Economic Investment Trust: A Safe CEF With An Appealing Discount To NAV

| About: Economic Investment (ECVTF)
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Economic Investment Trust Limited is a Canadian closed end fund trading on the Toronto Stock Exchange under the symbol EVT. It has been around since 1927 and trades at a very massive discount from net asset value. It closed on March 14, 2013 at $63 and had a reported value, as of December 31, 2012 of $83.98/share. The American stock symbol is OTC:ECVTF.

This fund really contains two different and diverse portfolios. Over 54% of the portfolio consists of long term holdings in the following three securities:

E-L Financial 39.9%
Algoma (OTC:AGMJF) 8.5%
Bank of Nova Scotia (NYSE:BNS) 9.0%

These are fine large cap Canadian companies which are stable and will always remain part of the portfolio.

The second half of the portfolio consists of a truly global portfolio of non-Canadian securities. This portfolio had been previously managed by Sanford C. Bernstein, which produced a mediocre performance. This portfolio is now being run by Burgundy Asset Management, a Canadian investment advisor.

As of December 31, 2012, the fund held securities with a market value of $483,221,000 and a cost basis of $220,662,000. To partially offset this, it had tax loss carryforwards of $73,930,000.

The fund has always sold at a massive discount from net asset value which has ranged between 20-45% . If you can buy in at the high end of the discount, I think you will have acquired substantial value which may or may not be released over time.

Performance for the past two years has been as follows:

2012 2011
NAV 13.9% (17.8)%
TSX Composite 7.2 (8.7)
MSCI All Country World Index 13.7 (5.1)
S & P 500 13.5 4.4

I would not put all my money here but I would buy a little for the ride. The discount can be very appealing.

Disclosure: I am long OTC:ECVTF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.