mike57dk

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  • Comparing Dividend CEFs With ETFs: Which Are Better?  [View article]
    Jerbear - Thanks for the comment and to specifically address your concern:

    The April 30,2014 semi annual report AND the Oct 31, 2014 annual report ( audited and signed by Deloitt ) both confirm that AOD has a line of credit with BNP Paribas that was INCREASED from $300,000,000 to $700,000,000 from March 31,2014 - May 31,2014 but which will revert back to $300,000,000 through fiscal 2014. Terms of the loan is Fed Funds rate plus 0.95% per annum on amounts borrowed ( page 22 of the semi annual report )
    The maximum amount of the line of credit available will be the lesser of 33.33% of the total assets of the fund or the amounts disclosed above.

    During the period ending 4/30/2014 - the average borrowing of the fund was $4,225,445 at an average rate of 1.02% ...and the maximum borrowing was $34,431,762 with interest totaling $21,714.

    Summary - with all due respect to CEF Connect, they are a little slow to update, particularly since the fund, from inception, was designed NOT to make use of leverage ...The management commentary for the fiscal year end even makes mention of the use to leverage to enhance the yield ...

    In my opinion ...this is far from some obscure accounting point of order ...fund management has gone thru some pains to negotiate and for a brief time to more than DOUBLE the amount on their line of credit ...and YES ...an average interest rate of 1.02% sounds very favorable ...but at the end of the day ...they are BORROWING MONEY to sustain their dividend payments ...and my original contention was that this adds a new dimension of risk and liability to an already hyper-aggressive fund tactic of " Selling Dividends " which individual brokers are precluded by securities regulation from doing ...and adding an outstanding loan balance to that tactic seems to be adding more risk to a fund that has dramatically underperformed over the past five years ...

    With respect ...I stand by my earlier comment that AOD is using leverage to meet the dividend payment requirements. In simple point of fact; they negotiated to increase their line of credit to $700,000,000 in early 2014 for a few short months ...this ..on a fund with $1,082,298,147 in net assets at the time.
    Regardless if you think AOD is just being smart and taking advantage of the low interest rate environment ...Its simply NOT accurate to say that the fund does not employ leverage. ( They clearly do )

    Hope this proves helpful - Mike
    Jan 26, 2015. 12:09 PM | Likes Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better?  [View article]
    Hello kt82 and thanks for the comment / question ...

    Let me take a stab at answering with my point of view and in recognition that many others here on SA and other chat boards may well have a differing perspective.

    The NAV is nothing more than the aggregate current market value of the stocks held in the portfolio by AOD ...since closed end funds essentially have a fixed number of shares and trade on an exchange like a typical stock ...the market price can AND will trade at a premium OR a discount to the NAV ...Look at STK for a nice example of a closed end fund trading at a PREMIUM to NAV instead of a DISCOUNT. ( good fund to have on your watch list by the way )

    My contention is that a DISCOUNT to NAV makes the fund more attractive to potential investors ...in this case AOD is trading in the open market for approximately 13% LESS than what the literal value of the stocks its holds in the portfolio ...Its " On Sale" so to speak ...

    So ...why is AOD trading at such a preposterous DISCOUNT ? Well ...they have wildly underperformed over the past five plus years ...the fund has over $3 billion in capital loss carryforwards on a fund with only $1 billion in assets ( what is wrong with that picture ? ) ...they reverse split the stock 1:2 in Jan 2014 ...and underperformed versus the S&P 500 index in 2014 by at least 300 basis points ...

    Their dividend capture strategy has been discredited as a bull market only tactic and recently they have taken to borrowing money to pay the large monthly dividend ...( leverage ) ...

    Many , many investors have dumped this stock because of its poor performance and many more seem to be waiting for a slightly better market price ...and then dumping it ...$9.00 per share or close to it seems to trigger a wave of new sellers ...thus driving down the price yet again ...

    Many large cap equity funds trade at a discount to NAV ...and some people ( myself included ) think that a 5% discount is sort of NORMAL ...but AOD is almost 2 x that normal discount ...sending me DANGER signals ...

    Look at ETY , ETW and other funds ...for a better investment strategy of buying closed end funds at a workable discount to NAV ...AOD has made me some money in the past ..but ..they maintain that " run & gun " dividend capture tactic ...and that seems out of step with the current market conditions.

