Owen

Equus Total Return: A Solar Inverter Play for Free!

Good point, fxtrader07. I've looked at this CEF before, and was disturbed by the high management fee and low returns even more than I was with the valuation of their private holdings. In fact, even if you added back the obscene 5.5% management fee, the fund would still underperform the S&P since inception. The only justification to invest in EQS is if you have reason to believe the fund will soon be turned into an open-ended mutual fund, at which point NAV and price will coincide. In all other cases, any perceived discount to NAV will eventually be eaten up by fees and an underperforming portfolio.

If past performance of this fund teaches us anything, it is that their NAV will, in time, drop to match today's share price of $7.15, rather than the price rising to match today's NAV of $12. The discount is likely to stay at the historical levels of 25-45% as long as the assets are difficult to price, and as long as the bulk of the gains go to management rather than shareholders.