[VIDEO ANALYSIS] Is Hunter Hall Global Value Fund a hold or sell?

 

William O'Loughlin:

Joanne had a second part of her question that was, "I have Hunter Hall Global Value Fund, HHV, can you recommend whether to hold or sell."

 

Shannon Rivkin:

Yeah. This has been a real part of this incredible Hunter Hall story which we've been talking about a little bit in the report, which started with the founder and Peter Hall talking about his leaving the company and then selling 20% of the company at a dollar versus the share price at the time of $3.10. There's been a huge saga since then about what was going to happen with the company and it's funny at the time when he first talked about leaving and selling, he suggested that he was looking at either winding up the company, which is ridiculous because he's not the controlling shareholder nor is he the only person that can run this company. This is a company with almost a billion dollars funds under management, very loyal customer base, so that was ridiculous.

 

 

We've finally gotten through that saga now to the point where it looks like they're going to have a merger with another high quality company, funds management company Pengana, which I think is a really nice tie-in between the two. Soul Pattinson will be the major shareholder in that group after getting the remainder of Peter Hall's shares. What's been going on in the background is the Hunter Hall Global Value Fund which is a listed investment company managed by Hunter Hall.

 

 

Funnily enough I think what's been going on with this probably was the catalyst for the huge saga that went on with the fund manager itself. My expectation is that if you actually look ... What's happening with the Hunter Hall Global Fund is that Wilson Asset Management, which many of you would know, has taken a position in Hunter Hall and is now trying to get them to offer a buyback at NTA saying that the underperformance of the fund is unacceptable.

 

 

Looking back at some of the commentary from Peter Hall, it looks like there's been a huge fight between him, potentially the Wilson Funds, and the board about how this has all been handled. He made some comment about letting a tiger into the cage as far as Wilson Funds on to the share register of this. Anyway, that's just a bit of a back story. Now as far as what to do with Hunter Hall, I think this is one of the stranger moves from Wilson as far as ... This thing is trading at a very small discount to NTA so to come on and to agitate the change and say offer an opportunity to get out at NTA, it's kind of bizarre because many listed investment companies out there trade at or below NTA. That's quite common and I think usually this is the sort of situation you only see if you're talking about significant discounts; 10%, 20%, 30%.

 

 

At those levels I think it's completely understandable but right now if I was holding HHV and I was seeing an NTA 1% or 2% above the current share price, it really wouldn't bother me. Probably, I think if you're holding HHV, don't think about the buyback because I think it's kind of silly, to be brutally honest. Think about now what the change of management and ownership of Hunter Hall as a fund manager means. Peter Hall traditionally was an ethical investor, as I said he had a big following. I think probably the change into joining within Pengana will remove that emphasis. If that's a factor for you and you're always into the ethical investing side of it, then you probably have to reconsider your position.

 

 

Going forward it's a little bit hard because they don't have ... It's not going to be the exact same fund management team because Peter Hall is not there, but undoubtedly they'll build a great culture of strong fund managers there. There's no reason to think the long-term performance of this won't be good and you're getting a small discount to NTA if you're in there right now. I can't say I have a problem with it, probably the fact that there's been all this fireworks at the top is a little bit concerning and maybe performance might not be so great in the short-term if there's been that distraction. I certainly don't have a problem with it and as I said, the buyback option, I don't get it.

 

William O'Loughlin:

Okay.

 

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