Equity CEFs: The Insanity Of CEF Investors [View article]
Imagine if you started your own Closed End fund and you set it up to have a 10% annual distribution paid each quarter. But since you weren't very experienced, you decided to invested all of the assets in only very aggressive biotechnology stock.
But lo and behold, you got lucky and that one stock position went up by 100% in a year! Now since you have a 100% unrealized capital gain and you have paid yourself and any investors 10% along the way, how is that 10% distribution classified? That's right, 100% ROC because you had no income and no capital gains.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
Calling 20+ distribution cuts and raises over the past few years was due to following the NAV, not the market price. Having 95% success rate on my picks and pans since writing on Seeking Alpha was also due to to following the NAV, not the market price.
But by all means...go with whatever works for you.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
The biggest influence on premium/discount values is the fund's yield. Fund's with the highest yields tend to get a premium valuation though its not just because of the higher yield. Funds with the highest yields tend to have the worst NAV total return performances too and so they will lose NAV value quicker trying to pay for that high yield. This means the fund is more likely to trade at a premium even if the fund's total return is underperforming.
One of the strangest things you will find in equity CEFs is that many of best funds tend to trade at wide discounts and many of the worst can trade at premiums. But that's where the opportunity is because it usually doesn't last forever.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
I wrote negatively on NAI when it had too high an NAV yield and didn't have the NAV total return performance to back up a premium valuation back in July of last year...http://seekingalpha.co....
I said NAI would cut its distribution, which it did substantially a couple months later. I was short at the time though not any more. I think the fund is more reasonably priced now though I would still rather own a fund that could possibly raise its distribution than one that is still going to struggle to meet its distribution.
Its amazing to me that investors just don't get it and have to wait for a distribution cut or increase before they react.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
Table covers 9/31/2007 to 2/22/2013 or over 5-years. Since you're looking at a different end date, now the period covers from 9/31/2007 to 9/30/2011. During that time, NIE was down -10.1% and PGP was down -15.2% with all distributions added back.
This is a running tally going back to the start date, not a qtr by qtr performance. But if you wanted to calculate say, the 3rd qtr 2011 performance for NIE for example, you would have to take the starting NAV of $20.06 on 6/30/2011, the end NAV of $16.87 on 9/30/2011 and include the $0.28 distribution during the period.
Obviously, the 3rd quarter 2011 was negative, hence why it is shown in red.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
JCE's NAV has done well, no question about it, but its also a pure equity fund like ETY. Also, I don't think either JCE and certainly not ETY, are in a position to raise their distribution. NIE is, and we'll see in the next couple weeks.
Equity CEFs: The Insanity Of CEF Investors [View article]
Obviously, tax reporting has become more sophisticated by the brokerage firms. However, none of this should be affecting your Box 3 Non-dividend distribution amounts or even your tax implications IF you didn't sell any of your ROC investments in 2012.
Proceeds have historically been what was reported to the IRS and it was important that your tax forms substantially match the amount of proceeds being reported by your brokerage firm. On 1099's this year, however, cost basis also seems to be reported to the IRS as well, except actual gain/loss is not.
The bottom line is that if you adjust your cost basis, you need to be careful that it doesn't vary too much from what is being reported by your brokerage firm. Though the proceeds # is still probably the more important of the two in the eyes of the IRS, nothing seems to be taken for granted anymore. Still, if you don't sell, then all of this is a moot point and I'm guessing that you also receive a step up valuation when assets are passed on to heirs.
Equity CEFs: The Insanity Of CEF Investors [View article]
Well, it does look like 1099's for this year are accounting for ROC in each transaction based on a first glance review. I don't recall brokerage statements doing that in the past, i.e. they were only accounting for ROC in the distributions, so I suppose the good news is that you don't have to adjust your cost basis anymore. The bad news is that any adjustment for tax purposes will have to be done from a "lower cost basis" scenario as opposed to an original "higher cost basis" scenario.
Does this take away from the advantages of ROC? Not necessarily if you don't plan on selling. ROC was always based on the concept of tax deferral, not tax elimination. And though I am not an accountant, I would imagine that any heirs would receive a step up in valuation as part of an estate settlement as well, though don't quote me on that.
