Z Seven Fund Open-Ending Proposal

Dec.27.05 | About: Z-Seven Fund, (ZSEV)

I just noticed that the Z Seven Fund (ZSEV) filed a preliminary proxy statement stating that they will ask shareholders to vote on open ending the fund. I normally don't follow this fund very closely because it is tiny, with a high expense ratio and extremely light volume. However, according to ETF Connect Z Seven is trading at over a 9.5% discount as of Friday, which makes this fund more interesting. I've said before that most investors should not try to arbitrage these open-endings, but Z Seven has a few things going for it. First, its top two shareholders, one of which is the portfolio manager, control 47% of the fund's shares. So I'm fairly confident that the proposal will be passed on the first vote. Second, with only about $10 million in assets, most large investors are not going to be able to buy enough shares to make it worth their time. However, the light daily trading volume makes it difficult for even a small investor to take a significant position in the fund.

So, while I'm not recommending that anyone purchase shares of Z Seven, if you had some speculative cash available, it may be worth doing some further research on this situation.

« Any opinions expressed on the Seeking Alpha sites are those of the individual authors and do not necessarily represent the opinion of SeekingAlpha or its management. »