Question 1: Do you have anything on participating in the Caltex off-market share buyback?

Answer: Thanks for the question. I note that the capital component of the buyback is only $2.01, meaning a very large fully franked dividend around $22.

On that basis, the off market buyback should be attractive for low/zero rate taxpaying entities (such as an SMSF in pension mode). It will be unattractive for high rate taxpayers.

If you accept the buyback, you are (of course) selling your shares – so careful consideration needs to be given as to what you do with the cash. Do you stay in cash, buy shares in another company or perhaps even buy the Caltex shares back on market?

Question 2: I recently received a flyer from Pengana Capital in relation to their proposed Pengana Private Equity Trust, which will provide an opportunity for investors to have access to a portfolio of private equity and private credit investments. Can you provide an outline of what this proposal is all about? I don’t understand the concept of investing in private equity and credit.

Answer: Not all companies are listed on a stock exchange such as the ASX or NASDAQ. In fact, the universe of companies that are unlisted is larger than that for listed companies.

Private equity funds invest in unlisted companies. Usually as providers of capital (shareholders), sometimes as providers of debt (credit). The Pengana Private Equity Trust is being established to invest in private equity funds. When fully operational, it is expected to have exposure indirectly to around 600 private companies – from a diverse range of industries, geographies and maturities. Grosvenor Capital will manage the investments, which are being made into a selection of private equity funds, potentially around 100, which will have an exposure to the 600 companies. The Trust will be listed on the ASX. Pengana acts as the responsible entity, with Grosvenor Capital appointed to act as the investment manager.

Question 3: What is your current recommendation on AMP? Is it a buy, hold or sell?

Answer:  In regard to the AMP, I’d have to say I am “disinterested”. It’s cheap but it could stay this way for some time. If pushed, I would say “buy, high risk”. Interestingly, all the major brokers are absolutely sidelined when it comes to AMP. According to FN Arena, of the 8 major brokers, there are 7 neutral recommendations and 1 “no rating”. The consensus target price has been crunched to just $2.29, just a few cents above the current market price.