In the investment world it is easy to overlook some lucrative opportunities, especially ones that sell below their net asset value [NAV].

ASA (Bermuda) Ltd (NYSE:ASA) is an employee owned investment manager with approximately $537 millions in assets under management. The firm manages close ended funds for its clients.

It invests in the public equity markets across the globe. The firm primarily invests value stocks of companies engaged in exploration, mining, or processing of gold, silver, platinum, diamonds, and other precious minerals.

It also invests in gold, silver, and platinum bullion or securities that seek to replicate the price movement of gold, silver, or platinum bullion.

ASA (Bermuda) Ltd was founded in 1958 and is based in Buffalo, New York. As a closed-ended fund, the shares trade on the secondary market through their listing on the NYSE. The company was organized in Bermuda as an exempt limited liability company.

ASA is managed internally and doesn't have an outside investment adviser. Having experience as an investment company that specializes in precious metals and minerals for 50 years gives them a unique, mature perspective on those markets.

Incidentally, the majority of its directors and officers are U.S. citizens and residents. The company has evolved into a provider to investors of a vehicle to invest in a portfolio consisint primarily of the stocks and companies engaged in the exploration, mining or processing of gold, silver, platinum, diamonds or other precious minerals.

The directors and officers of the cmpany, including their 80-year-old Chairman, President and Treasurer Robert J.A.Irwin, believe in the long-term value of owning precious metals.

That's why ASA Ltd may also invest directly in gold, silver and platinum bullion or securities that replicate the price movement of these metals. Like any managed fund, the investment is guided by the experience and priorities of the company's leadership.

As of June 27, 2008 the net asset value (NAV) of the shares was $90.26 while the share price that day closed at $83.93, so the shares are selling at a discount to the NAV of over 7%.

As I write this on July 3rd, 2008, the share price is down to around $78.72 and so now the shares are selling at over an 8% discount to NAV.

Due to the fact that the shares often sell at a discount to NAV, the company seems to annually offer to purchase a percentage of the issued and outstanding common shares at a per per share, net to the seller in cash, equal to 98% of the NAV per sahre as determined by the company at the close of regular trading on a predetermined day.

This year they are offering to purchase up to 2,400,000 shares at a cash price equal to 98% of the NAV per share at the close of regular trading on the NYSE on July 11, 2008.

The maximum number of shares that the company will purchase in the tender offer represents 25% of the number of currently issued and outstanding shares.

This thoughtful offer will permit tendering shareholders to liquidate at least a portion of their shares at a price per share equal to 98% of the NAV while preserving the Company as an investment vehicle for long-term capital appreciation for shareholders who remain invested.

There are many reasons a closed-end fund company does this, and one is to encourage investors to keep investing regularly in ASA in spite of the fact that the shares often trade at a discount to their NAV.

The board of directors announced recently that ASA will proceed with a subsequent tender offer in 2009 and 2010 only if its shares have traded on the NYSE during a selected 12-week measurement period at an average discount to NAV of greater than 10%.

This practice also equates to the fact that the shares of ASA currently trade below their book value and in the most recent quarter the shares were trading at a price-to-book ratio of 0.86, which value investors can appreciate.

The company does pay a fluctuating dividend, sometimes structured as a capital gains payout, and has been known to do special cash distributions as well.

So here's an investment in a company that has a trailing-twelve-month Return-on-Equity of over 31%, a Profit Margin (ttm) that is an incredible 1,792% and an Operating Margin (ttm) of 69%, run by directors who want investors to get more than their money's worth.

Now I guess you could say the same thing for The Gabelli Gold & Natural Resource Income Trust (NYSE:GGN) which also operates as a closed-end fund, by if you compare apples to apples you can see that ASA has better results and more shareholder friendly policies.

ASA Ltd. makes sense to those of us who believe that gold and silver will be going much higher from here during this supercycle of stagflation. It isn't meant to replace investments like Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) or Pan American Silver (Nasdaq:PAAS), but it certainly is a useful and potentially lucrative compliment.

We are also continuing to accumulate the Central Fund of Canada (AMEX:CEF) as a proxy for ownership of gold and silver bullion, but currently CEF is selling at an NAV premium of over 12%. We prefer NAV discounts to premiums any day.

So take a close look at ASA and see if it fits your investment objectives. It certainly has a lot going for it and has rewarded investors for many decades.

Disclosure: I am long all of the above companies except GG

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Marc Courtenay

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