    hope this proves helpful
    Jan 23, 2015. 04:30 PM | Likes Like |Link to Comment
  • Eaton Vance Tax-Managed Diversified Equity Income Fund declares $0.0843 distribution  [View news story]
    Well ...to answer your question with a ton of data ...here is a post I wrote out earlier today on another board ...
    Fiscal 2014 - ETY metrics with opinion added
    The print copy of the fiscal 2014 annual report on ETY had a good bit of interesting data and here is my take on the fund thru 10/31/14.
    Overview - Fund has a bit more then $1.8 billion in assets concentrated in only 60 large caliber / blue chip type stocks ...Google is 4.1%, AAPL is 4.1%,Corning is 2.7%,Merck is 2.4%, Amazon is 2.3%, CAT is 2.1% ..you get the idea ..ETY is overwritten with S&P 500 index CALL options about 47% of the portfolio giving them some downside protection in sudden market declines and portfolio income from the options premiums taken in ...they typically SELL the index calls with about 17 days average duration ...and close out the vast majority before expiration ...In fiscal 2014 ..with the market advance thru Oct ...they got clobbered with the options losing approximately $23 million ..BUT...that is ok as the underlying market value of the stocks in the portfolio greatly exceeded the loss in the options area. The fund is showing a net unrealized appreciation in fiscal 2014 of +$173,695,981 and an overall +$222,120,871 in net assets ... both very good numbers and a sign of positive health for the fund.

    For Fiscal 2014 ETY posted a + 19.41% rate of return as compared to the S&P 500 index of +17.27% so a nice year after posting a +25.53% return in 2013 and +15.99% in 2012.

    NAV - The fund improved its year end NAV by a raw +0.47 per share or 3.9% and hopefully muting some of the critics who have complained that the large amount of ROC in the monthly distributions was in effect robbing the NAV of the fund. A quick back of the napkin calculation indicates that approximately 67% of the fiscal 2014 dividend distribution was ROC.

    Portfolio Turnover decreased to 83% from 130% in 2013 as the fund reduced it overall number of stock positions while taking significant profits ...( 2013 was an unusual year in that the fund sold off virtually its entire portfolio ...took a huge capital gain ...and cleverly washed those long term gains against carry forward capital losses from 2008 / 2009 ...)

    ETY also showed that fund management is continuing its share buy-back plan ...they reported that 140,000 shares of ETY were effectively " retired " in 2014 at an average discount to NAV of 10.56% ...It would seem that when the discount to NAV reaches the +10% level ...fund management will be aggressively buying the shares in the open market ...( current discount to NAV is around -8.7% )

    Summary - This seems to be a smart well run fund coming off two consecutive years of strong market performance ...Their CALL option tactic is more defensive than simply owning the S&P index but in flat to uncertain / down markets ( uh ...like these days ) the fund seems to do very well in terms of market price appreciation while providing a strong monthly income stream.

    Someone once said ..." Its always wise to get paid ...while waiting for market appreciation " ...and ETY seems to fit that description very well.

    Hope this proves helpful - regards
    Jan 17, 2015. 01:01 AM | 1 Like Like |Link to Comment
  • 10.6% Yielding ETW Offers Both Income And A Capital Appreciation Opportunity  [View article]
    Good question ...and like any milestone or map of performance reference; The unmanaged S&P 500 index should be the benchmark of comparison for equity based funds.

    For example - If ETW, with dividends reinvested, produced a 1% Total return in 2014 versus the +14% return realized by the S&P index ....that is useful to know in evaluating weather or not to sell the fund as I strongly suspect many holders did in December ...

    At its core; ETW is a stock fund with positions in large blue chip companies globally ...its a RISK fund that produced a money market rate of return in 2014 , but that also produced a venture capital like return in 2009 with a + 59% performance ...

    Its a matter of record that most mutual funds do NOT beat their respective unmanaged index benchmark each year ....but a 1300 basis point underperformance signals to me that "something" happened ...in this case during the month of December ...where ETW essentially lost the full year of gains it had accumulated ...

    My take is this anomaly was caused by year end selling and with very few buyers late in the year ...the market price of ETW just got slammed unfairly ...giving us an opportunity ...that's the thinking anyway ...lol

    ETW seldom holds their options longer than 10 days ...closing out the open positions and buying the next month's index options ...The premiums taken in by the option positions are a source of tax advantaged income for the fund and a defensive hedge should the market sustain a sudden downturn. ( Index options , regardless of holding period , have a 60/40 long term / short term capital gains taxation rate ...

    In short; I use the general purpose S&P 500 index as a basic tool in measuring the overall success or lack of it for all equity based funds. I don't use any options benchmark for ETW ..

    hope this proves helpful

    Jan 3, 2015. 01:14 AM | 5 Likes Like |Link to Comment
  • 10.6% Yielding ETW Offers Both Income And A Capital Appreciation Opportunity  [View article]
    Enjoyed your article on ETW and wanted to throw a few other non-scientific factors that may factor into the equation or decision to purchase ETW.

    On Dec 3, 2014 the fund closed at $12.20 per share ...and closed the year on 12/31/14 priced at $11.02. That's about a -9.6% market price decline in less than 30 days ...Yahoo is showing the 2014 high for the stock at $12.95 on 6/11/14.

