How Mirrabooka Invests
There are many small and medium size companies listed on the Australian and New Zealand stock exchanges covering a very diverse range of industries and market sectors. Mirrabooka seeks to invest in those companies which offer investors attractive medium to long term value. Of particular interest are companies with relatively low price earnings ratios and sound dividend yields. Often these companies have strong growth prospects and specialise in a range of attractive product, market and industry sectors. Benefits may also arise from takeover and/or merger activity.
Investing in the small and mid sized sector can be subject to greater volatility compared with investing in larger capitalised companies because of the reliance these smaller companies have on single markets, products and/or key individuals. From time to time, shares in these smaller companies may also be subject to lower than normal liquidity. Consequently, this section of the market requires a significant amount of research and subsequent close monitoring of the portfolio.
In this context, we are willing to move quickly to realise investments when we form a view that an investment is well overvalued or there has been a material adverse change in a company’s circumstances or prospects. As such, we believe it is important to be nimble and responsive to material changes affecting these investments.
The Company typically holds between 50 - 70 stocks depending on their fit with our investment aims and the desired concentration of risk within the portfolio.
The Company also has access to lines of credit which allows the Company on a limited basis to gear its balance sheet when appropriate investment returns are available. In addition, the Company also uses options written against its portfolio to generate additional income although this activity is naturally limited by the lack of availability of option markets for most of the shares within the portfolio and the need to control our investments for risk management purposes.
If you’re a Mirrabooka shareholder, it’s optional to participate in the DRP. You can choose whether to reinvest all or part of your dividends in the plan. Participants enjoy the benefits of compound returns over time with no brokerage costs when acquiring additional shares. It’s entirely flexible, allowing you to join or withdraw at any time.
For more information on the DRP, please read the DRP Rules.
When Australian resident taxpayers receive DSSP shares, no income tax is payable until the shares are sold.
The DSSP may be suitable for Australian taxpaying shareholders that:
Australian resident participants in the DSSP do not receive a dividend but in lieu of that, are issued shares. As they do not receive a dividend, they will not get franking credits or LIC capital gains tax deductions and will usually not be subject to income tax. The receipt of the substitute shares will change the tax cost base of the Mirrabooka shares that participate in the DSSP and may therefore increase any capital gains tax paid on any subsequent disposal.
Shareholders should in all cases seek their own advice as to whether or not participation in the DSSP is suitable for them.
For more information on the DSSP, please read the DSSP Rules. We have also included a link to the Australian Tax Office Class Ruling regarding the Mirrabooka DSSP (refereed to in the document as a bonus share plan).
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