Weekly CEF Roundup: Sell PFO, JMLP Hit By AMID Drop

by: Stanford Chemist

25 CEF sectors out of 31 positive on price and 20 out of 31 sectors positive on NAV.

No distribution boosters or cutters or major CEF news this week.

Sell PFO, and be careful with JMLP's small/mid-cap focus.

The Weekly CEF Roundup summarizes recent price movements in closed-end fund [CEF] sectors in the last week, as well as to highlight recently concluded or upcoming corporate actions on CEFs, such as tender offers. Most of the information has been sourced from CEFInsight or the Closed-End Fund Center. I will also link to some articles from Seeking Alpha that I have found for useful reading over the past week. The searchable tag for this feature is "cildoc". Data are taken from the close of Friday Jul. 27, 2018.

Weekly performance roundup

CEFs performed strongly this week. 25 out of 31 sectors were positive on price (up from 17 last week) and the average price return was +0.41% (up from +0.06%). International sectors took the first four places: Latin America equity (+2.28%), emerging market equity (+1.94%), Asia equity (+1.58%) and emerging market income (+1.33%). The biggest loser was health/biotech (-0.84%).

(Source: Stanford Chemist, CEFConnect)

20 out of 31 sectors were positive on NAV (up from 10 last week), while the average NAV return was +0.35% (up from +0.11%).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest premium is multisector income (3.11%), while the sector with the highest discount is Latin American equity (-14.63%). The average sector discount is -6.79% (up from -6.83% last week).

(Source: Stanford Chemist, CEFConnect)

New Jersey munis showed the largest premium/discount increase (+0.94%), while global equity dividend showed the largest premium/discount decline (-0.65%). The average change in premium/discount was +0.04% (down from +0.16% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest average 1-year z-score is equity tax-advantaged (+1.14) while the sector with the lowest z-score is Latin American equity (-1.58). The average z-score is -0.42 (up from -0.44 last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest yield is MLPs (9.83%), followed by global growth & income (9.26%), emerging market income (9.20%), global equity dividend (9.16%) and multisector income (8.52%). Discounts and z-scores for the sectors are included for comparison. The average sector yield is 6.79% (down from 6.82% last week).

(Source: Stanford Chemist, CEFConnect)

Individual CEFs that have undergone a significant decrease in premium/discount value over the past week, coupled optionally with an increasing NAV trend, a negative z-score, and/or are trading at a discount, are potential buy candidates.


P/D decrease




Price change

NAV change







































































(Source: Stanford Chemist, CEFConnect)

Conversely, individual CEFs that have undergone a significant increase in premium/discount value in the past week, coupled optionally with a decreasing NAV trend, a positive z-score, and/or are trading at a premium, are potential sell candidates.


P/D increase




Price change

NAV change







































































(Source: Stanford Chemist, CEFConnect)

Recent corporate actions

These are from the last month and are quoted from Closed-End Fund Center, Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

July 19, 2018 | Tortoise MLP Fund, Inc. (NYSE: NTG) (the “Company”) today announced the results of its transferable rights offering (the “Offer”). The offer commenced on June 19, 2018 and expired on July 18, 2018 (the “Expiration Date”). The Offer entitled the rights holders to subscribe for up to an aggregate of 15,802,094 shares of common stock, $0.001 par value per share (“Common Stock”). The subscription price was $14.64 per share of Common Stock, and was determined based upon the formula equal to 90% of the net asset value (“NAV”) per share of Common Stock at the close of trading on the New York Stock Exchange (“NYSE”) on the Expiration Date. The Offer was over-subscribed. Shares of Common Stock will be issued promptly after completion and receipt of all stockholder payments and the pro-rata allocation of Common Stock in respect of the oversubscription privilege.

July 5, 2018 | Royce Value Trust, Inc. (RVT) (the “Fund”) is pleased to announce the successful completion of its common stock rights offering (the “Offer”), which expired on July 3, 2018. The subscription price for each newly issued share of common stock was determined to be $15.33, which under the terms of the Offer was equal to the lower of: [I] $0.25 below the last reported sale price per share on the New York Stock Exchange on July 3, 2018 (i.e., $15.58 per share); or [II] the net asset value per share on July 3, 2018 (i.e., $17.39 per share). Based on preliminary results provided by the Fund’s subscription agent, subscription requests for over 7.1 million shares were received, with gross proceeds to the Fund being expected to exceed $109 million. It is currently anticipated that such shares will be issued on or about July 9, 2018.

June 22, 2018 | The Nuveen Build America Bond Fund (NBB) and Nuveen Build America Bond Opportunity Fund (NBD) announced certain results of their Annual Meeting of Shareholders. NBB announced that shareholders at its Annual Meeting have approved the issuance of additional common shares in connection with the proposed merger of NBD into NBB, the elimination of NBB’s fundamental policy related to the its contingent term provision and the election of Board members. NBD announced that its Annual Meeting of Shareholders has been adjourned to solicit additional proxies necessary to obtain shareholder approval for the merger. Consummation of the merger is contingent upon shareholders of NBD approving the merger. Regardless of whether NBD shareholders approve the merger, NBB will conduct a 20 percent tender offer as described in the proxy materials, eliminate its contingent term provision, change its principal investment policy to invest at least 80 percent of its assets in taxable municipal securities, and change its name to Nuveen Taxable Municipal Income Fund. These changes will become effective on, or as soon as practicable thereafter, the closing date of the merger if the merger is consummated, or otherwise upon completion of NBD’s Annual Meeting of Shareholders, including any further adjournments thereof.

