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4/29/16 - Student loans paid off six months before I planned on them being paid off. Basically every paycheck minus living expenses since last Oct went towards them. Lower end luxury car amount of money at close to 7% interest. Now I will have more disposable income than I can spend each... More
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  • Dog Face Boy (Probable Buys This Friday...) 3 comments
    Dec 1, 2013 11:35 AM | about stocks: ETW, ETB, ETV, CII, BGY, ACP, GEQ, EXD

    Some good news - BC/BS will let me keep my policy for another year with a rate raise equivalent to what my employer will charge (which is far superior to what I would pay for Thus, I keep my 12% raise until I hopefully can find another job. Which means I can continue to contribute to my taxable account what I have been for the last year. More good news - I become vested in my 401k in four more days!

    Since my Roth and 401k accounts have funds in them that are great for a continued bull market, I tend to focus on undervalued-high-yield stuff that can maintain dividends for my taxable account. Right now, I have the preferreds I currently like in the account - if the preferreds in general start dropping this week I may update some new choices.

    So, in cef land, I'm thinking an Eaton Vance option/income fund might be a good choice again (I bought into several of them about a year ago and would have been happy to have kept them except for the car crisis last summer) . Eaton Vance still has buyback programs in place for its option/income funds, so there's some market price protection if things go south.

    (NYSE:ETB), (NYSE:ETW), and (NYSE:ETV) all sell options against the indexes they try to match. Up to 95%. ETB is based on the S&P 500, ETV is a mix of S&P and Nasdaq, and ETW also has FTSE thrown into its portfolio. Of the three, ETW's nav hasn't done as well, probably because of European and Japan exposure. All three are defensive, but none seem to me to be a screaming buy right now.

    ETB is trading slightly below it's 52 week average discount, so a maybe. Distributions are still mostly classified as ROC so some tax deferral benefit for a taxable account and the nav is creeping up over time...

    What would help at this point in buying any cef is the usual end-of-year tax loss selling, but it seems muted at this point.

    A couple of other EV funds - (NYSE:EXG) and (NYSE:ETY). Both of these only sell about half the portfolio value in options. Both have navs that are slowly increasing. EXG has about 60% FTSE exposure whilst ETY is much more S&P focused. Same deal as the above funds with the ROC (which I am okay with in this type of fund). Both are barely above their 52 week average discounts.

    Not too exciting so far! Let's see what else I might be able to dig up:

    (NYSE:ACP) - advertised as a senior loan fund on cefconnect. Nav got killed during summer and now is increasing while the market price continues lower. No tax advantage. I checked out the home site, but cannot tell how much of the portfolio are actually senior loans. Tried to read the prospectus, but it's a messy legalized 86 page pdf that appears to be altered since they did a rights offering last spring. Management fees are pretty high.

    But I keep looking at the discount to NAV - widest it's ever been - might make for a good trading opportunity. Or if I buy some, I'll probably end up being stuck with it.

    (NYSE:GEQ) - wrote about this one last time. Won't pay til the end of January and I believe my next investment paycheck will come before the ex-date, so I can wait a month.

    (NYSE:CII) - written about it a few times and somehow or another I always pass it over. Perhaps not this time - it's below the 52 week avg. discount and Blackrock is in vogue to be hated after the last round of distribution cuts. Another option/income fund with some ROC which is friendly in taxable accounts. (NYSE:BGY) might be another alternate for a hopeful international comeback.

    Anywho, plan as of this Sunday writing - CII or BGY. ETB or another one of the EV option/income funds if there's a sell-off by Friday. ACP a distant third.

    Update for 12/4/13 - ETB if the price keeps dropping is looking better to me.

    And I wanted to find something else that might be a good fit for the taxable account since I'm being lazy today and the tornado sirens are going off. Once in a while I check out stats on (NYSE:EXD), which is about the weirdest fund I know of. Portfolio of muni bonds and sells options on S&P 500 index funds. About as tax-free as you can get as long as you never sell. And with a double-digit discount and 12% distribution rate, so very tempting to me!

    And then I look at the NAV. The distributions are too much and are eroding the fund. If the management would cut back distributions to 8% on the NAV instead of close to 11%, I bet the NAV would improve and it would make a fine fund to own forever. At some point, the fund will cut the distributions or it will implode.

    One caveat to my above analysis is that this is one of the funds that has implemented a buy-back program. Makes it extra-tempting for me to buy, but I still look at the declining NAV. Even when distributions are added back, it's barely above break-even since the fund started.

    I'll keep checking on it and when they finally do cut the distributions and the fund's market price drops like a brick, I'll probably begin buying it.

    You know what, another update about five minutes after I wrote the above, something about EXD was ringing a bell in my head, and I remembered that I read this article a couple of years ago:

    I happen to like reading this author's articles, even if I don't use his metrics for cefs. Check it out and compare it to my short-bus analysis. Shoot me a message if you think I'm wrong or he's wrong!

    12/6/13 update: Bought into ETB today.

    Disclosure: I am long ACP, ETY.

    Additional disclosure: Anything I actually buy drops like a brick. Anything I want to buy goes up beyond what I'm willing to pay for it. I bought some ACP and ETY in my Roth since I first wrote this bit.

    Stocks: ETW, ETB, ETV, CII, BGY, ACP, GEQ, EXD
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  • Adam Galas
    , contributor
    Comments (460) | Send Message
    I stay away from any CEF that does ROC. Some "buy-write" covered call like Eaton Vance funds claim that they are not destructive but CEF Connect is worth its weight in gold.


    Free screener, non managed distributions typically filters out ROC funds and lets you get solid 8-10% yield without too much risk.
    10 Feb 2014, 10:34 AM Reply Like
  • User 7415181
    , contributor
    Comments (1039) | Send Message
    Author’s reply » Thanks for dropping by! I will disagree that ROC is bad for all cefs. The only way I know to quickly evaluate if it is bad or not is to examine the NAV. For bond funds, yes, I don't want to see ROC listed. But even some funds that don't list ROC you can still watch the NAV decrease over the long haul.
    10 Feb 2014, 11:58 AM Reply Like
  • User 7415181
    , contributor
    Comments (1039) | Send Message
    Author’s reply » AG,


    Checked out your article on psec - good read! And I was curious as to why an author I'd never seen before was posting on my lowly blog (I think you got me mixed up with Interesting Times) :)


    I used to own psec, but eventually I chickened out. Well, not quite - I couldn't figure out how to evaluate it like I would with a cef or preferred. And thus decided to sell for a profit and focus on things that I do understand how to evaluate...


    I like cefconnect because I can check out the NAV chart of various funds that show up on my screen. I have other sites I can go to to get a list of preferreds trading under par. But as for BDC's and other weird income oriented assets, I know of no quick and dirty way to find out if they're trading at a discount and such.


    If you know of something similar to cefconnect for BDC's/MLP's and other assets and would be willing to share the resource, I will give you a wonderful present! (I'm still going to disagree with you on the ROC thing, though)
    10 Feb 2014, 01:13 PM Reply Like
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