Seeking Alpha
Value, special situations, debt
Profile| Send Message| ()  

There are about 600 closed-end funds in the US market, and a majority of them trade at a discount to net asset value. But a glaring exception are the CEFs run by Pimco. I found 18 Pimco closed-end funds on cefconnect.com, and all of them are currently trading at a premium over NAV. Here is a list of the Pimco funds sorted by premium over NAV:

PIMCO Close-End Funds March 19, 2010
Current Premium 52 wk avg prem 52wk low prem Type
PGP 48.10% 52.80% 17.78% Multi-Sector
PHK 38.52% 47.87% 28.72% Hi Yld
RCS 20.13% 15.11% 5.92% Glbl Inc
PMF 11.91% 17.20% 7.08% Muni-Natl
PFL 11.87% 8.97% -8.70% Multi-Sector
PCK 9.53% 15.79% 5.32% Muni- CA
PMX 8.95% 11.68% 7.08% Muni-Natl
PTY 8.87% 8.36% -0.80% Inv Grade
PCN 6.44% 10.51% 1.09% Inv Grade
PML 5.64% 6.37% -1.36% Muni-Natl
PFN 4.90% 4.27% -9.09% Multi-Sector
PNI 4.88% 7.60% -0.23% Muni-NY
PCQ 3.98% 5.78% -3.65% Muni- CA
PCM 3.94% 4.11% -7.20% Mtg
PZC 2.77% 5.89% -2.41% Muni- CA
PYN 1.90% 3.99% -0.36% Muni-NY
PNF 1.90% 1.99% -6.48% Muni-NY
PKO 1.15% 1.92% -2.33% Multi-Sector

One can only speculate as to why the Pimco funds are trading at a premium. I often listen to CNBC and Bloomberg radio. It is amazing how much free air time is given to Bill Gross and Mohamed El-Erian. They usually talk about the overall economy and bond market sectors, but in a subtle way get to “talk their book” which may give them a slight edge over other funds. Some investors may be buying Pimco funds to exploit this media “advantage”.

The Pimco funds are now owned by Allianz. But not all of the Allianz closed-end funds sell at a premium. For example, NFJ and NIE sell at discounts over 10%. I’d like to recommend an idea to Allianz management. They should consider renaming NFJ and NIE to add PIMCO to their name. Given the current Pimco CEF mania, this may cause the discounts to turn into premiums!

Source: The PIMCO Closed-End Fund Anomaly