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mike57dk

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  • A Close-Up Look At The Report That Had MannKind Investors Reeling [View article]
    Goldman Sachs Research Analyst ....( almost a conflict of interest in the job description alone ) - GS does have a clientele of major corporate organizations , ultra high net worth individuals and even Countries ...( Greece comes to mind ) Despite this impressive " stable " of customers ; GS earns right at 80% of its considerable annual profits by placing BETS ....er ....investments with their own capital.
    Their familiar tactic is to use their cache to the wealthy and political types as a door opener to various new customers ....and once inside the financials of the organization ...a surprising and sudden amount of " short interest " in the common stock typically appears ...slamming the common stock market price significantly. ( look at what they did to another small company - BPZ a few years ago )
    One noted author has called GS a " vampire squid " sucking the life from their own customers / clients ...while of few select clients benefit greatly.

    Does any of this sound even vaguely familiar to the MNKD situation in today's environment ??
    In my opinion; Goldman Research, especially downgrades, are almost always dramatic events ....scheduled and designed to " shake-the-tree " and have many smaller investors quickly sell or dump their shares ....They are making their money by betting their own accounts and assets ...to the tune of 80% of their annual profits ...that places THEIR financial interests far, far in front of their clients and the investing public ....

    Just a few years ago ( 2008 ); the mighty and well regarded Goldman Sachs did NOT have enough cash on hand to meet their month end payroll ...The Federal Reserve , made them a bank in one day ....a real bank , not just an investment bank, and loaned them $10 BILLION dollars to stay in business ....They had essentially BET their corporate asses on the mortgage market and CDOs ....with massive leverage ...they were literally and actually insolvent.

    They issued Research reports ( sounding familiar ? ) calling for an immediate rebound in the mortgage market and those CDOs ....They were wildly inaccurate and wrong ...

    Goldman Research - issued a BUY recommendation on Fannie Mae / Freddie Mac citing their implied government guarantee and AA+ rating ...both stocks subsequently collapsed in the ensuing months ....

    They helped Greece out tremendously ...by bundling their future revenue from hospitals , roads and even the various Port authorities into a massive bond offering , whereby the local yokels in Athens would get some immediate cash from the bond creation , but then be stuck for decades with an impossible debt servicing on those same bonds ...which they sold to their unsuspecting retail clients and other brokerage houses ( anxious to market the super duper interest rate bonds backed by the revenue of a sovereign member of the EU )

    These bonds are all but worthless ...

    You seeing a trend here ? I literally laugh when I see a document chock-a-block full of charts and impressive graphs from Goldman Sachs ...like their MNKD Research downgrade ....The SA author of this article properly notes that the revenue projections seem odd ...suspicious even ...wondering where the supporting data is coming from ....

    I don't ...I just ASSUME that GS is producing another document for the " yokels " or the little people ...They are a vested player in this game, not an independent or even a particularly honest broker for us to depend on their research advice.

    Want more circumstantial evidence ? Jon Corzine served as the CEO of GS in the 1990's ...later as a US Senator and Governor of New Jersey. He took over MF Global in 2010 , a long term and quiet little company that had previously been hedging farm crops and commodities as their primary business ...In less than 24 months he bankrupted and closed the company ....by BETTING corporate assets and monies NOT the property of MF Global on super high risk investments.

    This is a culture thing with Goldman ... They are NOTHING more than a particularly fancy hedge fund ...wearing the cloak of a banker ...thanks to the US Taxpayer , but needing to make outrageous profits to keep their principals and key clients happy ....Those impressive gains often come at the expense of others.

    No ...I don't concern myself with Goldman Sachs Research , and neither should you.

    Hope this proves helpful ...Thx

    Mar 10, 2015. 01:43 AM | 17 Likes Like |Link to Comment
  • Assessing High-Income Covered Call CEFs [View article]
    Thanks for the interesting and informative article ...

    The questions about UNII and ROC have plagued funds like ETY for quite some time and seem to relate to the overall financial health of the fund. The accounting methodology / terminology can be confusing and misleading ...as several of the comments listed here indicate.

    Using ETY as a baseline ( since I follow that specific fund ) ; perhaps a better indication of overall financial health might be the ( audited ) total income or loss from operations on a per share basis ...?
    In 2014 , ETY published a + $1.481 per share income from operations ...their second best year since 2010 ...while distributing $1.012 per share in the form of dividends ...( 83% portfolio turnover )
    In 2013, ETY published a +$1.993 per share income from operations while distributing $1.096 in dividends ...( 130% portfolio turnover )

    If the thrust of the ROC and UNII questions / concerns are directed at the ability of the respective fund to sustain the monthly dividend stream, it stands to reason that an audited " surplus " of income on a per share basis is a good metric to use.

    Another might be Unrealized Appreciation in the portfolio year over year ....( although a bad week or two in the market could significantly reduce that number ) ETY posted a + $158,339,832 in unrealized appreciation in fiscal 2014.
    This after taking a REALIZED gain of + $560,378,480 in fiscal 2013 ...effectively using up their capital loss carryforwards from 2008 / 2009 ...and completely eliminating ROC from the dividend distribution for 2013 ...( clever move in my opinion as long term capital gains are still taxed much more favorably than ordinary income for most taxpayers )

    The questions relating to Index options versus individual Call options on a specific stock ....Index options are by tax law granted an automatic 60/40 Long Term / Short term capital gains status , regardless of the holding period ...which is good since fund management is using a holding duration averaging 14 days ....Individual options on stocks do NOT feature that inherent tax advantage ...and typically require the fund to utilize an Options Advisory firm which is expensive and paperwork intensive.

