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Douglas Albo

 
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  • Comparing Dividend CEFs With ETFs: Which Are Better? [View article]
    Stellar? Improved maybe, but hardly stellar.
    Jul 20 10:46 AM | 1 Like Like |Link to Comment
  • Equity CEFs: The Rights Way To Play CEFs [View article]
    Yes, that's true and I make mention of that in the article. Which is why buying the Rights at a discount can offset that to a degree. Last week, GRX-RI was trading at about $0.30/share or an implied $9.90 for GRX after a conversion. So even with the NAV reduction down to $11.20 or so post conversion, your basis is right back to a -13.1% discount.
    Jul 1 04:12 PM | 1 Like Like |Link to Comment
  • Equity CEFs: The Rights Way To Play CEFs [View article]
    Yes, you have to include the Rights offering. From Gabelli...

    http://bit.ly/1z5bOmf

    Hopefully, the link works but if not, you can go to Dividend/Tax Info tab for GRX. Gabelli has $0.7548 for the Rights NAV reduction back on July 24, 2013. But for shareholders, it's essentially a distribution that they get back.
    Jul 1 11:39 AM | Likes Like |Link to Comment
  • Equity CEFs: The Rights Way To Play CEFs [View article]
    If you owned GRX before the record date of June 3rd, you're entitled to put in for the over-allotment. You'll need to contact your broker or brokerage and exercise your Primary Rights first and if you want to put in for the over-allotment, specify the additional number of shares you would like to submit. Neither the Primary Rights exercise or the over-allotment privilege is done automatically so you need to call it in. And you will also need to have $9/share available as well.
    Jul 1 10:24 AM | Likes Like |Link to Comment
  • Equity CEFs: Funds Benefiting From The Weakness In Technology And Small Cap Sectors [View article]
    Not much opportunity with the discount valuations so similar between the three funds. BHK, as the surviving fund, would have to go up in valuation compared to BKT and BNA.

    JLA/QQQX is still the best arbitrage play but both go ex-dividend tomorrow so I wouldn't do anything until then.

    http://seekingalpha.co...
    Jun 10 02:02 PM | Likes Like |Link to Comment
  • Equity CEFs: QQQX And JLA Merger Opportunity [View instapost]
    I wish! That would make JLA shares even more valuable at around $16.25 based on a combined NAV and combined # of shares. But no, the consolidation is intended to be non-dillutive and non-taxable so it will be based on the NAV ratio of the two funds. JLA shareholders will actually get LESS shares than they currently own but at QQQX's market price. QQQX shareholders will be unaffected all the way around.

    This is similar to how the NIE/NGZ merger went last year. In that case, I was long the surviving fund, NIE, and short NGZ, just the opposite of this one where QQQX will be the surviving fund. I wrote an instablog on that as well...

    http://bit.ly/1idhLTi
    Jun 8 09:20 AM | 1 Like Like |Link to Comment
  • Nuveen To Consolidate Its Equity Option Income Funds: What Does It Mean? [View article]
    Not likely. The NGZ/NIE merger had an even bigger discount/premium spread when the deal was announced and it was approved. Ultimately, institutional investors call the shots and they will go along with the merger because of the economies of scale. Most individual investors won't even vote which also means a yes vote.
    May 6 12:00 PM | Likes Like |Link to Comment
  • Nuveen To Consolidate Its Equity Option Income Funds: What Does It Mean? [View article]
    I also think there is more and more institutional interest in these funds not just because of a rotation from growth to value and higher yielding securities this year but also because of newer funds like CEFL, which invest in CEFs.

    There's no limit to how much money can go into a fund like CEFL (unlike CEFs) and with an 18% yield, there's probably a ton of money rotating in and eventually, it has to be put to work in CEFs. This is good for CEF valuations but will also make them more volatile if investors ever start pulling money out of funds like CEFL.
    May 2 01:22 PM | 1 Like Like |Link to Comment
  • Nuveen To Consolidate Its Equity Option Income Funds: What Does It Mean? [View article]
    If this merger goes anything like the NIE/NGZ merger, it took months before the valuations reflected the conversion. But NIE, which was at a -13% discount at the time, was going to be the surviving fund, not like JLA in this case. What was a surprise, was that initially, NGZ went UP to a par valuation and stayed there for the better part of the term. It wasn't until a few weeks before the merger that NGZ's market price started to drop to reflect NIE's discount, since ultimately that's what NGZ's shareholders were going to receive. NIE never did reduce its discount much but as the acquiring fund with the surviving investment/income strategy, it was more NGZ shareholders to lose rather than NIE shareholders to gain.

    In this case, JLA is going away and QQQX will survive along with its investment & option income strategy. Even if QQQX dropped to a -5% discount, say $17.35, over $1 from here, that would still put JLA's value at $13.36 but all of this will be contingent on the conversion ratio and more importantly, how the NASDAQ-100 performs from now until the merger.

