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Tri-Continental Corporation trades on the New York Stock Exchange under the symbol TY. It is 82 years old and has paid dividends for 67 consecutive years. It invests in large cap stocks. Its portfolio is similar to Adams Express (NYSE:ADX) although changes have lately been made.

TY is now managed by Columbia Management which is a subsidiary of Ameriprise, which used to be owned by American Express. If I am not mistaken, Columbia had been the mutual fund arm of Bank of America (NYSE:BAC). In any event, they are continuing to do what they are supposed to do. They have made some changes but I find them acceptable.

Performance has been as follows:

1 Year5 Years10 Years
Market Price5.46%(3.01%)0.92%
Net Asset Value7.15%(2.48%)1.11%
S & P 5002.11%(0.25%)2.92%

Portfolio breakdown is well diversified over a broad spectrum and many securities. It is as follows:

Consumer Discretionary6.3%
Consumer Staples7.9%
Energy8.6%
Financial9.1%
Health Care8.9%
Industrials8.2%
Information Technology12.6%
Materials3.3%
Telecommunication Services4.8%
Utilities10.8%
Convertible Preferred Stocks11.8%
Corporate Bonds and Notes10.8%
Convertible Bonds11.8%
Limited Partnerships0.1%
Cash2.4%

The convertible preferreds, corporate bond and convertible bonds are new additions but are in keeping with TY's approach. These asset classes provide safety, less volatility and yield. I am fine with them. The portfolios of those asset classes are broad and well diversified.

The ten (10) largest holdings were not a substantial percent of net assets and were as follows:

APPLE3.0%
INTEL2.3%
IBM2.2%
PFIZER2.2%
CHEVRON2.2%
JP MORGAN CHASE2.0%
MICROSOFT1.9%
VERIZON1.8%
WAL MART1.7%
PHILIP MORRIS1.7%

As of December 31, 2011, TY had net assets of $1,115,796,610. TY does a substantial business in the loaning of securities for collateral and as of December 31, 2011, it was 8.6% of assets.

TY is a stable and dull closed end fund which has spent its entire life trading at a discount from net asset value. At present, this discount ranges from 12% to 15%. I like buying large cap solid stocks at discount prices. it does enhance yields.

Similar to ADX, TY has very low expenses. The basic ratios for the past five (5) years have been as follows:

OPERATING EXPENSESNET INCOMEPORTFOLIO TURNOVER
20110.59%1.80%97%
20100.60%1.84%86%
20090.98%1.46%70%
20080.73%2.96%111%
20070.66%3.22%1.23%

As of December 31, 2011, TY had net accumulated losses of $665,616,987 and unrealized appreciation of $45,808,951. That is a lot and will sustain future gains, without incurring tax liabilities, for the foreseeable future, until they expire in the next few years.

Conclusion

I like TY and feel it should be part of everyone's portfolio. It is a steady and solid holding. I know it is dull but it does have a substantial discount. It is cheaper to own TY than to assemble a portfolio of large cap stocks.

Disclosure: I am long TY.

Source: Tri-Continental: An Old Standby At A 12-15% Discount To NAV