Century Australia Investments (CYA.AX) announced a share buyback on 14 November, purportedly for "capital management" purposes. In reality, the buyback is greenmail to WAM, which built up a 21% holding in CYA and threatened to oust current management. CYA's porcine management announced the buyback to keep their snouts firmly in the fee trough. CYA's "market" price had been moved to par with NTA prior to the announcement, and fixed at $0.89.
In the preceding month WAM increased its CYA holding by close to a million shares, in preparation for demanding greenmail, so that it could sell back some of its CYA shares at the ramped price, and keep the rest of its holding valued at this artificial price. The communications between WAM and CYA regarding this scam is material information for their granny investors. When CYA's criminal management lied to its investors about the reason for the buyback, they committed securities fraud.
Listed investment companies are the Drosophila of financial fraud research, as they can be straightforwardly analyzed and valued. CYA holds listed assets with a current value of around $70m, or $0.89 per share. CYA collects interest and dividends of around $3m from these assets yearly, with around $0.8m in costs, or 27%. The fair value of CYA as a going concern is thus 73% of NTA, i.e. $0.65 per share, while its liquidation value is $0.89 per share. CYA promised years ago to liquidate the fund and return the money to investors, but never actually intended to, since that would stop the fee party.
The criminals running these companies know all this very well, but lie and dissemble, claiming that no matter the costs of an LIC, its ongoing fair value is at NTA or above. This is of course ridiculous, since quite obviously an LIC with lower costs would be worth more to an investor than an otherwise identical LIC with higher costs. CYA ridiculously claims costs of 1.1%, dividing expenses by outstanding assets, yielding a deliberately deceptive and useless metric favored by fund fraudsters. The entire business model of the LICs depends on such dissembling, as they could never function if they had to issue shares at fair value.