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Joe Eqcome

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  • ADX Vs. GUT: Fundamental Analysis Isn't Ideal For CEF Share Price Valuation [View article]
    Chamois16,

    "Imo, fundamental analysis of a CEF portfolio is important, if not essential, to determine the appropriate NAV and probable NII, not market price or distribution rate." Chamois16

    Let us assume the following:

    1. Investors want to maximize their return on investments.

    2. Investors typically accomplish this by buying a stock (market price--not at NAV) at a lower price (below intrinsic value) and sell it (market price--not NAV) when is seems overvalue based on intrinsic value.

    Your position is there is a “disconnect” between non-market valuations (NAV & NII), where fundamental analysis in important, and market valuations (share price and distribution yield) where they are not.

    Therefore, using fundamental analysis to determine NAV and NII when there is little relationship to market valuation—which is the how we make money by investing—becomes an academic exercise.

    The threshold question is how does one about valuing a CEF stock for purchase if fundamental analysis has little impact on CEF market valuations?

    I’d be interested in hearing your logic on this matter.

    Regards
    May 28 09:58 PM | Likes Like |Link to Comment
  • ADX Vs. GUT: Fundamental Analysis Isn't Ideal For CEF Share Price Valuation [View article]
    Philipsonh,

    I would agree with your point if the comparison were debt versus equity CEFs.

    However, both ADX and GUT are equity CEFs, i.e. those that invest in equity securities, that have a long track record and payout attractive nominal distributions. So, it is in fact an apple-to-apples comparison based on CEFs that invest in equities.

    Even if I were to compare CEFs that have a preponderance of investment in utilities the results would have been the same with regards to GUT--just less dramatic.

    I hope this is helpful.

    Regards.
    May 28 08:46 PM | Likes Like |Link to Comment
  • ADX Vs. GUT: Fundamental Analysis Isn't Ideal For CEF Share Price Valuation [View article]
    Doug,

    Thanks for your comments and I sadly agree with your conclusion regarding the market's near-term response.

    Enjoy your work.

    Joe Eqcome
    May 25 09:47 AM | 1 Like Like |Link to Comment
  • ADX Vs. GUT: Fundamental Analysis Isn't Ideal For CEF Share Price Valuation [View article]
    Erratum,

    In the text under the first chart, we identified ADX's earnings and capital gains as $3.48 per share when it was $3.28 per share. This does not impact the calculations in the chart nor any of the conclusions.

    The sentence should read,

    "As the chart demonstrates, over the past 5 years, ADX has cumulatively distributed $3.28 per share of earned income and capital gains versus only $0.97 per share for GUT."

    We apologize for the typo.
    May 24 04:55 PM | Likes Like |Link to Comment
  • CEF Weekly Review: Losing Altitude [View article]
    RIF is advised by the Portnoy family out of Boston which also advises some REITs.

    I'm curious regarding your characterization of RMR as dubious managers? Is there something that you can point to that would lead you to that conclusion?

    RIF was subject to a merger with its other managed real estate CEFs in January. While its discount is larger that RFI's its about average with its historical discount; it annualized distribution is lower; the CEF is leverage 20% beyond the leverage in the REITs they own in the portfolio; 50% of the portfolio is invested in preferred stocks vs 19% for RFI.

    In this case you get what you pay for.
    May 21 11:04 PM | 1 Like Like |Link to Comment
  • CEF Weekly Review: Strong Headwinds [View article]
    rsd57,

    It is likely that they may have similar characteristics as a result of the fact that while PCEF includes all fixed income CEFs, PCEF holds CEFs that are leveraged. I believe that JNK is not leveraged.

    It is possible that the leverage of PCEF enhances the yield and incrementally increases its duration making it similar to a high yield security.

    Don't know for sure, but it seems a plausible explanation.

    Regards
    May 14 10:04 PM | Likes Like |Link to Comment
  • CEF Weekly Review: A Reality Check [View article]
    User 438799 and Phanatical

    Hey Dan, as it relates to BIF, it depending on your view of Berkshire Hathaway, which remains its largest holding. It would seem attractive to me based on the fact that BRK-A is likely to pay a distribution maybe next year and the sum of the parts in likely worth more then the whole on the passing of the torch to Warren's successor.

    It is trading at a 21% discount--its largest over most of its measurement periods--and it holds value-oriented investments, but it is not yet paying a distribution which seems to be the reason most folks buy CEFs.

    Horjesi interest has been buying shares of FOFI for several years. They have a 10% interest as far back as two years ago. In January this year they doubled their sake in the CEF. This is standard operating procedure of owning a large stake in CEF that they advise.

    It seems Horjesi interest operates private companies that are publicly traded. Until their interest in aligned with shareholders' they will position themselves to maximize their value. Just don't know when they'll pull the trigger. Remember, their distributions are the fees to they receive on AUM. Why would you want to enhance the price of shares you're buying?

    Ain't the free enterprise system wonderful.
    May 8 12:46 PM | Likes Like |Link to Comment
  • CEF Index Advanced In April While Discount Remained Unchanged [View article]
    gcmagone

    That's if you ignore the facts.

    Regards
    May 8 10:59 AM | Likes Like |Link to Comment
  • Investors Ignore Distribution Declines In Fixed-Income Closed End Funds [View article]
    Groove,

    All I'm doing is reporting the facts. Everyone gets to make up their own mind.

