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Douglas Albo

 
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  • The 3 Safest High-Yielding Investments You've Never Heard Of [View article]
    Actually, BCX does not try and outperform the commodity index benchmark. It's primary objective is current income w/ capital appreciation second. That doesn't mean it won't outperform the index and so far in 2012, it probably has. Still, BCX sells derivatives (options) against its portfolio...it's NAV is not designed to outperform in a strong commodity rally. Selling covered-call options is where it gets its income to pay such a high distribution.
    Jan 31 06:58 PM | 1 Like Like |Link to Comment
  • Guggenheim Enhanced Equity Fund: Can Leverage, Option Income Make An Attractive Investment? [View article]
    Both are defensive with the 95% - 100% option coverage but because ETV doesn't use leverage, it gets the nod as being more conservative. GPM is going to have more active portfolio management with the leverage and the ETF's and in fact, had a 500% turnover last year according to CEFConnect.com. I think you can own both and I think its good to spread investments among several fund families such as Eaton Vance, Blackrock, ING, etc. anyway since fund families can fall in or out of favor.
    Jan 25 04:59 PM | 1 Like Like |Link to Comment
  • Guggenheim Enhanced Equity Fund: Can Leverage, Option Income Make An Attractive Investment? [View article]
    UNII or Undistributed Net Investment Income may be a good measure for CEF's which utilize an investment income strategy, i.e. portfolio dividends and interest to pay for their distributions (such as dividend harvest and leveraged CEF's) but it really doesn't apply to funds which use an option-income strategy. Yes, option-income funds will have net investment income too but its not their primary income vehicle and thus when you compare their net income with what they pay out, their UNII is typically negative.
    Jan 25 10:01 AM | 3 Likes Like |Link to Comment
  • Earnings Update: Eaton Vance Buy-Write CEFs [View article]
    Hopefully this article I wrote will clarify things for you...

    http://seekingalpha.co...
    Jan 18 06:34 PM | Likes Like |Link to Comment
  • Earnings Update: Eaton Vance Buy-Write CEFs [View article]
    You really need to understand how these funds work. The report of earnings in which the author quotes from is just that...a report of "earnings." The #'s have NOTHING to do with the fund's options operations. It includes all portfolio income and interest minus expenses plus the net increase (decrease) in net assets.

    If you want to get a clearer picture of how the fund is really doing, simply track the NAV. I do it on a calendar year. 12/30/2010 - ETB's NAV was $15.03, on 12/30/2011 - ETB's NAV was $14.69. Add back total distributions, which was $1.296 for 2011 and you'll see that ETB's total return was 6.5%, well ahead of the S&P 500. From inception through 12/11, ETB's NAV total return is up 32.1% compared to the S&P 500's 18.8% (and that includes dividends for the SPY which most S&P 500 quoted returns don't!). I mean, its not even close!

    This is the biggest misconception of these funds. That their high distributions of ROC means that they are just returning your investment. Do you realize that Eaton Vance tries to MAXIMIZE ROC? That's why "tax-managed" is in its name. They do this mostly with their options operations. Here is a good intro to how they (and many buy/write fund sponsors) do it...

    http://bit.ly/wXGGvh

    Go to fund literature, and then link to Related Content on the right side, "Non-Dividend Distributions - Return of Capital."
    Jan 18 09:26 AM | Likes Like |Link to Comment
  • Earnings Update: Eaton Vance Buy-Write CEFs [View article]
    They don't perform poorly at all from an NAV perspective. ETB and ETV have FAR outperformed the S&P 500 over the past year and since their inceptions. AND they trade at a historically wide discounts which means you can pick up a windfall yield at the market price, which you can't do doing your own covered-call strategy.

    Yes, the market price performances of the EV funds have been horrible but that is where the opportunity lies. I have yet to find ANY buy/write CEF that has had better NAV performance than ETB and ETV.
    Jan 17 10:19 AM | Likes Like |Link to Comment
  • The Best Equity CEFs For 2012: Part I [View article]
    Not really. You can read my articles concerning ROC. Many funds try to maximize ROC because of the tax benefits and option-income funds are in the unique position of being able to generate alot of ROC.
    Jan 12 09:00 AM | Likes Like |Link to Comment
  • EXG Is Failing To Generate The Income It Seeks [View article]
    Nope...try again. On an NAV basis, ETB's and NFJ's performance are about awash over the past 2-years through the 4th qtr '11, each up about 14%. Since roughly inception starting 2nd qtr '05, ETB's NAV is up 32% vs. NFJ's up 21%. Compared to JCE, which went public 3/27/07 or say from the 1st qtr '07, ETB's NAV is up 13% while JCE's is up 4.5% (NFJ is -3.9%).

