As the net asset value of Barramundi Asset Management increased 22 percent this year, the company decided to position itself defensively. This move has been met with investor disappointment. While the net asset value has risen in the past, the firm’s returns have fallen short of expectations. But investors should not give up on the company yet. It has many assets that could deliver superior returns. After all, it has a long history of high returns.
Barramundi’s net asset value rose 22 percent
While the NZX-listed fund Barramundi has enjoyed a strong stock performance in the second half, its investment manager, Fisher Funds, hasn’t got carried away. The fund’s net asset value (NAT) rose 22 percent in the three months to September’s end, creating a $16 million surplus for the fund. Moreover, the fund’s NAV increased a further 7 percent to October 15.
It has been positioned more defensively
Shares in NZX-listed Barramundi Asset Management have rallied strongly in the second half of the year, but investment manager Fisher Funds is not getting carried away. The fund’s net asset value rose by 22 percent in the three months after its balance date, creating a $16 million surplus. Barramundi shares dipped two cents to close at 77c on Monday.
Moreover, the fund’s share price has been declining steadily over the past five years. Five years ago, BRM shares were trading at 71 cents. Today, they are trading at 59 cents. This is despite its artificially propped up dividend yield, which will remain at a large discount to its underlying asset. Barramundi’s management is overpaid and incompetent, and has dug itself a hole in which it cannot escape.
It has delivered disappointing returns
The stock market has suffered from a lackluster performance this year, with the S&P/ASX 200 index dipping below the S&P/ASX200 index. Barramundi is subject to the FIF regime but a large part of its portfolio is exempt from the rules. As a result, N.Z. shareholders aren’t concerned about partial application of FIF rules. It’s worth noting that BRM trades near NTA, and its shares are priced at a discount to the assets backing them. The fund is currently tax free and pays out a dividend of 2% per quarter.
The fund is positioned more defensively after reducing its stake in Arrow Energy and increasing its cash holding. This will be put to work in new investments and help close the gap between the NAV and share price. The company’s shares closed down two cents on Monday. Despite this, the company still seems to be cautious based on its recent performance. However, the stock is still a good option for investors who seek to profit from the Australian stock market.
