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Douglas Albo

 
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  • 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, 2014. 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, 2014. 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, 2014. 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, 2014. 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, 2014. 10:58 AM | 1 Like Like |Link to Comment
  • Equity CEFs: 1st Quarter 2014 Review - A Change In Leadership [View article]
    Oh yes, still hold the Eaton Vance option-income funds though I have lightened up on ETV & ETB, which have gotten pricey. Don't even own EXG anymore. Biggest positions are ETY, EOI & EOS now. ETW is looking better and I would buy below $12.
    Apr 1, 2014. 10:53 AM | Likes Like |Link to Comment
  • Equity CEFs: 1st Quarter 2014 Review - A Change In Leadership [View article]
    They base the expense ratio on the net assets. Go to latest annual report and $2,944,666 total annual expenses (includes interest) / $142,058,456 net assets = 2.07%. However base the expenses on total assets (includes borrowed amount) of $194,410,993 and expense ratio drops to 1.5%.

    I think the 1.5% is a more appropriate expense ratio since you wouldn't have to incur an interest charge if you didn't leverage the portfolio, right?
    Apr 1, 2014. 10:22 AM | 3 Likes Like |Link to Comment
  • Equity CEFs: A Fund Which Probably Should Just Go Open-End [View article]
    From the NIE/NGZ merger registration statement...

    "The Funds’ Board of Trustees regularly monitors the relationship between the market price and net asset value of the common shares. If a Fund’s common shares were to trade at a substantial discount to net asset value for an extended period of time, the Board of Trustees may consider the repurchase of such Fund’s common shares on the open market or in private transactions, the making of a tender offer for such shares or the conversion of such Fund to an open-end investment company. The Funds cannot assure you that their Boards of Trustees will decide to take or propose any of these actions, or that share repurchases or tender offers will actually reduce any market discount.

    If a Fund were to convert to an open-end company, such Fund’s common shares likely would no longer be listed on the NYSE. In contrast to a closed-end investment company, shareholders of an open-end investment company may require the company to redeem their shares at any time (except in certain circumstances as authorized by or under the 1940 Act) at their net asset value, less any redemption charge that is in effect at the time of redemption.

    Before deciding whether to take any action to convert a Fund to an open-end investment company, the Board of Trustees would consider all relevant factors, including the extent and duration of the discount, the liquidity of the Fund’s portfolio, the impact of any action that might be taken on the Fund or its shareholders, and market considerations. Based on these considerations, even if a Fund’s common shares should trade at a discount, the Board of Trustees may determine that, in the interest of the Fund and its shareholders, no action should be taken."

    Not saying its likely but I do feel Allianz needs to do something.
    Mar 25, 2014. 01:36 PM | Likes Like |Link to Comment
  • Equity CEFs: A Fund Which Probably Should Just Go Open-End [View article]
    It's really a non-event in the scheme of things.
    Mar 14, 2014. 06:38 PM | Likes Like |Link to Comment
  • Equity CEFs: Sell This, Buy That From These Fund Families [View article]
    Nuveen runs JSN, JLA, JPZ and JPG very conservatively and this is not a great market for JSN, JLA & JPZ because they are so defensive. JPG can capture a bit more NAV upside in a strong market, but not much.

    So Nuveen tweeked the funds distributions down a bit for the year because they probably have some formula they use to ensure a certain NAV coverage based on their market outlook. I'm not too worried about it and the market didn't seem too worried about it either. These funds are the most "bond like" of any pure equity CEFs and are not designed for a strong bull market. Their NAVs were only up 13%-15% in 2013, well below the market considering their pure stock portfolios.
    Mar 13, 2014. 08:57 AM | Likes Like |Link to Comment
  • Equity CEFs: Sell This, Buy That From These Fund Families [View article]
    Liquid? Maybe in dollar volume but if there is any kind of seizure in the marketplace, forget about your mark-to-market price. Just how many dealers do you think there are in MBS? Not only that, they are very sophisticated and well informed. On the other hand, CEFs are mostly owned by retail investors, who are generally not very well informed.

    I'm sorry, but book value in REITs and NAV in CEFs are not the same thing.
    Mar 11, 2014. 10:19 AM | 4 Likes Like |Link to Comment
  • Equity CEFs: Sell This, Buy That From These Fund Families [View article]
    Not really. You couldn't rely on the "book value" of an mREIT, a bank or any other security as its liquidation value whereas with equity CEFs, the NAV would be very representative of its liquidation value.
    Mar 10, 2014. 04:55 PM | Likes Like |Link to Comment
  • Equity CEFs: Sell This, Buy That From These Fund Families [View article]
    I've written many articles on ROC so I think I understand the subject well thank you. It was more a rhetorical question to see what your understanding was since many investors don't realize that ROC can actually be an advantage and that fund sponsors will even try to maximize ROC at really no cost to the fund's performance.
    Mar 5, 2014. 04:27 PM | 12 Likes Like |Link to Comment
  • Equity CEFs: Sell This, Buy That From These Fund Families [View article]
    I think you misread the article. I'm not endorsing GAB and am actually short a little. But what is wrong with Return of Capital anyway?
    Mar 4, 2014. 11:03 AM | 3 Likes Like |Link to Comment
  • Equity CEFs: Sell This, Buy That From These Fund Families [View article]
    Easy to say in a ramp-up market, but unfortunately, I have fiduciary responsibilities to clients and can't simply buy something just because its outperforming.
    Mar 4, 2014. 10:51 AM | 3 Likes Like |Link to Comment
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