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Chris DeMuth Jr.
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  • Closed-End Fund Forum 61 comments
    Jan 13, 2014 10:04 PM | about stocks: UBAAF, ACG

    What are the most mispriced closed-end funds? Any attractive discounts to NAV? Activism opportunities? Self-tenders? How about upcoming opportunities in closed-end fund conversion to open funds? This is intended for people who do their own work but also are looking for new opportunities with positive expected values.

    Stocks: UBAAF, ACG
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  • Whopper Investments
    , contributor
    Comments (178) | Send Message
     
    One of my favorites is SVVC. I see no way they can survive bulldog's challenge. Only question in my mind is how much they spend on legal fees trying to put off inevitable.
    13 Jan, 10:06 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » Thanks for the idea, Whopper. I should take a look. I am a big fan of Bulldog's. Here is a link regarding their recent efforts on that one: http://seekingalpha.co...
    13 Jan, 10:11 PM Reply Like
  • bazooooka
    , contributor
    Comments (2883) | Send Message
     
    I keep waiting for another good dip on this one but haven't had a chance since Twitter broke out from the 40 dollar range.
    14 Jan, 04:17 AM Reply Like
  • Betalyst
    , contributor
    Comments (548) | Send Message
     
    NHF is posted to breakout higher.
    13 Jan, 10:16 PM Reply Like
  • SafisKusai
    , contributor
    Comments (236) | Send Message
     
    In november the Eaton Vance Risk Managed Diversified Equity Fund (ETJ) announced they authorized a tender of 10% of the fund as long as the fund averaged over 9.75% in feb, march, april. Currently the fund has an over 10% discount to nav. In addition they have been buying shares in open market below nav.

     

    On top of all this it pays a 9.8% dividend paid monthly.

     

    Whopper has written about this before on his blog when he talked about the Special opportunity fund (SPE) and since then it seems like they've been working on initiatives to begin to get the nav under control.
    14 Jan, 12:02 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » Great idea for a research project; thanks! -C
    14 Jan, 07:02 AM Reply Like
  • memshu
    , contributor
    Comments (584) | Send Message
     
    all income funds, as far as i can see. my own bias is towards EM funds but i am not buying yet as i think they can go lower. (discounts of 20% in EM debt are frequent)
    14 Jan, 01:49 AM Reply Like
  • Jerbear
    , contributor
    Comments (642) | Send Message
     
    There is an interesting ETF that is comprised of 30 closed end funds that meet an index created just for closed end funds. It is an easy way to diversify.

     

    Monthly distribution yield is 10.16% It has only $22M in assets but is slowly growing.

     

    The symbol is YYY Yield Shares. It was started by Christian Magoon who started many successful ETFs when he was with Claymore.

     

    Here is the link: http://bit.ly/KYTjee

     

    14 Jan, 05:41 AM Reply Like
  • bazooooka
    , contributor
    Comments (2883) | Send Message
     
    YYY is a nice idea but it trades right at NAV. One can by most of these holdings well below NAV and in the age of $8 commissions you can get into a decent/diversified sized position and do better by just picking from the holdings list and avoid the 1.65% expense ratio. However for odd lot investors I guess you could do worse then paying for "one stop shop".

     

    http://bit.ly/1lZcCCk
    14 Jan, 06:36 AM Reply Like
  • NYer1
    , contributor
    Comments (1117) | Send Message
     
    Bazooooka
    YYY trades right around NAV because it is an ETF (not a CEF).
    It is quite suspect in my view as it holds a few positions that trade consistently ABOVE NAV (see PHK and PTY for example) - that alone makes it an unworthy vehicle for divesification.
    16 Jan, 03:16 AM Reply Like
  • Yuanxi Zhang
    , contributor
    Comments (244) | Send Message
     
    are you working on acg as well?
    14 Jan, 08:56 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » Yes. We are close to AllianceBernstein (AB) and are actively working on the best outcome for them and for us regarding AllianceBernstein Income Fund (ACG).
    14 Jan, 08:59 AM Reply Like
  • Yuanxi Zhang
    , contributor
    Comments (244) | Send Message
     
    the ownership structure is quite dispersed though. I am not so sure if in the end we are getting 66.6% support. Maybe something in between like a tender offer is more likely? What do you think?
    14 Jan, 11:13 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » I don't know. 2/3rds is hard. AB should support a move to close the discount.
    14 Jan, 11:14 AM Reply Like
  • Clint Edgington
    , contributor
    Comments (247) | Send Message
     
    I see Karpus owns 5%, do we have any public indications to whom may own the 10% that's required to move the open-end discussion to vote?
    14 Jan, 09:08 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » My hope is that this will be a friendly, consensual process driven by AB.
    14 Jan, 09:14 AM Reply Like
  • Clint Edgington
    , contributor
    Comments (247) | Send Message
     
    Chris- great idea for a forum.