    The Total return measured with dividends reinvested for calendar 2014 was +0.96% compared to the unmanaged S&P 500 index of +14.56%
    Total return on a trailing 2 year basis is +22.02% versus the index of +46.37%
    Total return on a trailing 3 year basis is +43.34% versus the index of +71.39%

    The discount to NAV at this writing is approximately -8.63% which is compelling even if we accept the new normal of closed end equity funds to average a -5% discount to NAV.

    On the surface; these numbers would give pause to any investor looking for high income , monthly distributions and good growth potential ... even when on sale at a substantial discount.

    Eaton Vance is still showing the 2014 ytd 11/30/14 performance of ETW at a plus +9.97% with the NAV performance up 4% on the year ...The month of December seems to have wiped out any progress the fund made throughout 2014 ...

    Why ? why did the market price of ETW NOT recover along with the general market in late December ?

    Possible answers :

    1. " The Biggest Loser " syndrome ..( ok ..I just made that up ) ...ETW and sister funds like ETY are showing up on statements and portfolio holdings as the " weakest link " in most portfolios ....because of the accounting regulations that require that all reinvested dividends be treated like new money being invested in the security. For example ...my holdings in ETY show a cost basis of $23,614 and a current value of $20,492 with an unrealized capital loss of ( $3,121 ) on the position ...-13.2% ( ouch ...but wait it gets even better )
    The reinvested monthly dividends show a current value of $15,292 and a cost basis of $13,923 for a small gain on that lot of $1,369 ...during the holding period.

    But wait ...the Total Value of that original $23,614 invested years ago is actually $37,537 ...or a +58.9% Total return. ( hardly a negative or a capital loss )

    My contention is that accountants / CPA's / brokerage professionals, and plain old everyday investors are SELLING ETY / ETW in December to effectively wash those capital losses against a general market gain of +14% in 2014 ...and citing the relatively large capital losses listed on the statements.

    2. The effective monthly compounding of dividend reinvestment , especially a 10% ish dividend, will provide an effective "dollar cost averaging" methodology over time ...essentially buying more shares when the market price is lower and fewer when the price is higher ...The peak market price for ETW in 2014 was $12.95 per share ....( just six months ago ) ....if you believe that ETW has been unfairly hammered by year end tax loss selling or just investors dumping the fund ...volume was up four fold on the last two trading days of 2014 ...my guess would be that the great majority of that volume being SELL orders ...driving the market price down ...beyond any reasonable fair pricing level ...Closed End mutual funds like ETY / ETW are particularly susceptible to sudden price declines when a large sell order is processed. ( fixed number of shares ...few buyers and large sell orders can and will unfairly drive down the market price to a level that will find investor interest ....uh ...say $11.02 per share the other day....LOl )

    Summary - my opinion is that the December market price action knocked off about a dollar a share from ETW ...and much of this loss will be recovered ...and quickly ...as investors see this market disparity ...we could easily see the market price back to its Dec 3, 2014 level of $12.20 per share ...all the while collecting our annualized 10.6% dividend ...if you forecasted a $2 per share market recovery in 2015 and a further dollar per share in dividends paid ...that would be an approximate +27% return in 2015 ...if we just got back to the market price of June 2014.

    That's the investment thesis / hope anyway ...for us " bargain shoppers "

    Hope this proves helpful ...Regards - Mike
    Jan 2, 2015. 10:14 PM | 7 Likes Like |Link to Comment
  • We've Now Approached 'Stupid' Levels For Prospect Capital  [View article]
    Good comments all ...but ... I used to own PSEC and loved the yield. The frequent dilution of shares by additional share offerings was annoying but livable.

    Then I started to look beyond the math and the various statistical metrics on this company and instead look at the various investments the management was making ...while some were good, several were outrageous and foolish ...worse still was the management's attempt to distort the poor performing investments in the annual reports ...Example - a " Green Energy / renewable investment in New England ..lots of data ...but a simple Google search determined that this was a basic " firewood" company ... one with a troubled past and horrible management ...and far, far from being a " Green energy" concern ...PSEC lost millions betting on this whopper...and there were more of similar ilk.

    I decided to SELL my holdings ...not because of the new issuance of shares , or any specific financial aspect ...but because I felt the company was prone to taking super high risk on projects that had little chance of success.

    Conversely:

    I attended a meeting with the senior people of MAIN in Houston ..and they went over their investment in Castro cheese ...why it was a solid target market with a brand affinity in the Hispanic community , how their sizable investment was somewhat protected with liens and what their expectations were for the investment ...they clearly knew the company , management team and business potential. The Castro investment turned out very well ...but the difference in management competency as compared to PSEC was demonstrable.

