Trading Recommendation: Very short term only if discount is at least 4% greater than recent (1 to 6 months) average. Minimum discount advised is 20%. Trading only when buyback is operational.
Actual Performance:
In its Feb 2019 monthly report FPC reports a pre-tax NTA of 1.0138
FPC provides no benchmark comparisons because its performance has been woefully below any relevant benchmark.
Using Excel's CAGR formula I've computed the actual Inception to Date (ITD) performance using the IPO NTA minus estimated IPO costs ($1.075), 28 Feb 2019 Pre-tax NTA ($1.0138), Dividends (0 cents), Franking (0 cents) and Option value at expiry (0 cents).
Actual Compound Annual Growth Rate for Pre-tax NTA: -2.98%
Actual TSR Comparison with relevant benchmark ETF:
Using Sharesight and a performance report period of 22 Mar 2017 to 28 Feb 2019 you can accurately determine like-for-like Total Shareholder Return annualised performance between investing in the FPC IPO and investing in the most relevant index fund.
- FPC has an annualised TSR of -11.39% which is truly appalling
- NASDAQ:ACWI has an annualised TSR of 12.64%
Performance Impact on NTA Discount/Premium:
The massive difference between the ACWI TSR of 12.64% and FPC's -2.98% NTA CAGR has driven the discount down to 15-20% and the FPC TSR to be -11.39%. And that's with virtually all investors not having done their own NTA CAGR calculation and comparing it to the ACWI return for the same period..
FPC would need sustained NTA CAGR performance at least matching NASDAQ:ACWI to see this discount close. What is much more likely is that its NTA growth will continue to underperform and thus the discount logically should increase.
Fees:
FPC's prospectus cites the following fees:
"Management Fee
In return for the performance of its duties as Manager of the Company, the Manager is entitled to be paid a Management Fee payable monthly in arrears equivalent to 1.25% per annum (plus GST) of the Portfolio Value calculated at the end of the month (Management Fee).
Performance Fee
In addition to the monthly Management Fee, in return for the performance of its duties as Manager of the Portfolio, the Manager is entitled to be paid a quarterly Performance Fee of 20% (plus GST) of the difference between the Portfolio Value at the end of the relevant period and highest Portfolio Value of any preceding period (Performance Fee) allowing for adjustments based on any dividend payments or capital issues."
These fees are 1.375% management fee and a 22% performance fee (determined quarterly not annually) applying to the entirety of any improvement in Portfolio Value above the high water mark.
This performance fee is obscenely high and the discount applied to FPC should be 5% higher whenever this performance fee may be applicable (i.e. Portfolio Value is not well below high water mark).