Is the Future Generation Investment Company Ltd fund a buy at this share price?

Companies in the S&P/ASX 300 (INDEXASX: ^AXJO) (ASX: XJO) continue to hit new highs, with very few falling to new lows. Here are three of the latest winners and my take on whether they remain an opportunity today:

Insurance Australia Group Ltd (ASX: IAG)

I wrote about Insurance Australia Group (“IAG”) just on Monday, and it’s risen further to $6.17 since then. A good business for income-seeking investors, I remain convinced that there’s little opportunity in IAG shares today, as today’s prices factor in significant increases to interest rates. There’s very little business growth on offer in the near term, with management forecasting another flat result. This means that the prospect of higher interest rates is what’s driving share prices. Unfortunately today’s prices assume higher rates, but leave no margin of safety if higher rates don’t eventuate.

Genworth Mortgage Insurance Australia (ASX: GMA)

Shares in Genworth have risen rapidly in recent times, despite the recent quarterly update confirming weaker performance and a likely decline in Net Earned Premium for the full-year 2016. It seems the market remains sceptical of the business, especially since an increase in bad debts in areas reliant on mining activity. It would be prudent to factor in a discount to allow for further bad debts, but Genworth looks cheap given that it is trading at a 20% discount to its Net Tangible Assets (‘NTA’) – which is like getting the insurance business for free.

Future Generation Investment Company Ltd (ASX: FGX)

Far from the only fund manager enjoying the recent rise in the ASX, Future Generation Investment is worth a mention as it is, as far as I know, the only Listed Investment Company that operates for ‘free’ – well, there is a 1% management fee, but it gets donated to youth charities every year.

FGX is trading at a 3% premium to its Net Tangible Assets (‘NTA’), although with the recent rise in the ASX and the December NTA due out soon investors might find that it is trading at fair value. An interesting ‘set and forget’ opportunity for long-term, socially minded investors.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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