Adams Express Company is one of the oldest closed end funds and is traded on the New York Stock Exchange under the symbol ADX. It is a self administered and managed fund which has been in business for almost 100 years. It has low annual operating expenses and has been owned by families of investors for generations. On many levels it is a bargain worth holding by almost all accounts.
Per share figures for the past five (5) years show low operating expenses and low turnover. For that matter, ADX has held many of its securities for in excess of 15 years. The five (5) years breakdown of these figures are as follows:
|% Investment Return on Market price||% Investment Return on Net Asset Value||% Operating Expenses||% Net Investment Income||% Portfolio |
Your attention should be drawn to the fact that the annual expenses have been around fifty (50) basis points and the annual portfolio turnover rarely exceeds 20%. ADX has a fine stable portfolio which it has held for many years. Its ten (10) largest holdings, as of December 31, 2011, constituted 24.6% of its entire portfolio, and were as follows:
|Market Value in Dollars||Percent of Net Asset Value|
|Petroleum & Resources||55,532,228||5.1|
|Proctor & Gamble||18,678,800||1.8|
Petroleum & Resources is a sister closed end fund to ADX and also trades on the New York Stock Exchange under the symbol PEO. It is similar to ADX in that it owns a broadly diversified portfolio of large cap energy and natural resource companies, is self administered and managed, with low operating expenses and portfolio turnover.
To add icing to the cake, as of February 23, 2012, ADX was selling at a 14.5% discount from net asset value and PEO at a 13.22 discount from net asset value. As of December 31, 2011, ADX's discount from net asset value was 16.5%. ADX has been trading at this discount range for many many years.
ADX has adopted a managed distribution program and pays a dividend of at least six (6%) percent per annum. This substantially exceeds its annual net income which has been less than two (2%) percent per annum. I am not a fan of managed dividend programs but ADX feels that many of its investors are older and need this steady income to supplement their fixed income stream of income. Not only is ADX held by investors for their entire lifetime but it is commonly held by multiple generations of the same family.
As of December 31, 2011, ADX had net assets of $ 1,050,733,678 with unrealized appreciation of $ 62,511,196. ADX had 4.4% of its assets in short term investments. It engages in a modest program, less than 1% of assets, of lending securities against collateral. ADX also has a modest covered call and collateralized put writing program.
One investor, Erik E. Bergstrom of Palo Alto, California owns 8,350,000 shares of ADX which is 9.2%of the outstanding shares. He is not affiliated with ADX. Officers and Board members of ADX have meaningful but modest holdings in the company.
ADX is a fine proxy for large cap stocks and should be in most investors' portfolios, It has modest operating expenses and sells at a substantial discount from net asset value. Its portfolio is fairly bland but it is here to stay. They have been around for a very long time and have a conservative attitude. The portfolio is well diversified over a broad range of industries with a large number of securities. It is the perfect gift for children or grandchildren who can then sit on it their entire lives.