    Market price performance I don't care about because I look for where the opportunities are and even if a fund's NAV has beaten ETB's over a shorter time frame but is at a 30% premium (DNP, GUT), I'm still going to favor ETB.
    Jan 11 09:12 AM | Likes Like |Link to Comment
  • The Best Equity CEFs For 2012: Part II [View article]
    Thank you. Glad to see my work is appreciated.
    Jan 8 06:13 PM | Likes Like |Link to Comment
  • EXG Is Failing To Generate The Income It Seeks [View article]
    To say that selling covered-call options is a flawed approach implies that being on the other side of the trade, i.e. being long call options will more likely be successful. That is simply not the case. I have been in this business for 16-years, most of that time with Morgan Stanley and Smith Barney and I have NEVER seen anyone consistently make money being long options. The reason is that options are a time depreciating asset and time works to your benefit when you are short options.
    Jan 8 02:15 PM | 3 Likes Like |Link to Comment
  • The Best Equity CEFs For 2012: Part I [View article]
    Still like EOS, own alot of it. I like the monthly pay feature but EOS had a somewhat underwhelming year in NAV performance in 2011. So far this year, however, EOS looks good. It's benchmark is the S&P 500, NASDAQ and Russell 1000, .
    Jan 7 06:06 PM | Likes Like |Link to Comment
  • The Best Equity CEFs For 2012: Part I [View article]
    Just believe there will be a rotation in performance in 2012. If the Dow Jones does well, then DPO will do well too, but I think small, mid cap and overseas markets could do better, thus the reason for other funds.
    Jan 7 05:53 PM | Likes Like |Link to Comment
  • EXG Is Failing To Generate The Income It Seeks [View article]
    Huh? EXG is not even in the same ballpark as AOD. EXG and AOD's inceptions were about a month apart in early 2007 so they DO make good comparisons. AOD's NAV performance (NAV + distributions) since the beginning of the 2nd qtr. 2007 is down -34.7%. EXG's NAV over the same time period is down only -5.7%. On an NAV basis, which is the true performance of the fund, EXG has crushed AOD as a global CEF. EXG's market price performance may look ugly but that is where the opportunity lies.

    You're a perfect example of why I wrote this article... http://seekingalpha.co...
    Jan 7 03:22 PM | 3 Likes Like |Link to Comment
  • EXG Is Failing To Generate The Income It Seeks [View article]
    I disagree with this article. I've reviewed EXG's semi-annual and annual reports when they came out and there is plenty of revenue to meet the quarterly distributions if the options expired worthless. Though that won't happen every month, as long as the option premium and portfolio income cover the distributions, that's all I care about.

    EXG needs to generate $86.9 million per quarter to cover its distribution (305.5 million shares X $0.2843/share). If you go to page 9 of their annual report you'll see they took in $42.8 million in November expiration options. Extrapolate that over 3 months and that works out to $128.4 million per quarter. Add 1/4 of EXG's net investment income for the fiscal year of $58.6 million (page 11) and that's a sure $14.6 million as well.

    So the "potential" income per quarter is $143 million ($128.4 + $14.6). This is "potential" because even though the quarterly net income of $14.6 million is assured, the option revenue is not. Some months they may keep all of their premium (down months) and some months they may have to buy back their options (up months), but as long as the fund can more than cover it's distribution with its "potential" income, then EXG should not be in danger of any more cuts. The real concern for EXG is another down overseas market or poor stock picks but after two distribution cuts in 2010, EXG's distribution to income coverage should be fine.

    ETY was the real disappointment last year, not EXG.
    Jan 6 09:47 PM | 3 Likes Like |Link to Comment
  • EXG Is Failing To Generate The Income It Seeks [View article]
    The rest are pretty dismal? Tell me another option-income fund that has had better NAV performance than Eaton Vance's ETB or ETV since their inceptions? Seriously, I would like to know. I'm not saying there isn't one but I haven't found any.
    Jan 6 08:46 PM | 2 Likes Like |Link to Comment
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