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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Closed-End Fund Forum 74 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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Comments (74)
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  • Whopper Investments
    , contributor
    Comments (183) | 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 2014, 10:06 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | 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 2014, 10:11 PM Reply Like
  • bazooooka
    , contributor
    Comments (3606) | 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 2014, 04:17 AM Reply Like
  • Betalyst
    , contributor
    Comments (635) | Send Message
     
    NHF is posted to breakout higher.
    13 Jan 2014, 10:16 PM Reply Like
  • SafisKusai
    , contributor
    Comments (239) | 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 2014, 12:02 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » Great idea for a research project; thanks! -C
    14 Jan 2014, 07:02 AM Reply Like
  • memshu
    , contributor
    Comments (577) | 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 2014, 01:49 AM Reply Like
  • Jerbear
    , contributor
    Comments (901) | 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 2014, 05:41 AM Reply Like
  • bazooooka
    , contributor
    Comments (3606) | 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 2014, 06:36 AM Reply Like
  • NYer1
    , contributor
    Comments (1573) | 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 2014, 03:16 AM Reply Like
  • Yuanxi Zhang
    , contributor
    Comments (286) | Send Message
     
    are you working on acg as well?
    14 Jan 2014, 08:56 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | 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 2014, 08:59 AM Reply Like
  • Yuanxi Zhang
    , contributor
    Comments (286) | 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 2014, 11:13 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » I don't know. 2/3rds is hard. AB should support a move to close the discount.
    14 Jan 2014, 11:14 AM Reply Like
  • Clint Edgington
    , contributor
    Comments (328) | 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 2014, 09:08 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » My hope is that this will be a friendly, consensual process driven by AB.
    14 Jan 2014, 09:14 AM Reply Like
  • Clint Edgington
    , contributor
    Comments (328) | 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 2014, 09:24 AM Reply Like
  • Robin Heiderscheit
    , contributor
    Comments (2256) | 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 2014, 09:44 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » Great question.
    14 Jan 2014, 09:59 AM Reply Like
  • Clint Edgington
    , contributor
    Comments (328) | Send Message
     
    Thanks Robin- that's very helpful!
    14 Jan 2014, 09:59 AM Reply Like
  • TheSandman
    , contributor
    Comments (64) | 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 2014, 10:42 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | 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 2014, 10:59 AM Reply Like
  • johnbarleycorn
    , contributor
    Comments (133) | Send Message
     
    Such as XNPVX...thank you.
    14 Jan 2014, 01:00 PM Reply Like
  • jaginger
    , contributor
    Comments (716) | Send Message
     
    Thanks for the tip!
    15 Jan 2014, 10:59 AM Reply Like
  • Pine Research & Trading
    , contributor
    Comments (164) | Send Message
     
    Great tip, thanks. Using it right now.
    21 Mar 2014, 01:59 PM Reply Like
  • connellybarnes
    , contributor
    Comments (418) | Send Message
     
    Wow that is super obscure but useful. Thanks!
    21 Mar 2014, 02:31 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (597) | 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 2014, 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 2014, 06:41 PM Reply Like
  • NYer1
    , contributor
    Comments (1573) | 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 2014, 03:23 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 08:31 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | 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 2014, 06:45 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 02:17 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (597) | 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 2014, 04:23 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 07:15 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (597) | Send Message
     
    Hardly been a downtick for weeks. The mgmt co. has been buying shares recently too.
    16 Jan 2014, 06:23 PM Reply Like
  • George Spritzer, CFA
    , contributor
    Comments (971) | 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 2014, 11:55 PM Reply Like
  • toddro
    , contributor
    Comments (212) | 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 2014, 08:04 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | Send Message
     
    In re: SELF, I'd say any Winmill-managed entities should be approached with skepticism.
    15 Jan 2014, 07:17 PM Reply Like
  • toddro
    , contributor
    Comments (212) | Send Message
     
    Good to know, I appreciate it. Thx.
    15 Jan 2014, 09:15 PM Reply Like
  • toddro
    , contributor
    Comments (212) | 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 2014, 06:37 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 03:19 PM Reply Like
  • toddro
    , contributor
    Comments (212) | Send Message
     