Equity CEFs: No Rotation In The Allianz/PIMCO Funds [View article]
I have a great deal of respect for the Allianz/PIMCO family of funds since I own some of them. If I'm beating up on anyone, its the investors who buy these funds at such high premiums. And I personally would not call it beating up...I would call it more of a warning.
Equity CEFs: The Insanity Of CEF Investors [View article]
I think you're over-analyzing this. Your distributions are not a "cost" since it didn't cost you anymore than your initial investment. According to my calculations, your $23K initial investment is worth at least $26,400 using at least 2,600 shares X $10.15. That's not great over the last 3-years but then ETY is an option-income fund and won't perform like a leveraged fund in an up market. Certainly, ETY's market price performance has been better more recently but I don't necessarily recommend buying and holding these funds for long periods. You have to be nimble with them.
In addition, I sincerely doubt your statement's cost basis takes into account ROC. I have never seen a brokerage statement keep track of that. If you decide to sell, it would really be up to you to determine your adjusted cost basis.
Equity CEFs: No Rotation In The Allianz/PIMCO Funds [View article]
I really only cover equity CEFs. I follow fixed-income CEFs but I don't have a good feel for them. All I can tell you is when the worm turns, fixed-income CEFs can have as volatile a market price as stock CEFs.
Equity CEFs: The Insanity Of CEF Investors [View article]
But lo and behold, you got lucky and that one stock position went up by 100% in a year! Now since you have a 100% unrealized capital gain and you have paid yourself and any investors 10% along the way, how is that 10% distribution classified? That's right, 100% ROC because you had no income and no capital gains.
Gabelli Equity CEFs: Leveraged Funds For A Bull Market (Revisited) [View article]
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
But by all means...go with whatever works for you.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
One of the strangest things you will find in equity CEFs is that many of best funds tend to trade at wide discounts and many of the worst can trade at premiums. But that's where the opportunity is because it usually doesn't last forever.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
I said NAI would cut its distribution, which it did substantially a couple months later. I was short at the time though not any more. I think the fund is more reasonably priced now though I would still rather own a fund that could possibly raise its distribution than one that is still going to struggle to meet its distribution.
Its amazing to me that investors just don't get it and have to wait for a distribution cut or increase before they react.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
This is a running tally going back to the start date, not a qtr by qtr performance. But if you wanted to calculate say, the 3rd qtr 2011 performance for NIE for example, you would have to take the starting NAV of $20.06 on 6/30/2011, the end NAV of $16.87 on 9/30/2011 and include the $0.28 distribution during the period.
Obviously, the 3rd quarter 2011 was negative, hence why it is shown in red.
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
Equity CEFs: The Insanity Of CEF Investors [View article]
Proceeds have historically been what was reported to the IRS and it was important that your tax forms substantially match the amount of proceeds being reported by your brokerage firm. On 1099's this year, however, cost basis also seems to be reported to the IRS as well, except actual gain/loss is not.
The bottom line is that if you adjust your cost basis, you need to be careful that it doesn't vary too much from what is being reported by your brokerage firm. Though the proceeds # is still probably the more important of the two in the eyes of the IRS, nothing seems to be taken for granted anymore. Still, if you don't sell, then all of this is a moot point and I'm guessing that you also receive a step up valuation when assets are passed on to heirs.
Equity CEFs: The Insanity Of CEF Investors [View article]
Does this take away from the advantages of ROC? Not necessarily if you don't plan on selling. ROC was always based on the concept of tax deferral, not tax elimination. And though I am not an accountant, I would imagine that any heirs would receive a step up in valuation as part of an estate settlement as well, though don't quote me on that.
Equity CEFs: No Rotation In The Allianz/PIMCO Funds [View article]
Equity CEFs: No Rotation In The Allianz/PIMCO Funds [View article]
Equity CEFs: The Insanity Of CEF Investors [View article]
In addition, I sincerely doubt your statement's cost basis takes into account ROC. I have never seen a brokerage statement keep track of that. If you decide to sell, it would really be up to you to determine your adjusted cost basis.
Gabelli Equity CEFs: Leveraged Funds For A Bull Market (Revisited) [View article]
Equity CEFs: No Rotation In The Allianz/PIMCO Funds [View article]