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Karpus Investment Management sent a letter on Monday to Tri-Continental's (TY) Secretary, in which they stated their dissatisfaction with the current board, and their intention to vote in favor of Western Investment's board nominees. Karpus' dissatisfaction unsurprisingly stems in part from TY's persistent discount, poor relative NAV performance, and management's quorum proposal. These are all valid points, buy my guess is that Karpus voted all of their shares in favor of Western Investment in the last election, so this letter is probably more about making a point and shouldn't be seen as showing that Western is getting a new source of support. Because of this, I don't think the content of the letter will change the board's strategy at all.

Also this week, Western Investment filed a definitive proxy statement, which shareholders should be receiving soon. The arguments in the letter center around TY's performance, its discount, and the ongoing investigation of Seligman's management. As I wrote before, to me, the biggest difference in this election versus the last election for Western is that they have now said "We have no intention of seeking to open-end or liquidate the fund." In the last election, while Western said that open-ending or liquidating was a last resort, I'm not sure that other shareholders believed them. By making the above statement this time, I think Western is trying to get the support of shareholders who are not exactly happy with the fund, but do not want to see any drastic changes.

Overall, while I agree with all of Western Investment's points, I'm doubtful that these newest letters to shareholders will convince many investors who voted for the incumbent board a few months ago to switch their vote to Western's nominees this time. We shall see though.

TY 1-yr chart:

TY 1-yr chart

Source: More Management Shakeups at Tri-Continental