    Since I had flipped out of PSEC ..and invested the proceeds in MAIN ( May 09 ) ...the investment results have been noticeably different as well :

    MAIN - 2014 ytd - (-2.12%) Total Return , PSEC - ( -17.73%) Total return , S&P 500 - +10.59%
    2013 - Today - MAIN - +11.59% Total Return , PSEC ( -6% ) , S&P -+41.3%
    May 28, 2009 - today - MAIN -+288% , PSEC -+85% , S&P index - +144%

    BDC companies have seemingly fallen on hard times over the past two years ....but PSEC has proven itself UNABLE to compete with its peer group even in good years ...and is frankly getting walloped by the simple / unmanaged S&P 500 index ....turning in a massive underperformance on a one, two and five year basis.

    Why hold BDC type companies at all ? except to earn income and get a reasonable growth component over time ....In that gage, PSEC has failed ... and while the current discounts and various investment metrics seem compelling as defined by this article ...I just can't get past their management and disparity with the typical peer group performance and versus the S&P index.
    Dec 16, 2014. 03:05 PM | 1 Like Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better?  [View article]
    Interesting thought ...but lets address your recommendation with some contingencies that have happened to us in the past and which, if repeated, might tend to offer a contrary view to the overall attractiveness of Preferred stock ETFs :

    1. Preferred stocks are primarily an Income investment without any specific maturity date inside an ETF ...individually they typically have a 25, 30 or even 45 year duration so the average duration of the underlying paper inside the ETF can be very, very long. ( not good in a rising interest rate environment where any increase in the Fed rate will cause a sharp and significant decline in valuation of the preferred stock )
    2.Companies can and will suspend the dividends on preferred issues ....even those with an implied Federal Government backing ( FANNIE, FREDDY MAC ) come to mind ...where the new issue 9% preferred stock issued in early 2009 failed to pay even one dividend ...and the price fell from $25 to $3 in a few months ...ouch ) This sudden price decline triggered a stampede of investors dumping the stock ...causing even more price declines.
    3. ETFs typically trade at or close to their NAV ...whereas CEFs can trade at a premium or discount to their respective NAVs. Right now ..AOD is trading at a -13.35% discount to the NAV price in a market that is surpassing all time highs on the DOW and S&P 500 index. This very large discount in a top heavy market could serve to make AOD even more attractive to Growth & Income investors.
    4. Capital Gains - AOD literally has $3 Billion in capital loss carry forwards on the books since 2009 ...( not a misprint -lol ) AOD fund management can trade with a higher portfolio turnover than an ETF and NOT create a single dollar of capital gains taxation for 2014, 2015 ,2016 and 2017. Those gains must be washed against the capital losses incurred in 2008 / 2009 ...so it becomes an advantage to AOD shareholders, particularly in a good market.
    5. Portfolio Income - AOD is producing 7.9% annually as compared to 6.8% income for PFF. Give the advantage to the CEF here as well.
    6. AOD has a fund expense ratio of 1.2% as compared to PFF of 0.47% ...advantage to PFF ...but having an active portfolio management team versus what is essentially an unmanaged basket of preferred stocks, in a rising interest rate environ, and which have very long maturity levels ...the higher expense ratio may well be worth it.
    7. AOD management has an on-going stock repurchase plan underway ...where they can remove up to 10% of the funds shares from the open market at their discretion. These share buy-back plans can help close the discount to NAV and improve the overall market price over time.
    8. AOD, sporting perhaps the absolute WORST reputation in the mutual fund industry, brought in a new portfolio management team about two years ago. Since then; they have improved the NAV by over + 20% , increased the dividend +4% , Reverse split the stock 50% , started a 10% share repurchase plan ...In short, They are making a series of management changes and moves to bring the fund back to respectability. It can prove interesting ( and profitable ) to hold the shares for their third year in control of the fund ...

    Hope this proves helpful in your decision making ...Regards
    Nov 19, 2014. 11:12 AM | 2 Likes Like |Link to Comment
  • Fire Away  [View instapost]
    Good points all ....and without bothering to specifically check the exact numbers ....allow me to " Kentucky windage " the share positions :

    Mill Valley Venture Capital firm has roughly 1.2 million shares
    Last secondary offering placed what... 500,000 shares directly with another institution ...( rough numbers )
    Insiders , including Dr Lederman own or control what ? 4,000,000 shares ...and have NOT sold a single share ...ever.

    Wild Ballpark guess that there are another 3,000,000 -4,000,000 shares in the hands of committed LONG holders like you and me ...

    Last report I saw indicated that there were 12,200,000 shares issued and outstanding ....

    That basically sucks all the wind out of the trading " sails" of this stock ...

    So ...as many as 9.7 million of the 12.2 million shares are with Venture capital , Insiders , committed Longs waiting for the BESTFIT results ...79% of the outstanding stock ...

    so ...no wonder the daily volume is so small ...not much left to trade ..lol

    Plus

    Dr Lederman's disclosed compensation package includes about 250,000 options struck at $30 per share...

