Despite Solid Performance, RENN's Expense Ratio is Too High a Hurdle to Clear (RENN)

Includes: AMMD, LSCP, RCG
by: CEFblog

Who has benefited the most from American Medical Systems' (AMDD) recent acquisition of Laserscope (LSCP)?

Probably the closed-end Renaissance Capital Growth & Income Fund III (NYSE:RENN). The fund has almost 26% of its very un-diversified portfolio invested in Laserscope, which is being acquired by American Medical Systems for more than a 40% premium to Laserscope’s closing price from last Friday. The resulting price increase in Laserscope has caused RENN’s NAV to jump by almost 12% through Tuesday, and RENN’s market price has increased by a similar percentage.

This is definitely good news for RENN’s current shareholders, but I wouldn’t necessarily buy shares now. The main problem I have with the fund is that it’s last reported expense ratio was over 3%. I would need further convincing that the fund is going to have exceptional returns in the future before I would be willing to pay that much.

RENN 1-yr chart:

RENN 1-yr