[VIDEO ANALYSIS] Is Global Masters Fund (GFL) worth investing in?

Scott Schuberg:

Second question, Ashfaque from Queensland. Thank you for answering all our questions. It's our pleasure. What is your opinion on the Global Masters Fund Limited, which is GFL? I had a quick look at this one and I hate ... I don't like to sound opinionated and aggressive on this show, but it's just, I have no idea why this thing exists. So this is a listed investment company with a very small amount of assets. It's basically got the minimum that you would have as a listing on the US Stock Exchange. And what does this company do? It owns about 75% of Berkshire Hathaway stock, 18% of Flagship Investments which is an ASX listed investment company, and 7% of a unit trust in the UK. That's what it does. And it doesn't hedge the exchange risk on the UK and the US investments. And then it pays a bunch of old blokes just to be directors.

 

 

It's just I see these things, they're bizarre.  It's a very simple story. I can't imagine there's anything that I'm not seeing but I could structure you this same investment where you don't have to worry about funding the retirement of these guys who run it, by buying these things directly.

 

 

And because Berkshire has Berkshire B class shares, which are broken down into much smaller units than the behemoth that is Berkshire Hathaway, you can buy that in $166 US dollar increments. So if you like, if you said, "Listen, there's particular reasons why I like this thing," and it would have to be because you like Berkshire Hathaway. The other things ... the other holdings are relatively arbitrary. I'm sure these guys will hate me saying all this, "Oh it's arbitrary." "No, it's not arbitrary. We hold this for this reason and it's unhedged for this reason." But this is something...this is a 3 stock portfolio. It's listed on the exchange and pays listing fees and auditors and has to issue ASX responses, and pay directors. It's like [crosstalk 00:02:10] exist.

 


Shannon Rivkin:

It's just not an inefficient way to hold these investments.

 

Scott Schuberg:

So if you like Berkshire Hathaway, we are happy to buy the fully paid shares or the CFDs for you on your behalf, and you can sit there to your heart's content and have an unhedged exposure to exactly what these guys have without any layers of fees whatsoever, other than the dirt cheap brokerage we charge. I think about US, I think it's $12.50 we charge for US stocks. So it would be extremely cheap for me to replicate this thing for you, if indeed there's a reason why you wanted this particular mix that they've come up with but I've got nothing else positive to say about this thing.

 

 

And so much of the return on this is accidental. It's unhedged right? So depending on what the Aussie/US dollar exchange rate does on that Berkshire Hathaway holding, will determine a lot of the returns as well and I'm sure these guys don't have a crystal ball, they don't know which way the currency's going. So really odd listing. I'm intrigued as to why you asked about that one. Maybe you do hold it. And that's not to say it's not a performer. Berkshire is great stock, obviously, run by-

 

Shannon Rivkin:

And the US dollar's been strong over the last few years as well.

 

Scott Schuberg:

Yeah, yeah absolutely. So it's copped a lot of the tailwinds of its unhedged currency position. Yes, you could look at its track record and say, "Oh this is a cracker." Yeah sure, but it's Berkshire Hathaway, unhedged. I'll buy it for you in a US sub-account and you'll get pure exposure to it without any fees. So let me know if you'd like me to do that. I'd be more than happy to do that. We've got guys that will do that.

 

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