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E-L Financial Corporation Limited (ELF)
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United Corporations Limited (UNC)
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Economic Investment Trust Limited (EVT)
I currently hold E-L Financial (ELF), Economic Investment Trust (EVT) and United Corporations (UNC).
Ultimately the total value of these three holdings is 2.84 % of my equity holdings with ELF (0.77 %), EVT (0.66 %) and UNC (1.41 %).
E-L Financial and the controlling family shareholder holds approximately 25% ownership of EVT (through direct ownership) and approximately 53 % (through indirect subsidiaries) with a resulting public float of 21 %.
E-L Financial and the controlling family shareholder holds approximately 55 % of UNC and approximately 23 % (through indirect subsidiaries) with a resulting public float of 21 %.
Through Normal Course Issuer Bids and Substantial Issuer Bids, E-L Financial is very slowly increasing its control (approximately 1 % per year).
I understand all three securities have extremely low trading volumes (less than 500 shares per day and some days no trades). I am looking at a long-term holding period (> 5 years).
Questions
1 – General comments on ELF, EVT and UNC.
2 – Given the very slow creeping takeover (i.e. 20 years to complete takeover), does it make sense to retain holdings of EVT and UNC and sell my holdings of ELF? The ultimate goal is to reduce the number of holdings in my portfolio.
Thank you
We would view all three of these names as largely in a similar 'bucket' due to the lower liquidity and lack of analyst coverage. The biggest issue an invstor will have with these names, in our view, is what will get the markets to start caring about them. Even if they are fine fundamentally and in terms of outlook, they need to generate some attention from markets to get things moving, so patience is required with names like these. Regardless, performance has been fine for these names and they have tended to follow markets over the longer-term.
If looking to reduce any single name, we might keep ELF, as it holds a large amount of both companies. Then, if removing one of UNC or EVT, an investor would still have exposure to both names. We would be agnostic between UNC and EVT. As noted, all of these names do have lower liquidity which adds risks.