Tuesday, April 03, 2012

Platinum Capital Launches Share Buyback

A lot of Australian closed end funds - known as listed investment companies in Australian jargon - have been trading well below net asset value since the Global Financial Crisis. Some like Platinum Capital (PMC.AX) used to trade at a premium to NAV probably because of accumulated undistributed franking credits.* Some funds have introduced capital management plans to try to boost their share prices. PMC recently announced that it was implementing a share buyback and also it is now posting the daily NAV on its website. I have about 20,000 PMC shares...

* Franking credits are credits for Australian corporation tax paid that are distributed with dividends in Australia. These can be used to reduce investors' personal tax bills. If distributed dividends are less than profits, undistributed franking credits will accumulate. This is what drives the relatively high dividend yield of Australian stocks. They are not included in stated net asset value.

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