    Ok. Thanks. I'll keep looking around. Cheers,
    18 Jan 2014, 08:48 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » What should Bulldog go after next?
    15 Jan 2014, 09:24 AM Reply Like
  • George Spritzer, CFA
    , contributor
    Comments (971) | 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 2014, 04:55 PM Reply Like
  • toddro
    , contributor
    Comments (212) | 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 2014, 10:03 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | 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 2014, 10:22 AM Reply Like
  • toddro
    , contributor
    Comments (212) | 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 2014, 10:31 AM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 10:36 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 10:46 PM Reply Like
  • Fibonacci Sequence
    , contributor
    Comments (597) | 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 2014, 11:47 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 05:39 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » Undervalued Closed End Fund Has Hidden Net Asset Value: Central Securities: http://seekingalpha.co....
    16 Jan 2014, 08:49 AM Reply Like
  • toddro
    , contributor
    Comments (212) | 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 2014, 05:40 PM Reply Like
  • Aharon Levy
    , contributor
    Comments (126) | 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 2014, 03:22 PM Reply Like
  • toddro
    , contributor
    Comments (212) | 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 2014, 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 2014, 10:33 PM Reply Like
  • Patrick Lowry
    , contributor
    Comments (167) | 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 2014, 04:37 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6307) | Send Message
     
    Author’s reply » I know and like RAND. Here is my Discount to NAV portfolio: http://bit.ly/1g1KEEz.
    19 Mar 2014, 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 2014, 02:01 PM Reply Like
  • cashisking101
    , contributor
    Comments (7) | 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 2014, 03:43 PM Reply Like
  • jaginger
    , contributor
    Comments (716) | Send Message
     
    Any hope for ACG closing discount now?
    16 Jun 2014, 12:33 PM Reply Like
  • Harkness T.
    , contributor
    Comments (5) | Send Message
     
    Any thoughts on T.CWF?

     

    Trading at a 38% discount to NAV, but has a 2.33% ER.

     

    http://bit.ly/1xHYrFD
    20 Mar, 07:35 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    A bit exotic but anyone any thoughts on Capital VC (2324:HK)?

     

    NAV has doubled from the beginning of March untill now to 1.8 HKD. This is because the Hong Kong stock market they invest in has done really well during this period.

     

    The only other news was the share reconsolidation (reverse split). That will be effective this Friday.

     

    The share price hasn't changed much last couple of month despite the doubling of NAV.

     

    It's also a net-net with a large discount to NCAV.

     

    A position in this stock could be hedged with a short position in the general Hongkong index.
    11 Jun, 08:55 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    Capital VC went down a bit more on it's first trading day after the reverse split (5 for 1). I wonder whether some uninformed investors sold seeing that the price is now much higher. I bought a bit more at 0.7 HKD (0.14 pre-split).

     

    NAV is over 9 HKD per share post split (announcement May 31 2015).
    12 Jun, 04:21 AM Reply Like
  • Yuanxi Zhang
    , contributor
    Comments (286) | Send Message
     
    Hi Reurd,

     

    This company has a history of large capital raise at a very large discount to market price. The most recent announcement was in March when they announced that they will offer 7 shares for each share at a 76% discount to the market price at that time. This will make discount larger and larger. If you look at their 5 year chart, you can see a $10 per share stock becomes $0.2 per share
    12 Jun, 06:24 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    Yuanxi, of course there are always good reasons for such a low price. At the moment it looks very dark, and I can't think of anything that would turn this around. Although what recently changed is that their portfolio went up by 100% in a couple of months. So even for this stock it is illogical to go down instead of to go up.

     

    I don't recommend buy and hold until the discount is gone and neither do I recommend making a big bet.

     

    But I think it's worth to take the risk of a small bet, watch the stock, sell at 50 or 100 percent gain and otherwise take your loss after 2-3 years.

     

    I have seen companies diluting like they were crazy that were still great (short term) bets. Companies that even I didn't dare to touch went up by 200% in a short while.
    12 Jun, 07:19 AM Reply Like
  • Yuanxi Zhang
    , contributor
    Comments (286) | Send Message
     
    I see what you mean. Maybe you want to buy after they finish the coming dilutive stock offering..?
    12 Jun, 08:24 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    Thanks, I should have done my homework much better! I estimate now the NCAV/market cap at 1.6 post dilution. Not an excellent bet anymore but still a very good bet.

     

    We will now more when they publish their report, I suppose in August.
    12 Jun, 09:22 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    Only in the last couple of days before the rights offering the price went down a lot. I was a buyer then. If the stock price (corrected for the rights) returns to last week's level we will see a price of 0.37-0.38 HKD, in which case I will make good money.

     

    In that case the NAV will still be more than 3 times bigger than the market cap.

     

    The ticker has changed to 2981:HK
    12 Jun, 04:40 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    Last Friday I was really optimistic. I thought that the stock had a tendency to go up but then some large sales for avoiding the offering spoiled the party.

     

    Today Capital VC (2981:HK) is trading ex-rights, already at 0.5 HKD! This is about 30% more than the price from the last couple of weeks. I suppose the fund is now trading at about half of its NAV.