    Obviously he thinks that the value of TNXP will be NORTH of $30 sometime in the next few years ...( seemed a good point to mention )

    For better or worse ...we are on this ship ...waiting for the Bestfit test results ...
    Sep 23, 2014. 05:01 PM | 3 Likes Like |Link to Comment
  • Fire Away  [View instapost]
    brichnyc - Actually am LONG the stock in a very serious fashion.
    I follow Joe Springer and Jason N.'s work on TNXP and have read most everything out there that has been published for review.
    Simply asking questions from the company's official slide presentation...I am not sure how that impacts Joe Springer's " time and dignity" test ...and I didn't think my question was snarky or out-of-line.
    In simple point of fact ...we are basing a good portion of our investment thesis to own TNXP on the 26% reduction in pain reported by the 2a trial versus the placebo ... and projecting that outcome on the BESTFIT trial with 200 participants instead of the 36 participants in the initial trial. ( BESTFIT will also use the SL formulation instead of the capsule )

    The 2a test we are ALL citing for its 26% reduction in pain and 72% improvement in objective sleep quality ...in the control group taking TNX-102 ...also reported a 28% increase in nausea experienced by the 18 people taking the sugar pill ... and 11% of those actually taking TNX-102. Headaches were experienced by 28% of the people taking the sugar pill and 39% of the group actually taking TNX-102 ( in a 3.5 mg dosage )
    Perhaps small group tests are inherently flawed as just a few headaches and nausea can tend to sway the overall opinion as Joe seems to be suggesting ...for example ...I doubt very much that the sugar pill taken by the placebo group actually caused a 28% increase in headaches ....but 39% of the 18 folks taking TNX-102 reported experiencing headaches ... and Joe's response is "migraine headaches ? what migraine headaches ? "

    Invoking the " time and dignity" rule to avoid answering basic and legitimate concerns ...and then your dismissal as BS / much ado about nothing ...probably a short" ....That is just ignoring data that does not comport to your investment opinion.

    Joe - I do apologize if my earlier question about the TNXP slide presentation was somehow offensive ...and was unworthy of your time to merit a response.





    Sep 19, 2014. 01:07 PM | 1 Like Like |Link to Comment
  • Tonix Could Match Pfizer's Biggest Drug's Best Market  [View article]
    Joe - was looking at the Investor presentation posted on TNXP website and in specific the results of the Phase Two trial of TNX-102 ...

    It seems to state that 28% of the N group of 18 ....reported increased nausea ...from the placebo pill ...

    39% using actual TNX-102 reported increased headaches
    33% reported dry mouth ....

    My concern is that the small control group can and will provide outsized percentages of adverse events ...

    How on earth did the sugar pill increase nausea 28% for example ?

    or conversely ...if taking TNX-102 causes migraine headaches in roughly 40% of the patients ...that will be a huge factor that will weigh heavily against its usage.

    Hopefully ...the SL formulation in the BESTFIT trial will have a larger sampling ...and better results ...

    I also noted where the PTSD trail will have a 5.6 mg version of TNX-102 SL included with a third of the subjects ...so.... was wondering if having a stronger ( 2 x ) formulation of the TNX-102 SL in their arsenal could potentially show even better test results ....guess we will see those results in first quarter 2015 ??

    What do you think ?

    Thx - Mike
    Sep 11, 2014. 02:26 PM | Likes Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better?  [View article]
    Good morning Nick....

    I saw your comment regarding unrealized capital losses on AGD, AOD and EOD and wanted to suggest that , in reality, you are far advanced over a simple break even ...but that from an accounting standpoint ...you do indeed have an unrealized tax loss that can be used in your 2014 tax computations.

    Let me explain ....Assuming reinvested dividends and an investment start date of Jan 1, 2010 ...EOD has delivered a + 36.52% Total return to your account ...better put : You have 36% more than you originally invested in current account value ...yes ...the S&P 500 index with reinvested dividends would have delivered to you a +92.61% Total return over the same investment period but you didn't have that ...my point being that a plus 36% return is a lot better than simply being under water ...plus EOD is UP a net +23.34% ytd 2014 compared to the S&P index being up +10.39% so you might be getting a very nice benefit for holding on to the underperforming shares ...at least in 2014.

    Another example, AOD, and where a similar phenomena from a tax basis is unfolding.
    In one account, I purchased 1,250 shares of AOD on 3/09/09 ....with a split adjusted cost basis of $8.901. Thru dividend reinvesting I now OWN 2,555 shares of AOD with an unrealized capital loss on the brokerage statement of ( $2,710.89 ) ...the helpful brokerage statement even shows a percentage loss of -24.38% making me think that I am very much " underwater" with this investment and AOD is one of the real " stinkers" in my portfolio. ( sound familiar ? )
    But wait ...I started out investing in AOD with a cash purchase totaling $11,119 and the present value is quoted as $22,690 ....that is approximately a +110% Total return over a 5.5 year duration or +14.46% per year ...hardly an exercise in losing money in the stock market.

