Seeking Alpha

Hedge funds pile into income CEFs

  • Typically dominated by individual investors seeking a yield, closed-end debt funds have become the latest hedge fund playground as they seek to profit from assets trading at their widest discounts to NAV since the financial crisis.
  • Behind the discounts was last year's big jump in interest rates which sent the value of fixed-income assets way down. Too far down, say the hedge funds.
  • Boaz Weinstein's Saba Fund (known among other things for landing the London Whale), has amassed $847.3M in publicly traded funds since beginning to buy last year. Pine River Capital has loaded up on nearly $160M worth.
  • Among Weinstein's purchases are $75.7M of Pimco's Dynamic Credit Income Fund (PCI +1%) - making Saba the largest holder - $78.5M of BlackRock's Corporate High Yield Fund (HYT +0.3%), and $41.5M of BlackRock's Credit Allocation Income Trust (BTZ +0.6%).
  • Also a large owner of PCI and HYT, Pine River has 1.4M shares of DoubleLine's Income Solutions Fund (DSL +1.6%).
  • The magnitude of these purchases is unprecedented, says Warren Antler who specializes in CEF analysis at AST Fund Solutions.
Comments (2)
  • rheimerl
    , contributor
    Comments (388) | Send Message
     
    thought i was alone buying dsl, vgi and pci
    27 Feb, 04:23 PM Reply Like
  • vdubb6
    , contributor
    Comments (2) | Send Message
     
    It won't be fun when the hedge funds pile out.
    10 Apr, 10:01 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector