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Douglas Albo  

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  • Equity CEFs: The Insanity Of CEF Investors [View article]
    I've been covering the Alpine funds for years. Just what makes you think I have always been positive on them?

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    Discount/Premiums are only part of the story. NAV performance is the WHOLE story. Ultimately, every fund will follow its NAV, including PGP. Good luck to you...
    Aug 28, 2015. 10:30 AM | 2 Likes Like |Link to Comment
  • Equity CEFs: Back Up The Truck On SCD [View instapost]
    I would stick with the Eaton Vance option funds on any weakness. They seem to be getting great support when the markets turn.

    Other funds that seem to have a lot of buy interest when the markets turn are CII and IGA. All of these are option funds and all have had outperforming NAVs this year. IGA is global.
    Aug 28, 2015. 08:17 AM | Likes Like |Link to Comment
  • Equity CEFs: Back Up The Truck On SCD [View instapost]
    I don't believe I said a "buy of a lifetime." I said metaphorically, "back up the truck" at $14.90.

    I also don't think a current $13.34 is the "end of the world" in this market environment when its primary income sector, energy MLPs, has been pummeled.

    Now do I think the PM's have done a good job navigating these markets this year considering the sectors the fund invests in? No...but historically they have. If energy comes back, so should SCD.
    Aug 27, 2015. 08:52 AM | Likes Like |Link to Comment
  • CEF Strategies: Equity CEFs Back On Sale [View article]
    You have it backwards. How do positions get called away in a down market? If you mean that writing options in a collapse and then being forced to give up positions in the ensuing rebound, that's not what happens.

    Option-income funds actually generate a lot less option premium in down markets despite the volatility increase because they write options more out of the money. If an ensuing rebound results in the covered stock/index running past their higher strike prices, they will settle and re-establish at an even higher strike price, but they usually would not allow positions to be called away.

    Option income funds generate the most option income at a market top because they write options at just out of the money or even at the money.
    Aug 26, 2015. 10:02 AM | 1 Like Like |Link to Comment
  • CEF Strategies: Equity CEFs Back On Sale [View article]
    I've written extensively over the years on ROC and how the portfolio managers try to maximize ROC for the tax benefits. High ROC in option income funds is actually a positive and does not have to come at the expense of the fund's NAV. Go over my articles since 2011.
    Aug 25, 2015. 10:51 AM | 6 Likes Like |Link to Comment
  • CEF Strategies: Equity CEFs Back On Sale [View article]
    No...do not use stop losses. They will get hit due to lack of liquidity in these funds. If anything, use ridiculously low GTC buys. For example, EOI had a trade cross at $8.90 yesterday. That worked out to an absurd -33.2% discount for EOI. Only during the worst of the bear market in the fall of 2008 did you see discounts at that level and they only lasted a short while.
    Aug 25, 2015. 10:46 AM | 4 Likes Like |Link to Comment
  • 2015 CEF Strategies: 1st Half Observations, 2nd Half Opportunities [View article]
    Hmm, I'll take you up on that offer!
    Jul 15, 2015. 09:46 PM | Likes Like |Link to Comment
  • 2015 CEF Strategies: 1st Half Observations, 2nd Half Opportunities [View article]
    Can't really take a big position in HQH. I own HQH but I own a lot more GRX. HQH is too volatile and too sector specific, including private equity which is very risky due to liquidity. That being said, the performance of HQH and HQL has been off the charts. To a point where you wonder how much more biotech and healthcare can outperform like this.

    GRX you can take a big position in, in my opinion, because its 50% healthcare stocks and 50% consumer staple stocks, mostly food oriented. That's in keeping with its strategy to focus on the trend towards better nutrition and wellness as well as healthcare in general. GRX may not have the upside as HQH or HQL but its more diversified.

    On a broader note, I've never seen a market in which only a few sectors can dominate like this while every other sector is under pressure it seems (except small cap and some technology). This is NOT healthy and I don't think it can last despite this ever higher trend for biotech/healthcare.
    Jul 15, 2015. 11:24 AM | 2 Likes Like |Link to Comment
  • 2015 CEF Strategies: 1st Half Observations, 2nd Half Opportunities [View article]
    Don't own CEFL for multiple reasons. Two layers of expenses and their top holdings change quite a bit. Last I looked, they owned a lot of fixed-income CEFs, which I certainly don't want to be in. I think you need to be wary of any fund that offers 2X the exposure as you take on quite a bit more risk. I don't need that high of a yield in the first place.
    Jul 14, 2015. 09:25 AM | 1 Like Like |Link to Comment
  • 2015 CEF Strategies: 1st Half Observations, 2nd Half Opportunities [View article]
    Good question. The tax-managed Eaton Vance option funds sell index options, whereas EOI and EOS sell individual stock options. It's just a lot easier to tax-manage index options than individual options.

    In the tax-managed funds, there's no chance of positions being called away for a capital gain as settlements are in cash. However, the PM's might let stock get called away with EOI and EOS if they felt it wasn't worth buying back the options.

    Historically, there seems to be as much ROC in the EOI and EOS distributions as there are in the tax-managed fund's distributions so I don't think the tax-managed designation is necessarily exclusive to the tax-managed funds. ROC is generally the portion of the distribution that is not earned income (portfolio dividends/interest) or realized capital gains.
    Jul 13, 2015. 02:55 PM | 2 Likes Like |Link to Comment
  • 2015 CEF Strategies: 1st Half Observations, 2nd Half Opportunities [View article]
    STK is kind of a rogue tech CEF and I never know quite how its NAV is going to perform compared to the NASDAQ-100. It can outperform, like more recently, and it can underperform like in 2012 & 2013. So the fact that its been trading at a premium over the past year makes me wary. I'm not saying you shouldn't own STK, but if you're going to take a large position in a tech CEF, I prefer QQQX since it tracks the QQQ's a lot more closely.
    Jul 13, 2015. 12:33 PM | 1 Like Like |Link to Comment
  • 2015 CEF Strategies: 1st Half Observations, 2nd Half Opportunities [View article]
    JCE historically uses long S&P 500 e-mini futures as well as writing options so it can certainly have more NAV upside than EOI during a bull market. I keep an eye on JCE and would have bought some on the recent dip but its NAV performance was not doing as well as I hoped, less than EOI's. Since then, it has rebounded and yes, I wish I had bought some.
    Jul 13, 2015. 12:20 PM | 1 Like Like |Link to Comment
  • Equity CEFs: Back Up The Truck On SCD [View instapost]
    Nope. CEFs with MLPs issue regular distributions reported on 1099's. No K-1s to deal with.
    Jul 1, 2015. 09:28 PM | Likes Like |Link to Comment
  • Equity CEFs: Back Up The Truck On SCD [View instapost]
    MLP income for these funds is always classified as ROC.

    Certainly, all funds go through periods in which their income does not cover their distributions but that's not the problem wih SCD. SCD has a very low NAV yield at 6.5% so covering its distribution (MLPs, utilities, REITs) is pretty easy compared to most CEFs.

    SCD is suffering from pure depreciation of assets since half its portfolio is in a bear market. The ROC percentage has nothing to do with that (again ROC comes from its MLP distributions) and would not change much whether the portfolio was appreciating or depreciating.
    Jul 1, 2015. 03:34 PM | 1 Like Like |Link to Comment
  • Equity CEFs: Back Up The Truck On SCD [View instapost]
    And tell me your understanding of what ROC is please...
    Jul 1, 2015. 02:13 PM | Likes Like |Link to Comment
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