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Friday, 19 June 2009

CDF wind-up payment arrived

As announced last month, the wind-up of the Commonwealth Diversified Share Fund (CDF) was completed yesterday, with payment of $1.0387 per share made to all remaining shareholders. I'm glad that I borrowed some money to meet the margin call that resulted from Comsec Margin Lending reducing the margin value of this share to 0% on 17 May, otherwise I would have only received around $0.96 per share selling the shares on-market during late May.

By maintaining my shareholding until the termination date (1 June) and getting paid out the full NAV on 18 June, I received an extra 8% or so - around $5,136 - compared with having the shares sold out by Comsec in late May to meet the margin call.

Some smart operators made a killing by buying up CDF shares in late May. For example, Weiss Capital made around $200,000 by buying CDF shares for around $0.96 in the last two weeks of May and receiving $1.0387 per share yesterday. 8% ROI in one month with minimal risk is a pretty canny investment. If I'd had spare cash I would have bought some CDF shares as well.

I am less impressed that CBA also became a substantial shareholder during late May. Their share transactions notification shows a lot of buying and selling by Value Nominees (ie. Comsec Margin Lending) which I suspect was mostly due to Comsec cutting the Margin Lending Value of CDF shares from 70% to 0% on 17 May. However, CBA ended up with a net increase in CDF shares of around 2.5m shares, which also gave them a nice profit when the fund was wound up. Perhaps I should ask ASIC to look into the behaviour of CBA Bank, Comsec and CDF Fund regarding possible conflict of interest issues regarding these related parties and their clients/shareholders?

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