     

    Is anyone familiar with any tool that allows you to set alerts on CEFs based on discounts? For example, if a discount widens to x% an email is shot to you?
    14 Jan, 09:24 AM Reply Like
  • Robin Heiderscheit
    , contributor
    Comments (1952) | Send Message
     
    Clint CEFconnect has that tool but you are limited to twenty names and the update is based solely on closing prices. I programmed by own.
    14 Jan, 09:44 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » Great question.
    14 Jan, 09:59 AM Reply Like
  • Clint Edgington
    , contributor
    Comments (247) | Send Message
     
    Thanks Robin- that's very helpful!
    14 Jan, 09:59 AM Reply Like
  • TheSandman
    , contributor
    Comments (59) | Send Message
     
    I'm sure most everyone reading here already knows this, but you can often do X???X around a three-letter CEF symbol to get a quote of the NAV for plotting purposes.

     

    For example, Nuveen's Virginia Muni fund is trading at a roughly 10% discount and yields 6% tax-free.

     

    http://yhoo.it/1cj3DDZ;t=
    14 Jan, 10:42 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » I didn't know that and it is super helpful. Thanks. I will use that all the time now. You should have demanded a royalty for your IP first!
    14 Jan, 10:59 AM Reply Like
  • johnbarleycorn
    , contributor
    Comments (128) | Send Message
     
    Such as XNPVX...thank you.
    14 Jan, 01:00 PM Reply Like
  • jaginger
    , contributor
    Comments (562) | Send Message
     
    Thanks for the tip!
    15 Jan, 10:59 AM Reply Like
  • Pine Research & Trading
    , contributor
    Comments (164) | Send Message
     
    Great tip, thanks. Using it right now.
    21 Mar, 01:59 PM Reply Like
  • connellybarnes
    , contributor
    Comments (350) | Send Message
     
    Wow that is super obscure but useful. Thanks!
    21 Mar, 02:31 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (591) | Send Message
     
    I just looked through the holders list of ACG. There is definitely smart money involved at the top of the holders list now. Still seems like it would be hard to get enough votes.

     

    SWZ self tender will be or is going on right now as well.
    14 Jan, 01:03 PM Reply Like
  • buyin
    , contributor
    Comments (3) | Send Message
     
    some of the leveraged muni cefs are interesting -- depending if you are a common shareholder or Adjustable Rate Pref shareholder. Nuveen and Blackrock have redeemed most of their ARPS but Pimco and Western Asset have not and are getting financing to leverage the portfolio at 0.01% from the poor ARPS investors who thought they had weekly liquidity. Pimco and Western seem to be taking advantage of the ARPS situation that has strayed far from the original issue and intent--- favoring the common shareholders over the Pref ---- and many of the funds are at discounts --- MMU is an example.
    14 Jan, 06:41 PM Reply Like
  • NYer1
    , contributor
    Comments (1117) | Send Message
     
    I totally agree that some of the Muni CEF are very attractive at current levels.
    They were even more attractive during the last 45 days of 2013 when tax selling pushed discounts to NAv lower (often in excess of 10%) and yields higher (often in access of 7.1-7.2%).
    Of note - the recent rally in Muni CEF as a result of the end of tax selling, recovery in muni's etc. has pushed some Muni CEF's back into PREMIUM valuations above their NAV's so one needs to be careful and selective.
    A few articles/blog posst in Barron's for example reported here on SA :http://bit.ly/19w7tPb
    pointed attention to the sector and also contributed for discount shrinkage.
    I recently covered one suc example of over-shooting for one of the Muni CEF , namely BKN, in a SA Blogpost which might be of interest to illustrate how expensively valued CEF can be swapped out of and into more attractively valued peers (often managed by the same fund company).http://bit.ly/19w7tPh
    16 Jan, 03:23 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    ARMF is hardly the biggest bargain on the block, but I'd say Ares Management is worth paying up for (I think they're a top-notch manager; feel free to disagree!). This is their recently-IPOed multi-strategy credit fund. You get a ~9% discount to NAV, ~8.5% yield, and exposure across a few different credit types. At their last public utterance they weren't fully invested, so I think there's potential for a modest bump in distributions, along with a modest increase in NAV and, assuming (as the two prior microcatalysts also assume) their management is good, a convergence of price and NAV.
    14 Jan, 08:31 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » Ares Management is terrific. I spent much of late 2008 and early 2009 on the phone with Ares. I would say that they taught me much of what I learned about the BDC business as well as the key attributes of syndicated debt. I remain grateful for their guidance, which resulted in my making an investment in their firm at the time as well as a number of other deeply discounted competitors.
    15 Jan, 06:45 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    Glad to hear my opinion of Ares echoed (though it's always dangerous to have people agree with you). I think it does not take too much of an investment of imagination to see ARMF returning 20-25% annually over the next few years as NAV appreciation and market recognition of quality do their work.
    15 Jan, 02:17 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (591) | Send Message
     