    Finally ...Several of the CEF's you listed are utilizing an aggressive share buy-back / retirement program ...ETY officially "retired" 140,000 shares of stock in fiscal 2014 and 1,385,696 shares in fiscal 2013 at an average discount to NAV of 10.56% and 12.92% respectively ...and have authorization to " retire " upwards of 13,000,000 additional shares at their discretion. This can also be called an advantage versus ETFs as fewer shares mean a smaller monthly dividend distribution requirement ...and potentially a higher NAV.

    Thanks again for the great article ...Mike
    Feb 11, 2015. 11:39 AM | 3 Likes Like |Link to Comment
  • Eaton Vance Tax-Managed Diversified Equity Income Fund declares $0.0843 distribution [View news story]
    Good morning ...and thanks for your question.

    Citing the most recent ( audited ) annual report ; ETY is using an estimated 47% overwrite of S&P 500 index CALL options ( only) to augment portfolio income, and serve as a good size defensive barrier against sudden market price swings in the overall market.

    This typically works out to between 4,000- 5,000 index calls opened and mostly closed each month ..Fund management can increase that percentage of Call contracts at their discretion and have done so in the past ...( seem to recall them being at 65% at one point ....)

    Information on these type of so-called Option Income funds can be found on the respective home website of each fund ...Eaton Vance has a very good and easy to navigate section that includes the respective annual reports of their various option income funds ( ETY , ETW, ETV among others ) Search Eaton Vance Closed End funds ...select your favorite fund.

    There are other mutual fund organizations that also use Index Options as an important tool in their portfolios, I just happen to follow Eaton Vance ....I would check out Doug Albo here on Seeking Alpha and reference some of his previous articles on closed end funds ...plus I notice that a new article on " Assessing High Income Covered Call CEFs " was published here on Feb 9 ...but I have NOT had time to review it in detail ...it sure sounds like what you were looking for.

    Hope this proves helpful - Mike
    Feb 11, 2015. 10:20 AM | Likes Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better? [View article]
    User429135 - Appreciate your response and comment ...and wish you the best of luck ...

    Just to be clear ...ETY and ETW both lost significantly in fiscal 2014 with their defensive options trading tactic ...so in a literal way ...they are NOT depending on the option premiums being taken in to pay the monthly dividend.
    The underlying portfolio value increased, dividends paid from the stock held in the portfolio and a portion of the proceeds from the sales of stock transactions were used to pay out the monthly dividend.
    In a weak or down market ....ETY / ETW has the ability to be flexible with the amount of options overwrite ...increasing the level from 47% -70% if needed ...and the overall value of the Index Call options will INCREASE greatly on sudden " bad-days" in the market ...( like today ) ...giving the NAV some protection.

    AOD is more aggressive of the two funds ...the new portfolio managers describing in their commentary where they are using leverage to buy stocks paying a special or one time dividend ...then quickly closing that position ...that tactic had some decent success for them in fiscal 2014 ...but seems contingent on an environ that has plentiful candidates for special dividends ....and that tends to be a very good market.

    My tenure with AOD earned me an annual return ( dividends reinvested ) of +13.77% ...whereas ETY earned ( dividends reinvested ) +17.56% annually ...approximately six years of duration measured.

    Both are decent numbers ...and worthy of inclusion in the equity portion of your At Risk portfolio ...

    Regards
    Jan 27, 2015. 02:54 PM | Likes Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better? [View article]
    User429135 - Thanks for your earlier review and question ...

    I follow ETY closely and their most recent ( audited ) annual report for fiscal 2014 details how the fund essentially lost ($28,295,915) writing S&P 500 index calls against their portfolio during the year ...despite that loss; the fund earned a net +$222,120,871 in asset increase with $48,424,890 coming from investment income and $173,758,924 coming from asset appreciation.
    The fund declared that $0.685 per share was effectively ROC and that $0.327 was attributable to investment income ...ETY distributed $1.012 per share during fiscal 2014 but EARNED $1.481 per share ...( 2014 was their second best year of the last consecutive FIVE YEARS with only 2013 being better and where the fund earned $1.993 per share but had a portfolio turnover of 130% to do that ...with ZERO ROC for fiscal 2013. In 2014 , portfolio turnover was reduced to 83% ...
    As the numbers above indicate ...even with a large ROC component in their 2014 dividend distribution ....ETY managed to INCREASE their NAV substantially ...illustrating that ROC does NOT necessarily reduce the NAV.

    So ..to better answer your question ...Where does ETY get cash to pay out the large monthly dividend ? - Answer - from monthly options premiums taken in, from a portion of the proceeds of their monthly sales of securities and from dividend income from the 60 large cap stocks they hold ...they can increase that cash flow simply by increasing the percentage of options overwrite they use, currently at 47% of portfolio but which has been as high as 70% in the past.

    ETY does NOT have a $300,000,000 or $700,000,000 line of credit against its portfolio like AOD has ...and it does NOT borrow money to meet the monthly dividend requirement.

    AOD seems to be a much more aggressive fund than ETY which uses S&P 500 index calls as a defensive tool ....AOD used to have a portfolio turnover greater than 300% per year ...650% in one outrageous year ...AOD is more like a recovering alcoholic fund, trying to stay on the wagon ...but they just keep falling ...they missed 2009, 2010, 2012 and 2013 completely ...and turned in a lackluster 2014 with over a 300 basis point underperformance compared to the S&P index ...

    Hope this proves helpful - Mike
    Jan 26, 2015. 01:54 PM | Likes Like |Link to Comment
  • Comparing Dividend CEFs With ETFs: Which Are Better? [View article]
    User429135 - Thanks for reading and commenting ...here is the sourcing for the claim that AOD is in simple point of fact making use of leverage to sustain or enhance their portfolio yield : ( I do believe that there is cause for concern on that score )

    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. 12:14 PM | Likes Like |Link to Comment
  • 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
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