Shares of MFF Capital Investments Ltd (ASX: MFF) hit a new all-time high yesterday, breaking the $3.28 mark for the first time ever. MFF shares have been on a 27.7% tear in 2019 so far, but yesterday’s breakthrough caps off a particularly stellar two months that have seen double-digit share price growth.
Here’s why this company is breaching new all-time highs.
What does MFF Capital do?
MFF is a listed investment company (LIC) closely associated with the Magellan Financial Group Ltd (ASX: MFG). The company invests in a portfolio of mostly US-based companies using a Warren Buffett-esque value-quality methodology (i.e. buying high quality companies at good prices). While many of Magellan’s direct funds have been drawing a lot of attention this year owing to their continuing outperformance, MFF flies under the radar somewhat, having separated many formal ties with the Magellan management over the past several years.
This is despite the fact that MFF’s chief investment officer is Chris Mackay, one of the co-founders of Magellan (along with Hamish Douglass).
And it’s also despite the fact that MFF has delivered share price gains of more than 120% over the past five years.
Why have MFF shares been raising the roof?
This year’s share price gains for MFF can be attributed to two factors.
First is the strong performance of the company’s portfolio. MFF’s current top holdings include payment giants Visa and Mastercard (together worth nearly a third of the total holdings), as well as Bank of America, Alphabet, Microsoft and Coca-Cola. Many of these companies have experienced substantial share price growth throughout 2019 and give MFF shares a current pre-tax net tangible assets (NTA) value of $3.44 per share.
Second is the depreciation of the Australian dollar. As MFF’s holdings are US-based, any fall in the value of our dollar against the greenback increases MFF’s value in Australian dollars. Since the Aussie dollar has spent 2019 dropping to historic lows against the US dollar, MFF’s portfolio has subsequently been bumped up in value on the ASX.
MFF Capital is one of the best investment vehicles on the ASX, in my view. I am happy to own shares myself and look forward to the next available opportunity to add to my holdings.
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Motley Fool contributor Sebastian Bowen 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.