anarchist

Thoughts on Portfolio Construction and Diversification (Part 2)

On Jun 22 04:41 PM Old Trader wrote:

>So if it's <1% of your portfolio why bother?
>
> Your point on GIM is well taken. My position in it is also based
> on an excellent long term track record by the management. My position
> in HTR is less than one percent of the portfolio, so whether it triples
> tomorrow, or goes to 0, it would little to no effect on overall portfolio
> returns. I'd agree there's probably some pain to come in the high
> yield sector.
>
> In regards to converts, its my understanding that, as you pointed
> out, a lot of hedge funds were in the convert arb strategy, and the
> ban on short selling effectively blew that strategy up, resulting
> in wide scale "dumping" of convertible bonds, killing the NAVs of
> convert funds. Still, the sector HAS recovered, somewhat, this year.
>
>
> A final point in regards to steep discounts to NAV, something I've
> noticed is that there's a growing tendency by CEFs to periodically
> (like once a year) announce a tender for a certain percentage of
> shares outstanding, typically, at a price somewhere around 3-5% under
> NAV. Since quite a few funds trade at discounts north of 10%, that
> can result in a pleasant "surprise" for fund holders.
>
> On Jun 22 03:27 PM odin wrote: