Seeking Alpha
View as an RSS Feed

Douglas Albo  

View Douglas Albo's Comments BY TICKER:
Latest  |  Highest rated
  • Equity CEFs: The First Cut Is The Deepest (Part II) [View article]
    You won't hear me say anything negative about ETW, I've owned it for a long time. It's just that ETW is more defensive than EXG selling 95% option coverage on its global portfolio vs. 47% for EXG. EXG may not have the NASDAQ exposure as ETW, but that low option coverage means its NAV has more upside capture in a strong global market. ETW also just went ex-div whereas EXG's rotation comes up again in November.
    Sep 24, 2012. 03:32 PM | Likes Like |Link to Comment
  • Equity CEFs: The First Cut Is The Deepest [View article]
    Thanks for your comment!
    Sep 18, 2012. 08:14 AM | Likes Like |Link to Comment
  • Equity CEFs: The First Cut Is The Deepest [View article]
    ETB has come a long ways in market price considering its NAV performance actually trails most of the other Eaton Vance option funds! Its a smaller fund so it can be more volatile. I've actually lightened up in ETB but I wouldn't be surprised if it got to a premium valuation with the strong uptrend its showing. I think ETV is a much better valuation here and goes ex-dividend next along with ETW. Both are similar to ETB in their high option coverage though ETW is global. EOS needs to show me a bit more umph in its NAV performance and I'm a bit disappointed that it hasn't kept up more with the NASDAQ , which is up 22% YTD. EOS is very tech heavy and with only 50% option coverage, really should be up more than the 14.2% total return on its NAV.

    I still prefer the leveraged funds, which are far outpacing the option-income funds this year. CHW is a gift here in my opinion. NAV up 16.6% YTD, -11.2% discount, 8.7% market yield paid monthly and over half its portfolio is in corporate, high yield and convertible bonds. How many pure leveraged corporate/high yield bond funds are even at discounts right now? Not many.

    CHW's sister fund, CSQ (more US based stocks whereas CHW is global stocks) keeps hitting new highs and is only at a -5.4% discount and yet CHW is the one with better NAV performance and a higher yield! Both raised distributions substantially in January.

    Sep 18, 2012. 08:13 AM | 1 Like Like |Link to Comment
  • Equity CEFs: The First Cut Is The Deepest [View article]
    Thank you for your comment!
    Sep 18, 2012. 07:50 AM | Likes Like |Link to Comment
  • Equity CEFs: The First Cut Is The Deepest [View article]
    I would be wary of IGD here. Though I picked it as one of my funds to own for 2012, I don't like the direction of its NAV. Up only 8.4% YTD, which is not very good considering how strong the overseas markets have been recently. Yes, it has a 10.9% market yield and yes, it pays monthly, but I don't think the distribution cuts are over for IGD.
    Sep 18, 2012. 07:48 AM | Likes Like |Link to Comment
  • Equity CEFs: The First Cut Is The Deepest [View article]
    I generally don't cover fixed-income CEFs but I'll take a look at it. Obviously, it has done very well riding on the back of a strong muni market. Reminds me a bit of a low-volatility PGP, which also has a fixed-income portfolio (non-muni) but instead of selling options, goes out and buys long S&P 500 e-mini futures. Also has done extremely well though also trades at a 65% premium! Thanks for your comment.
    Sep 18, 2012. 07:38 AM | Likes Like |Link to Comment
  • If Bill Clinton Gave A Speech On Fiscal Responsibility In Equity CEFs [View article]
    Hedging long positions with short ones has had mixed results this year. For example, one would think an arbitrage between the Alpine funds AGD and AOD would be an obvious winner but nothing seems to change the valuation spread between these two funds. The NAV graphs are essentially the same (though supposedly one is more global than the other) and yet AGD (which is actually the global one) trades at a 9%-10% premium while AOD suffers a -7% discount with a 200 bp higher yield! Why is that? Both funds have had horrible NAV performance over the years and both will have to cut their distributions eventually but it still should be a strategy that works since AGD has a lot further to fall. So far, the spread has not narrowed much even though it should.

    You have to be nimble with shorts and hedges with CEFs. Often times, these funds will get a bounce on their ex-dividend date because of reinvestment programs or because investors may have limit orders and don't realize that funds are reduced by the ex-dividend. This works best with quarterly pay funds that have a larger price reduction and won't pay again for 3-months. JTD (which I love BTW) is a good example. Shorted on its ex-div date 2-days ago at $14.52, which was actually up when you consider the fund was reduced by the $0.26 distribution and by the next day, the fund was down to $14.25 or so as investors who had locked in the distribution sold. I would probably have held onto the short for a longer period as a hedge but in this strong market, forget about it.
    Sep 14, 2012. 10:07 AM | Likes Like |Link to Comment
  • If Bill Clinton Gave A Speech On Fiscal Responsibility In Equity CEFs [View article]
    Yeah, I'm out of BGY once it made a run back up after the cut. Purely international fund with an 8.9% yield now. I can get that yield in a leveraged global fund like CHW which should far outperform BGY in an up market. BlackRock option-income funds in 2012 have become the Eaton Vance option-income funds of 2010-2011. Though I think the cuts for BGY are over, I much prefer the Eaton Vance funds now which have really come on. BGY is ex-dividend today 9/12.
    Sep 12, 2012. 07:38 AM | Likes Like |Link to Comment
  • If Bill Clinton Gave A Speech On Fiscal Responsibility In Equity CEFs [View article]
    My integrity? Maybe you should be directing that question to the sponsors of these funds who lure investors in with distributions and yields they know they can't support. I follow ALL of the higher yielding equity CEFs and perform short and long term analysis on virtually all of them so I'm not just randomly picking on funds to short. I know which ones are operating in the best interest of investors and which ones are not.

    Oh, and the facts changed quite a bit since my last article. NAI cut its distribution substantially which is exactly what I predicted.
    Sep 10, 2012. 07:42 PM | 5 Likes Like |Link to Comment
  • If Bill Clinton Gave A Speech On Fiscal Responsibility In Equity CEFs [View article]
    Actually 3 articles in the last month. Don't sell me short!!

    Yes, in case readers aren't aware, we're required to disclose that information and Seeking Alpha puts additional disclosures at the bottom of the article...

    Additional disclosure: Short NAI, AGD & EOD

    As for the "objectivity" and/or completeness of my analysis, you're welcome to take the other side and add something positive to NAI, AGD or EOD if you'd like. I'll stand by my analysis on these funds and every fund I've written about, positive or negative. I think you'll find I have been right a vast majority of the time.

    But as it turns out, so far I am wrong on NAI, AGD & EOD in this strong market environment, though I have been right on shorting these funds before and I'm pretty confident I will be right this time as well. Just so you know, I use shorts more as hedges to my long CEFs.
    Sep 10, 2012. 02:30 PM | 2 Likes Like |Link to Comment
  • If Bill Clinton Gave A Speech On Fiscal Responsibility In Equity CEFs [View article]
    Thank you! I had a lot of fun writing it!
    Sep 10, 2012. 12:23 PM | Likes Like |Link to Comment
  • 1565: What Will It Take To Make The Old S&P 500 Highs? [View article]
    We're essentially already at all time highs as measured by the S&P 500 ETF...SPY. It always amazes me that index comparisons don't include dividends whereas stocks, ETFs, CEFs and mutual funds do when calculating total return.

    Graph the S&P 500 with SPY. Exactly the same. Then consider SPY pays dividends while the S&P 500 is assumed not to. So today's SPY at 144.33 would be worth 155.66 if you added back the 11.33 in total dividends since October, 2007.

    Do it on a reinvested basis, and we're at all-time highs.
    Sep 9, 2012. 02:01 PM | 2 Likes Like |Link to Comment
  • The Best Equity CEF Market Price Performances YTD [View article]
    Here's my problem with EOD. Compare its NAV performance against the most maligned global option-income funds I know, EXG and ETW, two funds that trade at over-14% discounts. EOD went public in March 2007 so let's use the 2nd qtr of 2007 as a starting date since all three funds were trading at that time. EXG actually went public just before EOD in Feb '07.

    EOD's NAV total return performance from 2nd qtr. 07 to Sept. 4, 2012 is -17.2% ($8.46 current NAV + $7.86 distributions - $19.72 NAV on 6/30/07 divided by $19.72).

    Compare that to ETW's up 2.6% ($12.74 current NAV + $7.78 distributions - $19.99 NAV on 6/30/07 divided by $19.99) and EXG's -6.4% ($9.97 current NAV + $8.19 in distributions - $19.41 NAV on 6/30/07 divided by $19.41).

    So EOD trailed both ETW & EXG pretty substantially over that 5-year or so period of time. OK...so maybe EOD performs better in an up market environment so instead of comparing from just before the financial crisis hit later in 2007, let's compare from the market low around the 2nd qtr. 2009. Here the total return NAV performances should look better.

    From 3/30/09 to 9/4/12, EOD's total return was 29.6% ($8.46 current NAV + $3.86 in distributions - $9.51 NAV on 3/30/09 divided by $9.51). That is an abysmal total return performance from the market low frankly. Compare that to 53.7% for ETW and 41.4% for EXG, two funds that get very little respect but still far outperformed EOD.

    So if EOD cannot outperform two of the most maligned global option-income funds from either the market highs (or close to it) or from the market lows, THEN WHY IS IT TRADING AT A PREMIUM WHEN THESE TWO OTHER FUNDS TRADE AT -14% DISCOUNTS?

    That's my problem with EOD.
    Sep 5, 2012. 05:10 PM | Likes Like |Link to Comment
  • The Best Equity CEF Market Price Performances YTD [View article]
    1. ETJ and IRR both buy put option protection but I would not invest in them for the long term.

    2. 2011 saw tax-selling climax very late in December though I don't believe we will have the same intensity this year.
    Sep 5, 2012. 09:12 AM | 1 Like Like |Link to Comment
  • Why A Buy-Write ETF Generates A 10% Yield [View article]
    Thanks for bringing up the topic of buy/write funds. As we go into the more seasonally challenged period of September-October, this strategy could pay off. Anyone who has sold call options on individual stocks or ETFs knows that if the options expired worthless and they were able to do that every month (not likely), they could receive 18%+ additional income independent of how the stock or ETF performed, so an ETF yielding 10% is not excessive.

    It should be noted that there are a lot of popular buy/write funds among CEFs and I write on the subject often. One advantage of CEFs is that they can trade at discounts and so you can get an even higher yield than what the fund is paying at the NAV.

    ETV and ETB from Eaton Vance are the best buy/write (also called option-income and covered call funds) I have come across. Very defensive selling up to 95% coverage on their large cap US based stock portfolios and with similar 10% or so yields. You can find higher yielding CEFs, but I wouldn't recommend them as they tend to erode their NAV's faster.
    Aug 29, 2012. 11:28 AM | Likes Like |Link to Comment
COMMENTS STATS
689 Comments
590 Likes