    The reason for this apparent disparity is the way reinvested dividends are added to the position holdings ....the approximate 1,305 new shares of AOD purchased thru reinvesting dividends show a cost basis of $10.936 per share ...with a market value of $8.88 per share ...hence a $2,684 unrealized capital loss of the $2,710 total unrealized loss.

    By reinvesting the large monthly dividends ...you are essentially ' dollar cost averaging ' 12 times each year back into additional shares of AOD ...you buy fewer shares when the price is high....and more shares when the price is low ....over time ...this will develop into a significant investment advantage ...

    Incredibly ...you can even sell off the reinvested dividends to realize a valuable tax loss , up to ($3,000) per year and further reduce your overall tax burden for the year by $750-$1,000 depending on your tax bracket ...on an investment you made some solid overall gains in.

    Total Return is by far and away the best measure of individual investment performance ...

    ( I did briefly look at AGD and saw where it was scoring an average -3% ish Total return since 2010 - 9/10/14 ....so that particular investment is indeed ' underwater ' ....I would consider dumping it ...realizing your valuable capital losses ...washing them against any 2014 capital gains ...or ...simply letting the losses carryforward to upcoming tax years ...and re-deploy the cash proceeds into a better performing income based fund )

    After all ...if this tactic can reduce your hard dollar tax bill for 2014 by perhaps $1,000 ...its well worth it to do so. AGD is the weakest of the three investments you listed ...Its the proverbial " F " on your investment report card ....even money market funds have out produced this one ...so remove the " F " from your monthly statement ...start fresh with another investment ....I like your chances to do much better than AGD.

    Hope this proves helpful - Mike

    Sep 11, 2014. 11:39 AM | 1 Like Like |Link to Comment
  • How To Trade The 8% Yielding Alpine Total Fund Before It Splits And Raises Its Payout  [View article]
    Hello Cygnusx3 ...I feel your pain regarding AOD which most probably has the ABSOLUTE WORST reputation in the mutual fund industry. Total Return data from the fund's inception indicates that investors who purchased AOD on the offering have net lost 40% of their capital ...whereas ...a simple investment in the S&P 500 index would have netted a +55% Total Return in the same time period.
    My contention is that in the closed end mutual fund world ...things get " over-baked " easily ...both on the upside ( big premiums to NAV ) and the downside ( big discounts to NAV ) ...which can lead to compelling valuation despite the well deserved HORRIBLE reputation and performance of the fund.
    At this writing; AOD is trading at a -12.55% discount to NAV while the comparable indices are trading very close to their all time highs ...and paying out a current yield of 7.7% ..Performance metrics for 2014 show the market price annualizing a +16.8% Total Return Versus a +15.4% for the S&P index ...AOD is within $0.07 per share of it's 52 week trading high ...
    In the last 18 months ...the fund has brought in a new management team ...improved the NAV a bit over 20%, raised the dividend +4.5% , reverse split the stock 1:2, and retired 3,544,829 shares thru share buy-back ...( whew ...that's a lot )
    The reverse split , in my opinion, was designed to make the fund's market price more attractive ...and distinguish it from some "penny stock" ...and fund management had to know that investors HATE reverse splits ...but they did it anyway ...sacrificing first quarter 2014 performance comparisons with the S&P ...while betting that the subsequent quarters would reward them ...and it has.
    The fund has $3 Billion in capital loss carryforwards on the books with only $1 Billion in assets ...so... realistically we will NOT see any capital gains taxation from AOD thru at least 2017 ...which can be a positive for us.

    Summary - They might be worth a second look ....solid yield, decent performance in 2014 thus far , trading at a 12%+ discount ....holding Apple,Nestle,Walgreens, Qualcomm, Canadian Pacific and Vodaphone as their principal holdings ...( nice portfolio )

    Last point - reinvesting dividends 12 times per year at roughly an 8% yield rate gives you a powerful " dollar cost averaging" methodology ...Example - I purchased 1,250 shares back in early 2009 ...and thru reinvested dividends, now have another 1,290 shares totaling 2,540 ....and despite the miserable market price performance ...have a decent gain ( +107% ) ... YES ...many other investments would have done better ...but a +14% annual Total return is good enough to earn a spot on the roster ...and IF ...AOD ever returns to decent market performance ...the additional shares purchased thru reinvestment will prove beneficial.

    Incredibly ...I also note that there is an UNREALIZED capital LOSS of ( $2,943) due to the accounting formula and valuation method the IRS imposes ...so ....literally I can book a 100% + gain on AOD AND take a long term capital LOSS of nearly $3,000 on the transaction ...its an unintended benefit I guess ...but an important one.

