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Should you buy MFF Capital Investments Ltd shares after its portfolio manager bought some?

I think it’s an interesting sign when management buy shares of the company they serve in. I’m particularly interested when it’s the leading portfolio manager of one Australia’s best internationally-focused listed investment companies (LICs).

MFF Capital Investments Ltd (ASX: MFF) is a LIC that invests in oversea shares, the lead portfolio manager is Chris Mackay. He, or one of his associated people or entities, recently acquired 10,703 shares to mean he directly or indirectly has control of 61,496,994 shares. At $2.27 per share this is a huge amount of money.

The number of shares that Mr Mackay owns certainly gives a tick to the question of ‘is management aligned with shareholders?’.

MFF Capital owns some of the best overseas-listed shares in the world within its portfolio. Its biggest holdings include Visa, MasterCard, Home Depot, Bank of America, Lowe’s, JP Morgan Chase, Alphabet (Google), HCA Healthcare, Wells Fargo, US Bancorp and Facebook.

It doesn’t just have an impressive list of holdings, it has the performance to match it as well. To the end of February 2018, the average return per annum over the past five years has been 21.6%.

The company has been an excellent performer for shareholders. It could still be an attractive option today because the net tangible assets per share at the end of March 2018 was $2.549 pre-tax and $2.128 after (mostly deferred) tax according to the LIC. This compares to the $2.27 share price.

Foolish takeaway

MFF Capital is one of the best LICs to own in my opinion. I own a few shares, but I’d like to buy more over time. At the current price I’d be happy to buy more shares.

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Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd. 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 Scott Phillips.

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