    It appears investors are comfortable with these set of facts.
    May 7 12:30 PM | Likes Like |Link to Comment
  • Sourcing PIMCO High Income Fund's Distributions [View article]
    Market Slave,

    Only with a small "u".
    May 6 06:51 PM | Likes Like |Link to Comment
  • Sourcing PIMCO High Income Fund's Distributions [View article]
    RichAbe,

    For rhetorical purposes, and not to impugn the integrity of the PIMCO organization, let me address your two suppositions which appear less than rigorous.

    “It is completely illegal to allocate winning trades to one account and losers to another.”

    It is also illegal to late-trade mutual funds both under the SEC and the NY State’s Martin Act. However in 2003, the NY state attorney general filed suits against several mutual fund complexes for late-trading practices which seemed to become a widespread industry practice. This action was followed by investigations by the SEC.

    These charges led to the resignation of the chairmen of two major mutual complexes, Strong Mutual Funds and Putnam Investments. Later Invesco and Prudential Securities were added to the implicated funds companies.

    On February 20, 2004, the first in a series of securities class action complaints was filed against Allianz Dresdner Asset Management of America L.P. (n/k/a Allianz Global Investors of America L.P.), and related entities alleging market-timing and late trading in the mutual funds in the Allianz Family of Funds in violation of the federal securities laws. Each of these nine funds were part of the PIMCO Funds: Multi-Manager Series, now known as the Allianz Funds. http://bit.ly/IPbI7M

    Wall Street has benefited from the strategy of “asking for forgiveness as oppose to permission”. Do you really think that legal compensation for such infractions equals the money made by perpetuating them? If you can pay a fine to the SEC with neither admitting nor deny the allegations then I think this is a good business model.

    As it relates to your other observation regarding questionable securities trading, all you have to do is look to Pipeline brokerage platform, which was “gaming” their customers’ trades, and any of the “dark pool” where the inability of tracing the source of the orders is the purpose of their existence.

    Good analysts and investors are both skeptical and suspicious by nature. This may just be a character flaw. However, no one should get a “bye” in this business without answering legitimate questions.

    Regards.
    May 4 05:36 PM | Likes Like |Link to Comment
  • Sourcing PIMCO High Income Fund's Distributions [View article]
    SmartyMarty,

    Thanks for your perspective.

    As you suggest, it may remain one of the mysteries of life.

    Regards.
    May 1 05:20 PM | Likes Like |Link to Comment
  • Sourcing PIMCO High Income Fund's Distributions [View article]
    JedgarH,

    I research investment companies for my own and our clients accounts and the CEF market sector in a component of that universe.

    PHK is a component of CEFs which in turn is a component of investment companies and is a point of comparative valuation.

    Consequently, to understand the mechanics of PHK's valuation would help on a comparative basis with the valuation others in that investment universe.

    (Think of it as wanting to understand the valuation of Coke versus Pepsi, even if I only owned Coke and not Pepsi. Or more basically, why someone would want to know the value of an index of a industry group relative to the stocks in it.)

    More importantly, I was reaching out to the larger investment community to help me understand what I was missing in my detailed valuation of the PHK.

    So, far, no one has provided a compelling reason why it's fundamentally valued at these levels--particularly relative to its peer group.

    So, those are the some reasons one might what to understand the valuation of a stock that they don't own.

    I hope this is helpful.

    Regards.
    Apr 30 02:48 PM | Likes Like |Link to Comment
  • PCEF: How Marginal CEF Investors Can Avoid Being 'Gamed' [View article]
    RichAbe

    Just a point of clarification. The 1.56% in expenses that you cite included the underlying expenses of the CEF itself (1.06% on average) plus the fee for the ETF itself which is 0.50%. http://bit.ly/Ijzmvs

    So, you would only save 0.50% employing your strategy as opposed to the 1.56% that you cite--as you would be picking up the CEF management fees (on average 1.06%).

    While losing diversification, your recommendation has merit for those willing to put in a modicum of effort.

    Regards
    Apr 26 10:35 AM | Likes Like |Link to Comment
  • Sourcing PIMCO High Income Fund's Distributions [View article]
    Huck2u

    With all due respect, to intimate that we have provided the wrong parameters for valuing PHK while not providing any basis for your assertion is disingenuous at best.

    The reason I when to the trouble of providing a proof is for some genius like you to point our the inaccuracies so we can all better understand how PHK works.

    It would surely be helpful if you provide us the correct parameters for valuing PHK because there are a lot of folks that could benefit from your insight.

    As to admitting to the fact that I've been wrong on the trajectory of the stock, I've confessed to this in all the articles I've written about PHK as I did in this one:

    "8. Lastly, we've previously been consistently wrong on the trajectory of this stock and believe the stock will likely continue to be over-valuated until there is a rise in interest rates."

    Lastly, I could care less regarding the stock price since I've never owned it. I fall in Warren Buffett's camp of if I don't understand it, I'm not going to invest in it. (This is how he avoided the "tech wreck".)

    So, we're looking forward to seeing your detail proof on how PHK makes the arithmetic work.

    You would be providing a great service to your fellow investors.

    Regards
    Apr 26 10:11 AM | 1 Like Like |Link to Comment
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