    Hope this proves helpful - Regards - Mike
    Aug 21, 2014. 11:44 AM | 1 Like Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better?  [View article]
    Not to quibble ...but the portfolio turnover ( audited #s for AOD ) show as follows :
    2013 - 192% Fiscal year market Total return - +9.11%
    2012 - 310% -( 0.32%)
    2011 - 367% -(2.19% )
    2010 - 487% - (21.34%)
    2009 - 653% -+32.76%

    We are still waiting for the mid-year 2014 report from AOD to see the extent of their re-purchase plan ...am guessing that the guys who would impose a 1:2 Reverse split in Jan of 2014 and raise the dividend by 4.63% at the same time ...would NOT be bashful about snapping up shares with a 13% average discount ...so figure a heavy volume of buying each month.

    AOD management depends on the proceeds from their 192% annual portfolio turnover to pay the dividends ( some ROC ) and fund the share buy-backs ...in some ways this can obscure the financial health of the fund by illustrating significant unrealized gains on the share purchases of their own stock.

    I agree that the new portfolio managers in AOD are being more conservative than the predecessor ... but a near 200% annual portfolio turnover is still alarming ... by way of comparison; Richie Freeman over at Legg Mason typically posts a 2% portfolio turnover on his AGGRESSIVE growth fund for example ...while delivering +44% in 2013, +18% in 2012, +1.4% in 2011, +23% in 2010 and +32% in 2009 compared to AOD over the same time line.

    Both funds are essentially large cap aggressive growth funds ...perhaps extremes on both ends of the portfolio turnover spectrum.

    I am thinking that the poster who mentioned that " dividend capture " has been debunked was referring to those numbers ...where AOD missed the majority of the post Mar 2009 market recovery while most other funds did very well.

    Jul 24, 2014. 10:55 AM | Likes Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better?  [View article]
    Good morning John and thanks for the informative article from an analytic but perhaps short term perspective. ( numbers don't lie ) Here are some additional numbers to consider when considering AOD:

    AOD has perhaps the absolute worst reputation in the mutual fund industry having been incepted as one of the largest closed end offerings of all time ...with a feverish bull market dividend capture investment tactic that recorded portfolio turnover at 650% ...in an attempt to grab dividends ...then dump the stock a day or three later ...The SEC would call that " Selling Dividends " if a broker called to recommend that tactic it would be a violation of post 1929 securities regulation but incredibly ...its totally OK for a mutual fund to do it and have small investors buy the fund.
    AOD essentially got slaughtered in the bear markets of 2008 / 2009 ..racking up an audited $3 BILLION in capital loss carryforwards on a fund with a smidgen over $1 Billion in assets ...the market price ( split adjusted ) has fallen from $40 per share to roughly $9 where it stands today. ( performance was even worse as recently as Jan 2014 ) Audited returns based on market price being -0.32% in 2012, -2.19% in 2011, and -21.34% in 2010 ..( ouch ..and totally missing the market recovery post March 2009 )

    Under tremendous pressure from shareholders; Alpine management finally removed the "run & gun" portfolio manager and replaced her with two fairly young / smart / aggressive managers - Brian Hennessey and Joshua Duitz about 19 months ago.

    In their first 12 months on the job , and in conjunction with a strong market, they improved the NAV +17.60% ...with the fiscal year end 2013 delivering a + 9.11% total return versus the comparative index return of +23.89% over the same period. In other words ...AOD ended fiscal 2013 with a - 1,478 basis point market price underperformance against the MSCI world index. ( that's an ass-kicking by virtually any standard )

    But ...wait ...here is what the new managers have done in 2014 ....as you mention, the discount to NAV is -13.4% ...but it was -15.1% on 10/31/13 ..so some improvement there.
    1. They announced a REVERSE 1:2 stock split effective in Jan 2014 ...a wildly unpopular move that depressed their market performance significantly during the first quarter of 2014 ...but has yielded new investor interest.
    2. They INCREASED the monthly dividend by + 4.63% ...reversing the trend of constant dividend cuts the old management has inflicted on investors.
    3.They announced a 10% share buy-back plan after retiring 3,544,829 shares in fiscal 2013 ..roughly 295,000 per month ...and they are booking an average gain on those, accretive to investors, buybacks between 12-16% ...
    4. The new managers have abandoned the discredited dividend capture tactics and are now essentially a proxy for the S&P 500 index ...except at a 13% discount to market price ...holding mostly blue-chips and name brand stocks with a turnover of 192% versus 310% in 2012 ...( still eye popping but reflective of the new management change )
    5. They have DELIVERED an 11.2% total return YTD 2014 versus 9.08% for the S&P 500 ...Amazingly ...the YTD market performance of AOD is ALREADY better than the entire 2013, 2012, 2011, 2010 fiscal year total returns COMBINED ...so that is a good sign and start for the rookie portfolio managers.

