Monday, March 12, 2018

Out of IPE

I sold my 700,000 shares of IPE.AX on Friday and today at 13.5 cents each. This was after the company announced that due to a potential performance fee the net tangible assets of the fund were likely 13.8 cents a share. They will pay out next month a 7 cent per share distribution that is about half unfranked dividend and half capital return. If I had kept my shares I would have got a $A49k distribution with about $A11k of tax payable on it this year. By selling now and taking a capital gain, because I still have accumulated capital losses, the income tax is effectively deferred to a future year - by bringing forward the date I will have to pay capital gains taxes again. This probably doesn't make strict financial sense as I "threw away" about $2,000 to avoid paying $11,000 in tax this year rather than a year or two later, which implies a high discount rate. On the other hand, it's quite likely that the fund will have other expenses etc before we would get a final distribution from the fund.

On the other hand, Mercantile (MVT.AX) - Ron Brierley's firm - are still buying. They probably won't have the same tax consideration that I do and they must see some upside in the shares still. It will, therefore, be worth having another look at this stock again after the ex dividend day later this month.

Lifetime profits over the ten years I've been invested in IPE, starting with just 6,000 shares have been about $A31k with $A20k in gains since the beginning of this year.

I also recently sold out of Clime Capital (CAM.AX). Their performance has been subpar in recent years. Instead, I have increased my holding in Cadence Capital (CDM.AX).

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