    Those numbers might be a touch optimistic but I could see a move to a 6% discount and 8% coupon clipping a year from now. NAV growth would depend on what kind of discounted stuff they are picking up. Given that yield is a focus, I don't know how much leeway they will have to get involved in more problematic loans. Their distributor hasn't really done their fair share of carrying water for the ARMF. Try googling up the website for ARMF (not ARDC). Pretty much impossible. I had to get the info out of the filings....
    15 Jan, 04:23 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    Certainly optimistic but not, I think, derangedly so (though your scenario is, of course, equally likely). I think one of the reasons the opportunity exists is that there isn't yet a selly website (and it's a recent IPO, and it's a not-yet-differentiated CEF), so I'm grateful for that.
    15 Jan, 07:15 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (591) | Send Message
     
    Hardly been a downtick for weeks. The mgmt co. has been buying shares recently too.
    16 Jan, 06:23 PM Reply Like
  • George Spritzer, CFA
    , contributor
    Comments (838) | Send Message
     
    Junk muni CEFs have had amazing trend persistence. For example, if you adjust for the dividend on Jan. 13, XNMZX has been up or unchanged every day since December 19.

     

    http://yhoo.it/1b1G9Dq
    14 Jan, 11:55 PM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    I've been looking at SELF. Nice yield @ 15%, relatively stable share price sitting around p/e12, and trading 20% below NAV. Non-diversified investments in self-storage units. Would welcome any thoughts on it. Thx.
    15 Jan, 08:04 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    In re: SELF, I'd say any Winmill-managed entities should be approached with skepticism.
    15 Jan, 07:17 PM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    Good to know, I appreciate it. Thx.
    15 Jan, 09:15 PM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    I can't find much on Winnmill. What is the knock on him? It appears SELF is a reincarnation of a Global Income Fund that recently reformed themselves into an "operating company that owns, operates, manages, acquires, develops and redevelops professionally managed self storage facilities."
    16 Jan, 06:37 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    My impression (which may well be mistaken) is that they manage a few perennially-"cheap" assets which are more about harvesting fees than ensuring performance. If you're interested their web site lists all their funds.
    17 Jan, 03:19 PM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    Ok. Thanks. I'll keep looking around. Cheers,
    18 Jan, 08:48 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » What should Bulldog go after next?
    15 Jan, 09:24 AM Reply Like
  • George Spritzer, CFA
    , contributor
    Comments (838) | Send Message
     
    Not a CEF, but mortgage REIT ANH may be a target after a successful experience with JMI.

     

    http://bit.ly/19xCpPb
    16 Jan, 04:55 PM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    Sorry if it is a simple question, but would you be able to briefly explain how the value can be extracted by the shareholder in these closed-end funds. For instance, if I am looking at a fund trading 20% to NAV, what are some catalysts that will drive a fund back up to its NAV, or closer to it - thereby returning some of that value to the shareholder. Aside from a Bulldog obviously… Thx.
    15 Jan, 10:03 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » The distribution itself, buybacks in the open market, self-tenders including those with odd lot provisions, conversion to open funds, mean reversion, and activism would be some of the catalysts that I've seen in the past. One l like is http://seekingalpha.co.... What has the catalyst been? They buy back shares as fast as is allowed under their exchange's rules (which limit as a percentage of trading volume).
    15 Jan, 10:22 AM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    Great thanks - just wondering what the difference may be between a closed-end fund trading below NAV and say a business trading below TBV. This makes sense, thank you.
    15 Jan, 10:31 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    CEFs are not operating businesses; they are pools of assets. As such (unless they own esoteric, non-Level 1-type assets), their NAVs are fairly easy to ascertain: add up the value of each of the stocks/bonds/etc. owned. Determining TBV, on the other hand, is more a matter of art: a factory might be worth $10 million, unless you have to sell it in a week, in which case it might be worth half that or less.

     

    Some CEFs may, of course, hold similarly "fire-sale"-exposed assets (which may even be Level 1-type assets: if a CEF holds a huge slug of an illiquid microcap traded on the NYSE Amex, having to liquidate it might push down the price).
    15 Jan, 10:36 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    Chris: Going a little further afield, one non-US CEF of possible interest is Eurocastle (ECT on the Amsterdam exchange). It's a Fortress-managed entity that trades at about 60% of BV and a ~7% yield. It recently did a recap after almost total meltdown. Now it has a decent balance sheet and is deploying its excess cash into distressed Italian assets as it runs off its somewhat hairy German portfolio.

