Isn't it time for the typical TY buy-and-hold shareholder to get out?
I liked its strategy and the discount didn't bother me. But the ongoing controversy, charge vs. counter-charge atmosphere is too destabilizing. It has to distract and drain the energy of management and add to volatility.
Both sides have good arguments. Why not let someone else incur the expense of resolving them?
I think these are valid points, and a major question is how long will the fighting over board seats last. It looks like the expenses for the two meetings this year will cost about $2.5 million, and if this was incurred every year, it could start to be a drag on performance. But at this point, about $1 million was already spent on the earlier meeting, and the remaining $1.4 million or so that will be spent on the upcoming meeting, while not insignificant, is not all that large in relation to TY's assets. For comparison, TY's management fees last year were over $10 million.
As far as management being distracted, the actual portfolio manager of the fund shouldn't be paying too much attention to what happens with the board seats, but I agree that the controversy is not helping the NAV performance of the fund (I think it has helped the market price performance though).
So is the battle for board seats going to continue on in future years? My feeling is that as long as a fair and democratic election is held, this fight does not need to continue indefinitely. TY's management did try to block shareholder democracy last time by not initially providing Western Investment with a complete shareholder list, but I am not aware of anything underhanded being done now. So I think if shareholders clearly favor one side in this election, there might not be a contested election next year.
If I were currently a shareholder who liked the strategy of the fund, I probably would not sell now with the plan to buy shares again once everything with the fund has been sorted out. This is because I don't think it will take a really long time to get things sorted out, but I could be wrong. If I felt there were going to be several more years of contested elections, then I would probably sell and move into another investment.
TY 1-yr chart: