Kingfish hooked by sharemarket turbulence

Listed investment vehicle Kingfish has posted its third consecutive six-month period of losses.

The fund, which is managed by Fisher Funds, lost $7.84 million in the six months to September 30, down 28% from its $6.11 million loss in the same period last year.

It won’t be paying an interim dividend, but will consider paying a final dividend after the full year results are tallied.

Kingfish invests in domestic growth equities.

Its net asset value – the value of each share, backed by the price of the underlying investments at balance date – was $1.19 at September 30 and was last reported at $1.05.

At that point the share price was trading at 82 cents, a 23% discount to NAV, compounding the woes for investors.

Fisher Funds managing director Carmel Fisher says this is particularly disappointing as the portfolio itself is discounted by around 30% based on average analysts’ company valuations – thus trading at a “double-discount”.

The board has renewed the company’s share buyback program for a further 12 months, to October 31 next year, to try to reduce the discount to NAV.

Ms Fisher says it is impossible to predict what the market will do in coming months but quality businesses are always the most sought after in a share market rally and “the Kingfish portfolio is chock full of such businesses.

“The big unknown is timing and while many commentators are suggesting that a market bottom is nigh, it is impossible to predict the exact timing,” she says.

Ms Fisher also says that in a credit crisis the biggest victims are those businesses that require access to debt to fund their operations or their growth, and those that have high debt levels.

“The Kingfish portfolio focuses on smaller growth companies, that generally do not have high levels of debt.

“This is obviously critical in periods of economic recession, where any downturn in earnings can significantly increase the risk profile of the company,” she says.

Within the Kingfish portfolio, good performers were Delegat’s and Wakefield Health while Pumpkin Patch and Rakon disappointed.

Ryman Healthcare makes up Kingfish’s single biggest investment, at 18% of the portfolio, followed by Mainfreight (16%), Metlifecare (11%) and Freightways (9%).

On Friday, Fisher Funds announced that Lloyd Morrison’s Morrison & Co had bought a 26% stake in the fund management business.

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