The thing abt making a decision out of an investment dilemma is that you worry a lot about how ,if the result turns out to be the opposite of what you predicted, you will have a verq nasty feeling. Thats how i’m feeling abt MIIF right now.Currently, it stands at around 91 cents. Thats nearly 7% from my previous purchase at 97.5cents. Yield has gone up to 9%.
You would have heard all the debate on MIIF’s cashflow. I have looked into it as well and have to agree that it is quite a minefield to navigate through their report. Leisureworld, one of its late acquisition, gets revenue sources from the canadian based on certain benchmark, that makes it even harder to read. Folks can take a look at some of the comments we can gathered at sgfunds,chaunelnewsasia and wallstraits. The behavior of wallstraits have been interesting.
Selling of MIIF after holding it for only a while, that don’t give you ample confidence does it? Then again, their recent addition has turned out to be patchy as well.
A few questions that we asked ourselves comes to mind:
1. Does MIIF suffer from forex risk.
2. The fee structure brought abt by parent Macquarie selling its assets to MIIF is a drag on earnings
3. Cashflow that is hard to figure out to vague
4. Not much institutional demand due to it not being a temasek linked reit or div yielder.
I believe it is the aggregate of all these factors that causes the difference bet MIIF and other dividend yielders. When your cashflow is clearcut, it makes valuation easier, true value easier to get. Right now, I can only remember Vickers covering MIIF. Higher transparency can improve subscripticn and reduce its volatility. We hope the management does take Tanjm’s advice seriously.
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