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Douglas Albo

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  • Equity Closed-End Funds: Why EXG Is A Better Fund Than You Think [View article]
    UNII only applies to EXG's investment income (portfolio dividends and interest), not its option income. Option income makes up the bulk of the fund's income strategy by far, potentially up to $300 million per year.

    That -$0.59/sh comes from as follows...go to page 13 of EXG's 6-mo semi-annual report and as of 4/30/2011, EXG had $23,139,511 of net investment income (that's minus ALL expenses too) and paid out $203,669,399 in distributions. Divide that loss by 305 million shares and you'll get -$0.59/share annualized.
    Dec 18 01:08 PM | 2 Likes Like |Link to Comment
  • Equity Closed-End Funds: Why EXG Is A Better Fund Than You Think [View article]
    I don't think you can compare stocks with funds. Individual stocks have greater appreciation potential but they can also collapse, i.e. a Citigroup. Diversified securities generally won't have the upside potential (although in 2009 many CEF's went from extreme discounts to extreme premiums) but they won't collapse like a non-diversified security can, at least not suddenly.

    That being said, securities (stock or fund) that are raising dividends can expect to do well and visa-versa. There are actually several leveraged utility based CEF's (HTD is one I like) that have raised dividends this year and are doing well in price appreciation too, just like NEE. I just happen to look for the down and out funds that nobody likes (EXG is a good example at a -17% discount, wouldn't you say?) that may make a good turnaround story.

    EXG, like most CEF's, estimates what their income will be and sets its distribution around that. In years like 2009 & 2010, their income strategy underperformed and the fund was forced to cut distributions to better align with their income. In 2011, their income strategy is working much better even if their international stocks are not. Earlier in the year, I said that I didn't believe Eaton Vance would need to cut distributions any more and I stand by that. Now, I don't think EXG or any option-income fund will be raising distributions anytime soon but if we continue in a volatile up and down market environment, then EXG should be able to maintain its distribution and at a -17% discount and a 14.3% yield, I think there is price appreciation potential in addition to the yield as well.

    I also looked at NEE's total return since EXG's inception and I came up with a 13% total return since 2/23/07 ($57.87 current price + $9.51 in dividends compared to a $59.64 closing price on 2/23/07). Considering EXG's overseas exposure during this time frame, I don't think a -8.2% NAV total return is that bad compared to a 13% total return for a US based utility stock which I assume is one of your better performing positions this year. Then take a -17% discount from the NAV and I hope that gives you a better feel for why I think EXG offers good value.
    Dec 18 12:44 PM | Likes Like |Link to Comment
  • Equity Closed-End Funds: Why EXG Is A Better Fund Than You Think [View article]
    I'm looking at it hard. I already own alot of the Eaton Vance funds and its just NOT been the place to invest this year. Tax-loss selling may keep these funds in check until the end of the year but I'm hoping we'll see institutional interest step in in early 2012. They tend to be longer term holders instead of all the swing traders who now play these funds.
    Dec 16 08:49 AM | 1 Like Like |Link to Comment
  • 2011: A Year To Forget For Equity CEFs [View article]
    CEF's have a market price and an NAV price. The NAV price is the true price of the fund, the liquidation value. ETF's and mutual funds trade at a market price that matches their NAV's. Not so for CEF's. The market price can be higher (premium) or lower (discount) depending on investor sentiment. Do you see how a CEF's NAV price can be doing well while its market price may not?
    Dec 14 09:27 AM | Likes Like |Link to Comment
  • 2011: A Year To Forget For Equity CEFs [View article]
    Absolutely CEF's can go through premium/discount cycles. Every one of the CEF's I mention in my articles have been at premiums at some time over the last couple years. Go ahead and graph them on CEFConnect.com. And there are many institutions that focus heavily on CEF's. I could rattle off a dozen $100 million to $5 billion institutional firms that own CEF's in size so I don't know how you make a blanket statement like that. And I'm not talking about banks or brokerage firms either.
    Dec 13 02:17 PM | Likes Like |Link to Comment
  • 2011: A Year To Forget For Equity CEFs [View article]
    JCE has been fantastic, both in NAV and price performance this year. I tend to look for the down and out funds that aren't appreciated by the market so take it as a blessing in disguise that I haven't written about JCE!
    Dec 13 09:56 AM | 1 Like Like |Link to Comment
  • PIMCO High Yield Funds: Dividend Plays For Shorter Term Traders [View article]
    PGP does not own stocks. It's a mostly fixed-income portfolio that uses the cash flow to purchase massive equity futures contracts, mostly Emini S&P 500 contracts. This strategy was great in a ramp up market but the contracts are getting crushed this year with an NAV down about -14% including distributions.

