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Kingfish small caps NAV fell 18% last quarter

Kingfish, fund of NZ small caps, says NAV fell 18% last quarter

Feb. 10 – Kingfish Ltd., the New Zealand small-cap investor managed by Fisher Funds, said its net asset value dropped 18% last quarter, reflecting the slide in New Zealand shares and a slump in rest-home operator Metlifecare.

The NAV dropped fell to 98 cents, putting its gain since listing in March 2004 at 1.3%, the fund said in a statement.

Chairman Rob Challinor confirmed the reappointment of Fisher Funds to manage the Kingfish portfolio for a further five years on existing terms and conditions, despite it suffering “some of its heaviest falls in its history”.

“Short term investment performance has been disappointing, as it has been for other NZ equity funds reviewed, reflecting the global credit crisis,” Challinor said. “Notwithstanding this, independent directors consider that Fisher Funds has met all its Agreement obligations.”

Kingfish posted its second six-monthly decline in NAV, reflecting the rout in stocks that have driven down prices worldwide.

The net loss in the six months ended Sept. 30 was NZ$7.8 million from a loss of NZ$6.1 million a year earlier, the company said in a statement.

“In this climate, traditional stock picking and portfolio management techniques mattered little – investors were intent on selling shares irrespective of their quality, their fundamentals or their value,” said Carmel Fisher, managing director of Fisher Funds. “While the underlying businesses comprising the Kingfish portfolio were resilient, their share prices proved anything but,” she said.

Kingfish’s biggest bets are in freight and retirement homes, its four largest holdings being in Ryman Healthcare, Mainfreight, Metlifecare and Freightways. Shares of Kingfish gained 3.7% to 84 cents today and have declined 34% this calendar year, while the NZX’s SmallCap index fell 28%.

“The fundamentals of the Kingfish portfolio are compelling, despite continued earnings downgrades,” said Fisher. The portfolio was “well placed to weather the storm”.

“When investors again focus on rational valuation benchmarks and quality measures, the Kingfish portfolio will stand out.”

The only exception to this was an active reduction in Kingfish’s holding in Rakon in favour of cash.

Carmel Fisher on:

• Mainfreight: domestic market share is growing in a difficult market, “although the company admits to low visibility of its forward workload”;

• Freightways: Information Management division continues to perform strongly, albeit representing only 15% of group profits;

• Pumpkin Patch: $30 million currency hedge unwind has assisted debt repayment, but short term profitability is under pressure;

• Delegats: going from strength to strength.


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