Seeking Alpha

Douglas Albo

 
View as an RSS Feed
View Douglas Albo's Comments BY TICKER:
Latest  |  Highest rated
  • 3 Closed-End Funds With Positive Asset Returns Yielding At Least 6% [View article]
    CEFs are different from ETFs and mutual funds because their market price can be different from their Net Asset Value (NAV). ETFs and mutual funds trade essentially at their NAV, which is the sum of all of the fund's assets and liabilities at any given moment (literally for ETFs). CEFs, because they are "closed" to offering new shares and thus can't match willing buyers and sellers at the NAV, can have their shares priced at either a premium or a discount from the NAV based on supply and demand. For funds whose market price is higher than the NAV, its said to be trading at a premium and visa-versa for funds trading at a discount.

    Oh, and stay far, far away from AGD. It's just amortizing its NAV and has had one of the worst NAV total return performances of all equity CEFs since inception.
    Jul 13 09:29 AM | 2 Likes Like |Link to Comment
  • Equity CEFs: Which Allianz/PIMCO Funds Offer The Best Risk/Reward (Part I) [View article]
    Don't like either one. Both short securities. JGV shorts tech and GLQ shorts ETFs and stocks, hence the large expense ratio. Strategy could work over certain periods but I think its too complicated for managers of a CEF to use effectively over time. GLQ is essentially a 130/30 fund, i.e. 130% long, 30% or so short.
    Jul 11 11:55 AM | 1 Like Like |Link to Comment
  • Equity CEFs: Which Allianz/PIMCO Funds Offer The Best Risk/Reward (Part I) [View article]
    Often the portfolio interest and dividends don't cover the distribution on leveraged funds and the fund needs appreciation as well. I haven't looked at ETG's annual report so I'm not sure if the fund falls into that category but ETG will have the hardest time covering its distribution of all the EV leveraged funds. ETO will have the easiest. I prefer EVT & ETO to ETG but ETG obviously has the higher yield so investors often go with that.

    Actually, if you go to ETG's latest 3-month report dated July 10 (under Yahoo Finance news), ETG had $25,458 million in net investment income or $0.334/share for the qtr. while the fund paid $0.308/share per qtr. so they have the distribution covered. This does not include any appreciation/depreciation of the portfolio.
    Jul 11 10:52 AM | 2 Likes Like |Link to Comment
  • Equity CEFs: Which Allianz/PIMCO Funds Offer The Best Risk/Reward (Part I) [View article]
    Average in. These funds are prone to wide market price swings even if their NAVs don't exhibit the same volatility. ETV's ex-div rotation just came up so it won't go ex-div for a couple more months, whereas ETB's is next later this month.

    Might want to buy a half position on weakness ahead of an ex-div date and buy the other half after so as to get the average.
    Jul 9 10:26 AM | 1 Like Like |Link to Comment
  • Second Quarter 2012 Equity CEF Review - The Good, The Bad And The Ugly [View article]
    I wrote a private message to the author and we have since corresponded several times. As you probably saw, he came out with an updated article that softened his opinions quite a bit.
    Jul 3 02:17 PM | Likes Like |Link to Comment
  • Second Quarter 2012 Equity CEF Review - The Good, The Bad And The Ugly [View article]
    All my love can't seem to help the Eaton Vance option-income funds. Thought if I just ignored them, I couldn't jinx them.
    Jul 3 06:44 AM | Likes Like |Link to Comment
  • Picking The Best Option-Income Closed End Fund [View article]
    Yes, total return charts and tables you have to put together yourself. It certainly changes the performance picture quite a bit. Some funds are doing much better than they appear while others are doing worse. I also don't really pay much attention to the market price performance, which is more of a popularity contest among investors. NAV total return is the true test of performance but I admit, for the past year or so, nobody seems to care much about NAV performance.
    Jun 22 08:51 AM | 1 Like Like |Link to Comment
  • Picking The Best Option-Income Closed End Fund [View article]
    The chart is very misleading unless you add back the distributions over the years. Otherwise, you're not comparing total returns.

