I think it's always a good idea to buy shares when they are trading at an attractive valuation.
It can be quite hard to accurately price assets when they're not shares – buildings or private businesses can only be priced when they're sold, whereas shares have a valuation every day.
That's why it's fairly easy to decide if the share price of listed investment companies (LICs) and trusts (LITs) are trading cheaper than their assets or not.
A director has been buying shares of Future Generation Global Invstmnt Co Ltd (ASX: FGG). Geoff R Wilson – which is a different Geoff, not the name behind WAM – just bought almost $30,000 worth of Future Generation Global shares.
At the end of July 2019, Future Generation Global's net tangible assets (NTA) before tax per share was 143.29 cents, compared to the current share price of $1.30. This suggests a discount of around 10%.
If you don't already know about Future Generation Global, its money is invested in fund managers who work for free so that 1% of Future Generation Global's assets can be donated to youth mental health charities. There are no underlying performance or management fees.
Some of the fund managers involved include a 12.1% allocation to Magellan Financial Group Ltd (ASX: MFG), 10.9% in Cooper Investors and 9.8% in Antipodes.
Since inception in September 2015 the Future Generation Global portfolio has generated an average return per annum of 10%, with less volatility than its global benchmark.
Foolish takeaway
I am a great believer in what Future Generation is doing to support younger Australians to receive help if it's needed. Being able to buy shares at a discount is a great incentive, particularly as Future Generation Global has just increased its dividend in the half-year result.