     

    I think the Fortress involvement is both a plus and a minus. They favor high leverage and high yield in their public entities, and that was a near-death sentence for Eurocastle's first iteration. They also have no qualms about related-party deals and dilution.

     

    That said, I think they're smart-enough operators (even though in one of the last conversations I had with former hedgie Jack Nash, he dismissed them with a wave of his hand), and that their love of offering increasing yield in their public managed entities offers a series of catalysts. I don't think this will be the second coming of NCT, which underwent quite a resurrection, but it might be a half-rhyme.
    15 Jan, 10:46 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (591) | Send Message
     
    I pulled the original underwriters research from 7 years ago on Eurocastle.

     

    It was a blast to read. The warnings were in there (it was being sold over NAV, there were risks to running a struc fin MBS book, lease up rates were "aggressive") but of course in those halcyon days, all was considered boilerplate.

     

    Now I can see why tickers, names changes are done. In the google world it makes it much harder to find stuff on dead co's. (or at least those which have changed their identifiers) And on the margin that may lure back in a set of investors who've forgotten the past.

     

    No real view on ECT just was looking at it for a sense of history, and to see if anything in Europe is changing.
    28 Jan, 11:47 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    Europe may or may not be changing; Fortress certainly doesn't seem to be (not necessarily a bad thing: you more or less know what you're getting with their public vehicles). Funny to see that the old Gatehouse Media, after bankruptcy and various other transformations, is going to be public shortly as New Media, another high-yield newspaper rollup.
    29 Jan, 05:39 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » Undervalued Closed End Fund Has Hidden Net Asset Value: Central Securities: http://seekingalpha.co....
    16 Jan, 08:49 AM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    Does anyone know anything about SMCG? It looks like they are re-tooling themselves with a new strategy this year. Their #1 asset is SMC Group in India, but it appears they have decided to invest outside of India this year. Trading at 50% discount to NAV, but that seems to be where they average. They've had a huge recovery from .30 to 1.25 in the past several months. I've had them on my notes as a fund I'd like to research, but I've not had time to dive in. They seem very thinly traded with little coverage - just the way I like them some times! Just throwing it out there - thanks.
    24 Jan, 05:40 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (123) | Send Message
     
    SMCG has been perennially cheap as a (if memory serves) not-fully-busted SPAC. They have turned up in my screens frequently over the years but there never seemed a compelling reason to buy, as they've changed focus several times and haven't been able to find any means to generate value for holders. Just one person's opinion.
    25 Jan, 03:22 PM Reply Like
  • toddro
    , contributor
    Comments (191) | Send Message
     
    Thanks aharon. I would tend to agree you. I wish I had picked up a few thousand shares @ .60 though. I just never found the time to "travel" to India and try to figure out what was going on over there...
    25 Jan, 03:58 PM Reply Like
  • Pine Research & Trading
    , contributor
    Comments (164) | Send Message
     
    APF running a tender for 20% of their outstanding shares.
    18 Mar, 10:33 PM Reply Like
  • Patrick Lowry
    , contributor
    Comments (162) | Send Message
     
    I will go out on a limb and say Rand Capital, a nano cap BDC closed end fund. They recently realized 5x on a portfolio investment and their biggest portfolio company investment (Gemcor) now generates more dividend income annually than the original cost. Also, the dividends pay all their operating expenses and then some. Discount currently @ 25%. Nice way to participate in venture/private equity deals without being uber wealthy.
    19 Mar, 04:37 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4369) | Send Message
     
    Author’s reply » I know and like RAND. Here is my Discount to NAV portfolio: http://bit.ly/1g1KEEz.
    19 Mar, 05:08 PM Reply Like
  • Pine Research & Trading
    , contributor
    Comments (164) | Send Message
     
    ZF and ZTR are continuing stock buybacks. they've bought quite a bit over the past year or so and they are planning on buying more. currently ~12% discount for ZF.
    21 Mar, 02:01 PM Reply Like
  • cashisking101
    , contributor
    Comments (6) | Send Message
     
    On Toronto stock exchange - ROI funds converting to open structure (pending unitholder vote later this year). Tickers for funds are RIR, RIL, RIH. Dream corp (recently spun out of Dundee) bought the rights to manage the assets of the funds and will merge all 3 into one fund. At that point the fund will become open ended. More info in the news release. All 3 funds currently trading ~19% discount to NAV. FWIW, RIL seems most interesting with 20% assets in cash and another 6% of assets in one of the other sister fund.
    7 Apr, 03:43 PM Reply Like
  • jaginger
    , contributor
    Comments (562) | Send Message
     
    Any hope for ACG closing discount now?
    16 Jun, 12:33 PM Reply Like
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