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Aberdeen Asia-Pacific Income Fu Message Board

  • SurfStock SurfStock Apr 20, 1999 3:32 PM Flag

    FAX is worth...

    ...whatever anyone will pay for it. That's the
    way the world works. Come to our free Yahoo stock
    trading club with BBS, chat room every night at 9 PM ET
    where traders will answer your questions. Don't trade
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    • "......whatever anyone will pay for

      In this case, where ownership produces a revenue
      stream, the value of the stock is independent of its sale
      price. Surely you would not argue that, even if NO
      buyers existed, recieving a guaranteed .06/share/month
      had no economic value.

      No, the point here is
      NOT what people will pay for FAX, but what WE should
      require before selling it. Let those who don't own any go
      get their own guaranteed income if they won't meet
      our price.

      • 1 Reply to GodtheCreator
      • You are right on the mark in comparsion
        "shopping". It fun to try and guess a FMV(Fair Market Value).
        And as you say it has to start somewhere and a 3
        month T-bill is always the start for any U.S.

        A few thoughts to add:

        Appx. 15% of the
        funds dividend is "return of capital" or captial gains
        paid out. Thus that does not reflect a "real" source
        of reoccurring income so I'd cut that part out in a
        T-bill comparison. Or $.10

        The credit quality of
        the income is good, but since it's a fund with no
        maturity a risk premium has to be included for volitility.
        Ususally some kind of variance from the mean kind number
        or standard deviation. At this point the stock is
        right in the middle of it's high and low for 52 weeks,
        about 18% either way variance. Last year I think was an
        unusual year with lots of price movement so it's probably
        some where in the 10% up or down area for varience. I
        want at least half of 10% up or down varience for
        principle protection each year. Or 5%($.50/year)

        if you add the riskless rate(4.5%) and the principle
        risk premium (5%)your looking at 9-10% for this fund.
        Take away the return of capital($.10)and you have a
        FMV of $6.50($.62/.095).

        But I do feel the
        fundamentals can get stronger to move the fund higher in the
        long term. We've certainly discussed this at lenght in
        the past. And of course risk is a perceived thing and
        will vary depending on the last bad occurrance I
        guess. Lastly the fund is at a discount so the payout of
        NAV doesn't become a real problem till the fund is at
        a preium I'd think. So in reality there is probably
        not any reason to cut out he capital gains
        distributions till the fund is at a preium. I personally like
        to see a little discount. Any thoughts

        I don't know if this makes sense or not, the more
        Wall Street comes up with tools to figure things out
        the worse the outcome it seems.

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