     

    From the top of my head I remember that the new shares will be delivered on July 9. Then sellers will depress the price again, and after that the stock may have more room to go up. We will see, so far so good.
    15 Jun, 01:54 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    I found another one: Hotung Investment Holdings http://bloom.bg/1IiHm9r

     

    This Taiwanese VC like fund trades below half of book value. It's listed in Singapore, it's listing was many years ago. It seems to be a shareholder friendly fund: consistent dividend payer, high yield and some small but ongoing buybacks. Multi-national board with some people having a degree in the UK and the US, among which the CEO.

     

    I think I will pass on this one since I should stick to net-nets, but this one could be the next Urbana. Anyone an opinion, for instance for why it is trading so much below book? What's wrong with this fund?
    16 Jun, 10:20 AM Reply Like
  • Arbalet
    , contributor
    Comments (44) | Send Message
     
    Very exotic, but EOS Russia (EOS SS), listed in Stockholm, trades at a 50%+ discount to the value of its underlying assets, primarily four listed regional electricity distribution companies in Russia (MRSK Volga, MRSK Center-Volga, MRSK Urals, MRSK Northwest) plus some other related assets. The underlyings are already cheap in their own right – RU distribution companies trade at a 50-75% discount to peers, at an average PE of 5x, EV/EBITDA 3x and EV/sales 0.2x vs EM comps 7x, 15x, 0.9x and DM comps 11x, 16x, 6x.

     

    The sector’s been left for dead as a result of an inconsistent regulatory regime, enormous inefficiencies and a long-delayed privatization program. There is a major opportunity for strategic investors like French utility EdF (which had a management contract for the Tomsk distribution company), although less so near-term in the wake of the Ukrainian incursion. The 13 or so distribution companies have so much fat that motivated private owners could turn them into cash cows, as E.On and Enel did with their Russian generation companies, with relatively little effort. For example, the average distribution company has ~3x the number of employees per unit of throughput as their EM peers, which are none too efficient themselves. In addition, these companies are gigantic (MRSK Urals alone delivers more power than all of Austria, MRSK Volga more than Switzerland) and required investment in the sector is enormous, on the order of $75-100 billion over the next 10 years; private capital will be needed.

     

    The problem is the majority ownership in all of these companies of Russian Grids (RSTI RX), a swamp of cronyism whose management are opposed to privatization. More forward-thinking elements in the government are gradually building up the case for privatization, although as always, what's best for the economy isn't necessarily best for Putin & famiglia. There is some evidence, though, that Russian Grid management are losing ground.

     

    At the moment there is a tug of war going on under the surface among various government bodies and private interests over the pace and timing of privatization and over the companies’ dividend policies (the MinFin wants to see them pay dividends on IFRS-based income instead of (lower) Russian accounting-based income). Either privatization or higher dividends could provide a catalyst, although privatization is unlikely while sanctions are in place. EOS has some influence on the process as they have large stakes and board seats on all of its major investments, which are among the better-run distribution companies.

     

    Whether and when this will pan out is a difficult call, and it’s a high-risk investment given the country, the sector, and the decline in the stock's liquidity. (There is also the potential for a fund windup that could be adverse to shareholders, e.g., it has large stakes in the underlyings which public sales would pressure, or management could distribute the holdings to shareholders who may not want to hold them separately.) The sector is so bombed out, however, that in a situation where the only change is a relaxation or dropping of EU sanctions there is potential here for substantial upside.
    18 Jun, 10:12 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (803) | Send Message
     
    Wow, great idea, it's so scary that it must be really cheap. So I like it. For those who are not yet convinced that it is scary:
    http://bit.ly/1K0sEbu

     

    Just 2 employees and one of them doesn't live in Russia (anymore).
    18 Jun, 10:35 AM Reply Like
  • NYer1
    , contributor
    Comments (1573) | Send Message
     
    PHK is now virtually the only fixed i8ncome CEF that still trades at a huge Premium.
    After PHT lost all its premium and has become discounted to its NAV over the past few months it seems that PHK is slowly but surely following suit.
    They are still maintaining the outrageously inflated distribution but I believe it has been long overdue for them to reduce it so it more suitably is in line with market conditions of lower rates.
    If that happens PHK will become a discounted CEF to its NAV with a few short days.
    But even if it doesn't happen soon, I think the premium would shrink dramatically over the next 30-60 days.
    At current NAv levels the fund must earn about 19.4% annually just to finance that dividend without any NAV erosion .
    I know they have been very successful over the past 5-6 years since the financial crisis but this "disaster waiting to happen - on steroids !" has encountered less favourable market conditions and the next few years will probably see higher rates which should not be too good for this fund.
    Any sane vies/ideas why this fund should NOT be sold and swapped into attractively valued discounted CEFs would be appreciated (please spare us all the common cliche about the fact they have been paying this distribution since inception, that is not a valid reason in my mind as they can opt to reduce it any time, see PHT as an example).
    18 Jun, 10:26 AM Reply Like
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