    The conversion ratio probably won't change too much and might actually improve for JLA shareholders if the NASDAQ-100 continues to recover. Not sure why QQQX's market price went up so much other than that valuations for most equity CEFs have improved a lot since the beginning of the year. For more index oriented funds like QQQX, DPO and DPD (Dow 30 funds), they seemed to get even better valuations.
    May 2 11:10 AM | 1 Like Like |Link to Comment
  • Nuveen To Consolidate Its Equity Option Income Funds: What Does It Mean? [View article]
    Beat me to the punch Left Banker. So JLA is worth $14.50 if QQQX's market price stays the same (77% of $18.81). The other positive is that if the NASDAQ-100 continues to recover, JLA shareholders have essentially taken on QQQX's option strategy right now too. Since JLA is very defensive and sells index options on 100% of the notional value of its portfolio whereas QQQX sells only about 50%, that could actually be beneficial too IF the NASDAQ-100 does well. Don't forget, you will get 1 and maybe 2 more distributions at an 8% market yield for JLA compared to 7.2% for QQQX before the merger is complete. In either case, JLA is now tied to QQQX's NAV and market price performance until the merger is approved and complete.

    The only possible negative for JLA shareholders is if the NASDAQ-100 performs poorly from here and QQQX goes from a premium to a heftier discount by the merger date. This is why an arbitrage would be very opportunistic since QQQX would have a lot further to fall. I was actually short QQQX before yesterday already and I have been buying ALOT of JLA shares this morning.
    May 2 10:06 AM | 2 Likes Like |Link to Comment
  • Equity CEFs: Funds Benefiting From The Weakness In Technology And Small Cap Sectors [View article]
    This will be no different than NQZ's absorption into NIE's earlier this year except in that case, the acquiring fund was at a hefty discount. Ultimately, the fund with the largest discount will be the beneficiary no matter who the surviving fund is so this is great for JLA holders and theoretically, should be neutral for QQQX, i.e. QQQX won't be diluted but if anything, there may be a drag because QQQX is at a premium valuation and is absorbing a fund at a -7.8% discount.

    JLA shareholders will receive QQQX shares based on the NAV ratio of the two funds. So if the conversion were as of yesterday's close, JLA shareholders would get 0.7707 shares of QQQX because of the NAV ratio of $14.05/$18.23.

    So for every 100 shares of JLA you own, you will get about 77 shares of QQQX but you'll get it at the higher market price and since QQQX currently trades at a premium, your 100 shares of JLA currently at a discount market price of $1,296 (100 X $12.96) is now worth $1,450 (77 X $18.81) based on the conversion.

    So that puts JLA's market price worth $14.50 based on owing 100 shares currently according to my calculations. Or about an 11.9% bump from here if QQQX's market price stays the same.
    May 2 09:28 AM | 2 Likes Like |Link to Comment
  • Equity CEFs: Funds Benefiting From The Weakness In Technology And Small Cap Sectors [View article]
    GRX's market price has probably been trading in response to a more nervous healthcare sector this year. Yes, the XLV has outperformed the S&P 500 but that is large cap healthcare weighted index and GRX can own smaller cap as well as biotech, which haven't done nearly as well. Then consider that half of GRX's portfolio is in food & nutrition, which again could be a smaller cap version of the consumer staple index, XLP.

    You rely on Gabelli's stock picking ability since GRX is more growth than yield oriented, thus the fund has a tilt towards higher beta stocks. Large cap has outperformed smaller cap this year and GRX has exposure to smaller cap healthcare and consumer staple stocks.
    Apr 30 09:04 AM | 2 Likes Like |Link to Comment
  • Equity CEFs: Funds Benefiting From The Weakness In Technology And Small Cap Sectors [View article]
    Everybody loves them but that's why I'm worried about them. You don't offer those kind of yields w/out taking on more risk. CEFs have outperformed the market this year and investors have gotten a false sense of security in funds like CEFL. I would wait for a better entry.
    Apr 30 08:33 AM | 1 Like Like |Link to Comment
  • Equity CEFs: Funds Benefiting From The Weakness In Technology And Small Cap Sectors [View article]
    Yes, I would expect GEQ to be more defensive than JTD.
    Apr 30 08:26 AM | Likes Like |Link to Comment
  • Equity CEFs: 1st Quarter 2014 Review - A Change In Leadership [View article]
    I generally don't like the fund of funds approach since 1). it adds an additional layer of fees and 2). I don't believe you need that much diversification. That said, CEFL offers 2X the exposure of its component CEFs at a 0.50% annual fee plus a leverage cost. I don't have the prospectus, but it looks like leverage is based on the 3-month LIBOR plus a spread.

    Though CEFL offers an extremely generous yield with an overall expense ratio that would be significantly less than if an investor tried to replicate the fund's strategy, I personally would wait until there is more of a track record. You don't get that kind of a yield without taking on an enhanced level of risk and CEFL can also invest in leveraged CEFs, which are themselves much riskier.
    Apr 6 10:58 AM | 1 Like Like |Link to Comment
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