The Arowana Contrarian Value Fund (CVF) is in the process of winding up and delisting from the ASX after a period of underperformance.
The listed investment vehicle flagged in April 2020 that it was "engaging in a detailed strategic review" because of the adverse impact of COVID-19. It had a market capitalisation of $21.8 million at yesterday's close.
At the time, the board said it was "comfortable" with investment manager ACVF Management's ability to navigate through the difficult period but was still considering winding up the LIC.
The board recently announced it will hold an extraordinary general meeting on February 4 to put forth resolutions to wind up CVF.
During FY20, the global economic shocks of COVID-19 resulted in "disappointing" performance, together with a hedging strategy that did not pay off as markets unexpectedly rallied, the annual report showed.
CVF made a $7.4 million net loss after making a profit of $466,000 in FY19. It returned 6%, slightly beating the benchmark's 7.7% net of fees. It paid a fully franked yield of 15% based on the closing price of $0.79 as at 30 June 2020.
While the board said it supports the value-based investment strategy, CVF's investment portfolio against the benchmark index was nevertheless "disappointing".
CVF listed six years ago, trading at $1 and peaking at about $1.31 in 2018. The share price plummeted from about $1.06 to 37 cents on 17 December 2020. It invests in local and international companies such as Corporate Travel Management, Nine Entertainment, Janus Henderson Group, Perishing Holdings and Village Roadshow.
Arowana is the parent company of CVF, which operates and scales small and medium-sized businesses.
Kevin Chin is the founder and director of CVF.