Letters: LICs and gold miners

One member asks about Listed Investment Companies, while another takes a look at a gold miner flying under the radar.

Listed Invested Companies

I’m interested in learning more about Listed Investment Companies (LICs), specifically WAM Capital. It has been suggested by my broker for my SMSF.

Name withheld

Editor’s response: Ian Verrender wrote about LICs, including WAM Capital late last year, which you may find of use (see: Why investors should like LICs).

Sovereign Gold

I would like to suggest that a Eureka Report contributor take a look at New South Wales-based gold explorer Sovereign Gold (ASX code: SOC).

In my view, the company is heavily undervalued and seems to be flying under the radar despite having $21 million worth of Chinese funding and having just announced the acquisition of unlisted exploration company Gossan Hill Gold Limited.

CW

Yield, yield, yield

Lately there seems to be a lot written on yield and why company is great value because it yields more than another company. My question is when did earnings suddenly become a function of dividends? Dividends are paid out of earnings, so it is imperative that any analysis starts with a company’s earnings and then determines whether dividend payouts are sustainable.

A year ago, the banks were paying out grossed up yields of 10%-plus and investors were told the sector was a hold at best. Today, the sector is up 44% and is rated a buy because banks are yielding 5%.

Gordon Barratt

Corrections in the market

I found Adam Carr's article on corrections in the market very interesting (see: Five ways to spot a correction). Could you advise how ordinary retail investors and SMSF trustees can go about getting more information, such as charts etc. Or will Eureka Report keep its readers up to date on corrections?

Name withheld

Editor’s response: Eureka Report always endeavours to keep our members informed of developments in the markets, but we recommend investors keep themselves informed of any changes in sentiment both at home and overseas, as volatility is likely to remain for some time.

Woodside or BHP?

I’m considering selling my holding in Woodside Petroleum and instead investing in BHP Billiton. I bought Woodside about 8 months ago and the shares have performed well, but I want to invest in the stock that has better long-term growth potential.

Jamie Parker

Editor’s response: We have published a number of articles on BHP Billiton and Woodside Petroleum in recent months that you may find useful. (See: The Great Sharemarket Return: Unearthing value in BHP and Is Woodside heading the wrong way?) There have also been a number of articles written on  the outlook for miners (See Iron Ore in a steel trap) and the energy sector (See: The power plays of 2013).

The next big shale gas small cap?

I enjoyed Alan Kohler and James Kirby’s video on shale gas and oil (see: Investing in the shale boom). I fully agree that shale is the next big revolution in the energy sector. I recently saw a presentation on Icon Energy, a company I think could really take off.

Name withheld

Media reforms

Senator Conroy's plan to control the media by appointing a Public Interest Media Advocate is an unacceptable attack on freedom of speech in Australia and should be rejected. The sinister, implied threat of having media licences revoked if the Government doesn't like the message, should have the opposite effect hoped for by Mr Conroy. Courageous media owners will continue their ethical mission to inform the public by writing the truth as they see it.

JT

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