    When you can buy CEF's that are SHORT options and have higher distributions and are at -15% discounts, this is one of the absurdities of the CEF market. It is frankly, unbelievable that NO ONE seems to get this.
    Nov 23 09:00 AM | 1 Like Like |Link to Comment
  • Giving Away Outperforming Equity CEFs At -16% Discounts [View article]
    I think we have been over this before, Carousel. EXG's NAV has OUTPERFORMED the S&P 500 since inception even as a GLOBAL fund. I'm sorry if you bought the fund at the wrong time but don't blame the fund for that. You would be singing a different tune if EXG were at a premium or even par.

    EXG's current NAV is $9.96 + $7.61 Total distributions - $19.07 Inception NAV on 2/23/07 / $19.07 = -7.9%

    SPY current price $121.98 + $11.67 Total dividends - $145.30 price on 2/23/07 / $145.30 = -8%

    Even YTD, EXG's NAV is down -5.1%, which is a heck of alot better than most other global funds I follow from ING and BlackRock. BOE -8.4%, BGY -10.3%, IAE -14%, IDE -10.2%.
    Nov 21 09:21 AM | 1 Like Like |Link to Comment
  • Defensive Equity CEFs At 12% Discounts And 12% Yields [View article]
    I would look to buy a half position here and add on severe weakness or the beginning of the year, whichever comes first.

    Ranking is difficult because it depends on where you see the market headed. EOI & EOS both go ex-dividend on monday, the 21st. Of the two, I like EOS because its NAV has done better and historically has a higher valuation. Both have 50% option coverage, so they are not as defensive as ETV, ETB or ETW at 95% option coverage.
    Nov 17 08:50 AM | Likes Like |Link to Comment
  • Giving Away Outperforming Equity CEFs At -16% Discounts [View article]
    I don't like ETJ even with its large discount because the fund buys put options on 100% notional value on its portfolio. It has proven to be a huge expense that hasn't paid off even in a down market and I believe Eaton Vance would be wise just to drop it altogether. Eaton Vance tried to offset the expense by selling deeper in-the-money put options awhile ago but it really hasn't helped much.
    Nov 16 08:37 PM | Likes Like |Link to Comment
  • Giving Away Outperforming Equity CEFs At -16% Discounts [View article]
    No. See below.
    Nov 16 08:28 PM | Likes Like |Link to Comment
  • Giving Away Outperforming Equity CEFs At -16% Discounts [View article]
    I follow about 100 equity CEF's and I'll write on any one of them if I feel they are a compelling buy or sell. I've written positive pieces on RVT, CII, JSN, JLA, JPZ, NFJ, IGD. I've also written negative pieces on AGD, AOD, IRR, BGY, BOE, PGP.

    I write more often on the Eaton Vance funds because I believe they still offer the most compelling buys based on their relative valuation (which includes NAV performances and discounts mostly). Believe me, I would like nothing better than to write about other funds! That would mean that the EV funds are doing better!
    Nov 16 08:26 PM | 1 Like Like |Link to Comment
  • Giving Away Outperforming Equity CEFs At -16% Discounts [View article]
    EXG is at a -15% discount as well and has outperformed most other global option-income CEF's from BlackRock and ING this year. It's just not as defensive as ETV, ETB & ETW as it sells only about 50% option coverage. If I'm going to buy an Eaton Vance option-income CEF with 50% option coverage, I would rather own EOS which pays monthly and historically has been at a much higher valuation. The only Eaton Vance equity CEF I don't like is ETJ.
    Nov 16 09:02 AM | Likes Like |Link to Comment
  • Giving Away Outperforming Equity CEFs At -16% Discounts [View article]
    There are some very astute institutional investors who do nothing but re-invest the distributions at these discounts. They don't plan on selling so the realized capital gain issue is null. Their clients receive 1099's based on a fraction of the distributions received while they accumulate shares at market prices -15% below NAV. That's how discounts and ROC can be a good thing.
    Nov 16 08:54 AM | Likes Like |Link to Comment
  • Tax Loss Selling Creates Opportunities In Option Strategy Closed-End Funds [View article]
    George, we may be the only ones left owning these funds by January at this rate!

    I've pretty much given up writing on these funds since nothing seems to make a difference, but as much as I believe many of the Eaton Vance option income funds are at their best buys in 2 1/2 years, I don't believe ETJ is one of them. Eaton Vance would be wise to just drop the buy put component on ETJ which is their only fund which utilizes put options. The collar option strategy just hasn't benefited the fund much even in a down market.
    Nov 14 09:49 PM | Likes Like |Link to Comment
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