    We started this note by stating that " numbers don't lie " ...and therefore, by most standards, AOD would and should be a PARIAH in the fund business ...The replacement of the portfolio manager with Brian & Joshua marked a new beginning for this fund ...NAV up over 20% since then, dividends up +4.63%, market performance up 11% YTD, share buyback plan removing 295,000 shares of common each month, Reverse 1:2 stock split in Jan 2014, new investment tactics reducing portfolio turnover significantly ...

    This was a " GUTS" move by Alpine to try and recover from the MASSIVE underperformance ...and reflective of the pressure on Alpine to do something / anything to help fix the fund performance ...

    I own and hold AOD ...having found the discount to NAV compelling back in March 2009 ...but the numbers versus the S&P index indicate that during that 5 year period, where I received a +14.70% average total return from AOD ...the S&P 500 index DELIVERED a +24.52% average annual total return over the same time line. ( 5.36 years and an average -982 basis point underperformance each and every year thru Friday... )

    Investors who purchased AOD on the IPO have a -40.25% Total return or -6.87% per year ...

    Those numbers should have been included in your article as historic yield is important ...but a managed fund that routinely posts a 1,000 basis point underperformance each and every year versus the unmanaged S&P 500 index should not be touted as a top performer ...It would be similar to saying that Brazil scored a goal on the German team in the final minutes of World Cup competition ...but neglecting to mention that The Germans had scored SEVEN earlier goals in the same game ...

    AOD is essentially, at its core, a RECOVERING ALCOHOLIC mutual fund story and they have done some fun and interesting things over the past 19 months of leadership ...but can they " stay on the wagon" and avoid the temptation of going back to the 400-600% portfolio turnover days to capture yield ?

    The numbers I want to see from AOD in 2014 :

    1. Pay the dividends ...( no cuts for any reason )
    2. Outperform the S&P 500 index by a measurable and significant amount
    3. Complete the 10% share buy-back
    4. Stay away from the giant / excessive portfolio turnover
    5. Earn the dividend distribution without inflicting too much ROC on investors.
    6. Continue to grow the NAV while reducing the discount to NAV.

    Summary - Its too early to put TOP PERFORMER and AOD in the same sentence ...but the trend has been favorable over the past 12 months ...

    Thanks again for the interesting article - Mike




    Jul 20, 2014. 01:59 PM | 3 Likes Like |Link to Comment
  • Tonix Approaching 100 Days Until BESTFIT Results  [View article]
    Had always heard that there are at least seven ways to be Bullish or Bearish on a stock ...The top three Bullish tactics being :
    1. Long Call
    2. Short Put
    3. Buy shares ..

    So essentially the debate is which tactic is best for TNXP at this price ...but all are essentially BULLISH variants ...whichever " floats your boat" ....that fits your specific risk / financial profile and prior experience ...

    Am long the shares ...seemed the easiest, most convenient way to act on this investment idea ...I think the options chain was a very recent change / development for TNXP ...with a grand total of 137 CALL contracts outstanding thru three strike prices in December 2014 ...( according to WSJ this am ) ...That's not just thin volume ...that's tissue thin ...( one ply if you will ) ...and as a former options trader; B&H certainly understands that lots of bad things can easily happen ...such as no buyers when you really , really want to sell ...making the quoted option bid / ask more of a fantasy than a price where you can actually get an execution or worse.. a market execution far , far below the quoted price which is nothing more than a last trade history ...or a machine calculated number ...based on an algorithm, not trading based. ( ouch )

    In my opinion, and given the relatively low price of the stock , the approximate 10,000,000 total number of shares outstanding, heavily held by the insiders and about 1.3 million shares held by Technology Partners Fund VIII LP in Mill Valley, California, the best way own the future of TNXP ...is by simply buying the shares.

    But ...lets have some fun ...and ASSUME that the stock hits the $61 per share level suggested by Joe in this article ....and in November ....what do you think the December CALLS struck at $60 would be selling for ? My guess is that the huge volatility in driving the price upwards over $50 per share in the last 100 days ...and the 3-7 week time value remaining on the Dec 14 contracts would impute a BIG NUMBER ....$10 per contract ? $15 on what would be the latest pharma stock to explode upwards ....My point is that you can then SELL the covered calls expiring in Dec 14 ....probably get $15 per share or perhaps much more ...and when exercised ...your exit price would be effectively $75 per share ....or about a $63 per share profit assuming a $12 average purchase price ...that's not shabby either ....if the market price sags back to $40 per share ...close out the open covered call position ...count your money ...keep the underlying shares for another Covered write ...

    Lots of fun ways to make money ...IF... the market price goes up as Joe has forecasted ...There is no ONE RIGHT answer here ...just the one that fits you.

    Mike

    Jun 20, 2014. 04:00 PM | 4 Likes Like |Link to Comment
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