AFI reported today
• Revenue from operating activities (excluding capital gains) was $126.8 million, 3.7% up from the previous corresponding period.
• Profit after tax attributable to members was $113.6 million (down 7.0% on last year’s $122.1 million). This figure includes unrealised gains on certain investments in the investment portfolio that are defined as ‘puttable instruments’ or non-equity investments.
• Net Operating Result after tax was $105.5 million, 8.6% down from the previous corresponding period.
• The interim dividend is 8 cents per share, fully franked, the same as last year’s interim dividend. It will be paid on 24 Feb 2012 to ordinary shareholders on the register on 9 Feb 2012 and the shares are expected to commence trading on an ex-dividend basis on 3 Feb 2012.

A number of changes were made to AFI's portfolio during the half. The largest acquisitions were in Ansell, ANZ, BHP Billiton to replace the stock sold into the off market buy back last financial year, Woodside Petroleum, National Australia Bank, InvoCare and Telstra Corporation. Ansell is a new company to the portfolio. The Company disposed of its holdings in Foster’s Group and Eastern Star Gas as a result of takeovers. It also sold its entire holdings in Commonwealth Property Office Fund, APN News & Media and Fairfax Media.

In our view there is likely to be further uncertainty in the coming months as the political and economic events continue to play out in Europe. The Australian economy continues to benefit from investment in mining and energy projects although the remainder of the domestic economy is wrestling with the impact of a strong Australian dollar, relatively high interest rates, hesitant consumers, rising input costs and unemployment.

Recently AFIC successfully completed an issue of unsecured convertible notes which raised over $220 million. This provides AFIC with funds to add to its investments when the market provides opportunities to buy quality companies at what we see as historically low valuations. The first interest payment on the 6.25% Convertible Notes issued in Dec 2011 will be $1.2158 per $100 Note, payable on 28 Feb 2012.

AFIC plans spending spree - Eric Johnston
January 26, 2012

AUSTRALIA'S most influential listed investment fund is preparing for a $220 million sharemarket spending spree to take advantage of beaten-down stock prices.

Australian Foundation Investment Company, which has more than $4.3 billion under management and counts sharemarket doyen Bruce Teele as chairman, believes that with stocks trading at a deep discount after nearly two years of losses, it is almost time to start buying.

The Australian sharemarket has made a strong start to the year, gaining more than 5 per cent even as economic troubles in Europe continue to weigh on global sentiment.

AFIC managing director Ross Barker said retail investors were still holding back from equity markets because they were ''shell-shocked'' by the steep losses since last April.

''We're cautious about the short-term situation, but we're really a long-term investor,'' he said.

''Our approach is to take advantage of the negative market sentiment to pick up some things for the medium to long term which we think will be good for the portfolio in that time frame.''

AFIC, Australia's largest listed fund manager, was last month rushed by investors for a $223 million convertible note raising. The notes trade on the Australian Securities Exchange and are similar to debt instruments in making an annual payout.

AFIC yesterday reported a 7 per cent drop in first-half profit to $113.6 million. While it generates most of its income from dividends in the shares it holds, most of the drop in earnings came from a fall in the market value of the fund's investment portfolio.

AFIC declared an interim dividend of 8¢ a share, fully franked, flat on the same time last year.

AFIC's mostly blue-chip portfolio fell 7.8 per cent in the half-year, compared with a 9.7 per cent fall in the S&P/ASX 200 Index.

Read more: http://www.smh.com.au/business/afic-pla ... z1kVPaHB5C

benthonic wrote:enjoy your petites vacances

I did. Short and wet but enjoyable nonetheless.

benthonic wrote:Platinum Capital PMC

Investment crossholdings a Tax Office nightmare
Ian McIlwraith
February 7, 2012

Australia's listed investment groups, presiding over a pool of $16 billion of other people's money, now have almost $800 million invested in one another. [Like 5% is a worry? Must be a slow news day - Judd]

When your existence is all about chasing yield, it is probably inevitable that you buy shares in like-minded companies (or the ''diversified financials'' sector as they are classed by index-hugging investors) - but it is looking decidedly ''clubby''.

For Insider, it has the feel of one of M.C.Escher's famous artworks: Australian Foundation Investment Co has $30 million in Diversified United Investment Corp, which owns $12 million in Washington H. Soul Pattinson, which owns $106 million of Milton Corp, which has $1 million in Argo Investments, which has $112 million in Australian United Investment Co … you get the picture.
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And just think what it must be like at dividend payment time as the order is reversed - AUI sends a cheque to Argo, which sends one to Milton, which sends one to Soul Patts etc. Best of luck to Michael D'Ascenzo and the Tax Office team trying to work out who paid the tax on all those franked dividends flying around.

Argo Investments, which reported its half-year results yesterday, is (sort of) the odd one out because it has no real stablemates.

It makes up for that by having more than $280 million of its near $4 billion portfolio parked in like-minded groups. Its largest stake is in Milton Cor, where it has $130 million of stock, followed by the AUI stake. Those two stakes are among Argo's 10 largest equities holdings. It also has more than $30 million in DUI.

By way of comparison, it has a minuscule holding in fellow Adelaide company Santos, which although valued by the market at $13 billion, commands just $55 million of Argo's money, or 1.6 per cent of the total portfolio.

Strangely, though, none of the other investment companies seem to return the favour. Argo's biggest shareholder has less than 1 per cent of issued capital, three out of five of its biggest investors are related to the deputy chairman and one-time stock-picking executive director, Robert Rich.

Milton is itself a member of a very tight circle of companies run by Sydney's Millner family. Robert Millner last year enjoyed some unwelcome publicity as institutional shareholders in members of his group, that apart from Milton includes Washington H. Soul Pattinson and Brickworks, tried to force a break-up of the interlinked shareholdings to crystallise gains.

There is no denying that the Millner-run companies have been tidy performers over the years; it is just that fund managers (themselves under pressure to justify their fees in shabby equities markets) reckon there is considerable value that can be unlocked.

The other two big investment groups, both of which grew out of two of Melbourne's most conservative stockbroking firms - JB Were and Potter Partners - also have healthy stakes in other members of their families.

With DUI and AUI, which grew out of the late Sir Ian Potter's cash accumulating skills (and retains many a Potter relative on its register), the former has $30 million of its stock owned by the latter.

The once-were warriors of investment Australian Foundation owns about $32 million of the spin-out Djerriwarrh Investments and another $16 million in Mirrabooka. Djerriwarrh also has $8.6 million in Mirrabooka.

Read more: http://www.theage.com.au/business/inves ... z1lfE4Cjfg