager's alpha may be just due to these two factors, the basis of smart beta investing, not how hot shot he actually is.

TTB once said, you don't need to go to the University of Chicago to be an analyst/fund manager. He is smarter than all the Nobel Prize winning finance professors there, what do they know about value investing when their Efficient Market Hypothesis says it is hard to out perform the market consistently, which TTB has claimed to be doing.

The shares have reached the stage where the only buyers are those attracted by the deep discount and are in no hurry to buy as a long term investment. Those looking to profit from a narrowing of the discount have long given up. There is some improvement on the discount ex dividend because the cash distribution is no longer subject to the deep discount, as shown in the table here, average of price discount for 5 weeks before and after dividend, suggesting that dividends are good for the share price when deeply discounted.
Date Price NAV P/B Aver. P/B
19/1/22 2.10 3.33 0.63
12/1/22 2.18 3.55 0.61
5/1/22 2.24 3.61 0.62
30/12/21 2.24 3.46 0.65
23/12/21 2.16 3.44 0.63 0.628
--------------Ex dividend -----------------------
16/12/21 2.23 3.64 0.61
9/12/21 2.18 3.59 0.61
2/12/21 2.17 3.58 0.61
25/11/21 2.18 3.73 0.58
18/11/21 2.16 3.76 0.57 0.596

I have done an analysis of the share movements of the top 30 shareholders of the company from 2013 to 2021 https://www.dropbox.com/s/hssn5zn73r0ey4u/icapital%20shareholders%20list.xls?dl=0 The only big collections are by the foreign funds managed by COL, while the locals hardly came in to buy. What happened to the die hard followers? Without foreign buying, if the injunction is not lifted, good luck with the share price discount.

Just to clarify, I am not suggesting that these stocks are bad, just don't think they fit the traditional 'value' label.

Value investing means looking for margin of safety, that's what John Dough has been posting here all this while. At 60x PE, what's the margin for error on the downside? Using the much used rule of thumb valuation of PER/Growth ratio of 1 as reasonable pricing, this requires a 60% future growth rate. What if there's another MCO lockdown?

@Nepo That's what the analysts and BOD's were doing for the glove companies during the runups and share buybacks. See what happened?