    In addition, these are the market price graphs, not NAV graphs. The NAVs plus distributions is a much more accurate total return to compare against the S&P 500 than the market prices.
    Jun 21 07:06 PM | 3 Likes Like |Link to Comment
  • Top 10 Healthcare ETFs [View article]
    How about a healthcare Closed-End fund (CEF)? I don't think there is a better opportunity than the Gabelli Healthcare and WellnessRx fund (GRX). GRX has one of the best NAV performances YTD and since inception of all CEFs and yet trades at one of the widest discounts, -15%. Big reason for the historic discount was because it didn't offer a dividend yield for the first 5 years and most investors get into CEFs because of the yield. But just this past March, GRX initiated a $0.10/share per quarter dividend, or about 4.9% annualized market yield. That's modest for a CEF, but I see this increasing.

    GRX also uses about 30% leverage so it can turbo-charge its returns during strong markets. NAV is up over 14% YTD. The leverage also means it has a high total expense ratio at about 2.2%, but I believe that's the price you pay for an actively managed Gabelli CEF, many of which trade at hefty premiums.
    Jun 20 09:05 AM | Likes Like |Link to Comment
  • Is Morningstar Missing Out On The Best Performing Option-Income CEFs? [View article]
    Depends on where you see the market going. ETG and EVT are leveraged and will do much better in a strong market whereas option-income funds will generally hold up better in a flat to down market. Now I'm talking about the NAV of the funds. The market prices can do whatever they want and sometimes, ETG and EVT will outperform the option-income funds even on heavy down days. But if we go into a prolonged negative environment, ETV, ETB & ETW should hold up the best on an NAV and market price basis.
    Jun 13 07:51 PM | Likes Like |Link to Comment
  • Is Morningstar Missing Out On The Best Performing Option-Income CEFs? [View article]
    ETB & ETW are more defensive than EOI or EOS because they sell options on about 95% of their portfolio value vs. about 50% for EOI and EOS. ETB and ETW also use index options whereas EOI and EOS use individual stock options. The theory is that individual stock options will have more premium than indexes because they are typically more volatile but it also puts more pressure on the fund managers to manage the portfolio and options overlay more effectively. For example, AAPL is a top holding in all of these funds but trying to sell individual options on AAPL stock would have been a nightmare over the past year compared to selling NASDAQ 100 or S&P 500 options.
    Jun 13 07:45 PM | 1 Like Like |Link to Comment
  • Is Morningstar Missing Out On The Best Performing Option-Income CEFs? [View article]
    Thanks everybody for your comments. I must say I was borderline shocked with all of the support!

    I did receive an email from Morningstar wanting to clarify a couple points. 1). They did not go negative on ETJ until March of 2012, not November of 2011. To me, that makes them look even more behind the curve, but they wanted me to include that. 2). They are not negative on ETV and have the fund at a bronze rating, which is 1 of 3 positive ratings, and 3). They have EXG at a neutral rating, which is neither positive or negative.
    Jun 13 07:31 PM | Likes Like |Link to Comment
  • Equity CEFs: The High Cost Of High Distributions [View article]
    I'm more long BGY than short NAI. I just starting shorting a little NAI and whether I hold through the ex-div date depends on what the declaration is next week by Allianz. In CEFs, some funds are trades and some funds I hold onto. NAI is more of a trade.
    Jun 8 01:21 PM | Likes Like |Link to Comment
  • Equity CEFs: The High Cost Of High Distributions [View article]
    Good point. Let's take a look at Undistributed Net Investment Income (UNII). Though for option-income funds, UNII is generally not applicable since most of their income comes from options and not portfolio dividends and interest...still NAI has one of the worst UNII's I've ever seen. According to http://bit.ly/NmGadx NAI's UNII was -$0.4433 per share as of its semi-annual report dated 8/31/2011.

    And I'm sure things haven't improved much from a year ago either as NAI's NAV was around $12 and now its $9.52 after paying $1.60 in distributions over the past year.
    Jun 8 11:16 AM | Likes Like |Link to Comment
  • Equity CEFs: The High Cost Of High Distributions [View article]
    It is frankly incredible to me that some institutional investor or market maker would step into a fund like this and not see the potential downside. It really makes me wonder how much manipulation goes on with these funds since there is no justification for NAI to be even close to $11 with an NAV so depressed at $9.52. Could be a short covering as well but these funds have become so counter-intuitive that I don't think 99% of investors even bother to look at the NAV.
    Jun 8 10:51 AM | Likes Like |Link to Comment
COMMENTS STATS
613 Comments
456 Likes