Joe Eqcome

Closed-End Funds: Due for Positive Returns in 2009

GlobalHOBBIT,

Thank you for you input regarding AWP.

You are factually correct regarding the reduction in the dividend. However, I think that reduction was fully anticipated as post-announcement the stock did not trade down significantly. Since you've sold your stock last week it’s up about 12%. Sorry for you loss.

I just think now’s the time to buy these stocks as a trade--particularly when investors are as pessimistic as you. I'm looking only looking at these stocks as a trade--so, the longer term performance is less of a concern for me.

As an aside, there are many studies regarding insider trading that demonstrate—in general—insider selling is not as a predictive tool as generally believed regarding future stock price performance. (See article by David Teitelbaum regarding this subject.) I think your observation would have been more relevant if you could have demonstrated that this was an industry phenomenon as opposed to company specific.

“Insiders sell for one or a thousand reasons, but they buy for only one reason--they think the stock is going up.” I would place greater weight on insider buying than selling as the ratio of insider selling to buying can be anywhere from 10 to 1 to 50 to 1.

Happy trails,

Joe Eqcome



On Dec 26 08:01 AM globalHOBBIT wrote:

> Last week I sold 5000 shares of AWP at 3 dollars and change. My average
> cost was almost 8 dollars a share. This fund is managed by father
> and son Team Lieber was paying a $1.52 dividend per share annually
> it's been reduced to .36 cents annually.... a 75% cut. If you read
> their quarterly conference there was no indication they would cut
> the dividend at all. They even said in the Sept 09 conference call
> that the dividend may increase. I know this father and son team have
> a lot of their own money into it also at very much higher prices.
> The reality is global real estate is in serious trouble and this
> fund won't see any real price increase until very late 2009 but more
> likely 2010. Dec 16'th 2009 marked the first time there was insider
> selling of this fund EVER! That's never a good sign.......never.

Closed-End Funds: Due for Positive Returns in 2009

CMG,
If you're looking for european real estate companies there are a couple of places you can look:
1) the European Public Real Estate Association; its website is erpa.com. It has a number of indices for non-US publicly traded real estate companies.
2) Another possible source of information would be the FTSE, their website is ftse.com. You can look under "indices".
The history of public REITs in the UK is fairly short as the legislation enabling UK REITs is only a couple of years old. However, there is a longer history of UK property companies--many of them--which I believe converted to UK REITs.
Additionally, there was an article in the WSJ on December 24th entitled: "Rethinking Property Stocks" that you might find of help.
I hope this is helpful.
Joe Eqcome


On Dec 24 04:06 AM CMG wrote:

> Dear Author,
>
> I have recently started looking at the concept of CEF arbitrage &
> CEF research in general, having previously only researched the open-ended
> fund market. I've found you're articles very interesting and while
> I'm coming from a low knowledge base, you have obviously been looking
> at this market segment in some depth.
>
> I was wondering where you got your data from and whether you look
> at data for the UK universe of funds. I would be interested in looking
> at whether similar conclusions can be drawn within the UK opportunity
> set.