Fancy buying $1 worth of assets for 80 cents, from a prominent fund manager, through an ASX-listed company? That opportunity is available to investors every day through Listed Investment Companies (LICs), but is not as clear-cut as it seems.
Consider Westoz Investment Company, a Perth-based LIC. Westoz traded at an 18% discount to its pre-tax Net Tangible Assets (NTA) in March 2017, ASX data shows. Simply put, Westoz is worth almost a fifth less than the market value of its assets.
Sounds like a bargain, right? Not so fast. Westoz has underperformed its benchmark index over five years and has a bias towards West Australian small-cap stocks. With the WA economy underperforming its East Coast peers, investors have marked down Westoz.