June 20, 2018 | Aberdeen Emerging Markets Equity Income Fund, Inc. (the “Fund”) (AEF) announced today the preliminary results of its cash tender for up to 28,470,130 shares of its common stock, representing approximately 32% of the Fund’s outstanding shares. The offer expired at 11:59 p.m. New York City time on Tuesday, June 19, 2018. Based on current information, approximately 61,362,593 shares of common stock or 68.97% of the Fund’s outstanding stock were tendered through the expiration date. This total includes shares tendered pursuant to notices of guaranteed delivery. This number is subject to adjustment and should not be regarded as final. Because the number of shares tendered exceeded 28,470,130, the number of shares that will be purchased by the Fund will be pro-rated based on the number of shares properly tendered by each shareholder. No more than a total of 28,470,130 properly tendered shares will be accepted for payment at a price per share equal to 99% of the Fund’s net asset value per share (“NAV”) as of the close of regular trading on the NYSE American on June 20, 2018. The final number of shares validly tendered and accepted pursuant to the tender offer will be announced at a later date.

Upcoming corporate actions

These are from the last month and are quoted from Closed-End Fund Center, Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

July 20, 2018 | The Board of Directors (the “Board”) of Liberty All-Star® Growth Fund, Inc. (NYSE: ASG) (the “Fund”) has authorized and set the terms of an offering to the Fund’s shareholders of rights to purchase additional shares of the Fund. Shareholders on a record date to be established by the Fund’s Board would be issued non-transferable rights entitling them to subscribe for one additional share for every three shares held (the “Primary Subscription”), with the right to subscribe for additional shares not subscribed for by others in the Primary Subscription. If such over-subscription requests exceed the number of shares available, the Fund may, in its sole discretion, elect to issue additional shares in an amount of up to 25% of the shares issued in the Primary Subscription. The subscription price per share will be 95 percent of the reported net asset value or market price per share, whichever is lower on the expiration date. Market price per share will be determined based on the average of last reported sales prices of a share on the New York Stock Exchange on the expiration date and the four trading days preceding the expiration date. The offering is subject to the effectiveness of the Fund’s Registration Statement to be filed with the Securities and Exchange Commission (“SEC”) and will be made only by means of a prospectus.

July 20, 2018 | Advent Claymore Convertible Securities and Income Fund (NYSE:AVK), Advent Claymore Convertible Securities and Income Fund II (NYSE:AGC), and Advent/Claymore Enhanced Growth & Income Fund (NYSE:LCM), each a closed-end fund (together, the “Funds”) announced today that shareholders of the Funds approved the mergers outlined below.

Acquired Funds Ticker Acquiring Fund Ticker
Advent Claymore Convertible Securities and Income Fund II AGC Advent Claymore Convertible Securities and Income Fund AVK
Advent/Claymore Enhanced Growth & Income Fund LCM

Subject to the satisfaction of certain customary closing conditions, the mergers are expected to be effective with the open of the New York Stock Exchange on August 27, 2018. The mergers, if completed, would occur based on the relative net asset values of AGC, LCM and AVK.

Recent activist or other CEF news

These are from the last month and are quoted from Closed-End Fund Center, Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

July 18, 2018 | RiverNorth Opportunities Fund, Inc. (the “Fund”) (RIV) announced today that its Board of Directors approved a change in the Fund’s fiscal year end from October 31 to July 31. In addition, the Board also approved the declaration of monthly distributions of $0.21 per share of common stock, payable on the dates noted below. Based on the Fund’s current net asset value share price of $18.89 (as of market close on July 17, 2018), the distributions represent an annualized distribution rate of 13.34%. Further, the Board approved the termination of the Fund’s managed distribution plan, effective following the close of business on July 31, 2018. Beginning August 1, 2018, the Fund intends to make regular monthly cash distributions of its net investment income to common stockholders at a level based on the projected performance of the Fund, which rate continues at a fixed dollar amount that may be adjusted from time to time. Dividends and distributions may be payable in cash or shares of common stock, with stockholders having the option to receive additional common stock in lieu of cash. The Fund may at times, in its discretion, pay out less than the entire amount of net investment income earned in any particular period and may at times pay out such accumulated undistributed income in addition to net investment income earned in other periods in order to permit the Fund to maintain a more stable level of distributions. As a result, the dividend paid by the Fund to common stockholders for any particular period may be more or less than the amount of net investment income earned by the Fund during such period. The Fund’s ability to maintain a stable level of distributions to stockholders will depend on a number of factors, including the stability of income received from its investments and the costs of any leverage. As portfolio and market conditions change, the amount of dividends on the Fund’s common stock could change.

Distribution changes announced this month

These are sorted in ascending order of distribution change percentage. Funds with distribution changes announced this month are included. Any distribution declarations made this week are in bold. I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information. I've separated the funds into two sub-categories, cutters and boosters.


Name Ticker Change Previous Current Yield Discount z-score Coverage Announced Ex-date
BlackRock MuniHoldings Quality (MUS) -20.5% 0.0635 0.0505 4.95% -8.58% -1.3 106% 7/2/2018 7/13/2018
BlackRock Municipal 2020 (BKK) -19.5% 0.0395 0.0318 2.54% -1.31% -0.6 98% 7/2/2018 7/13/2018
BlackRock Enhanced Global Div (BOE) -19.2% 0.078 0.063 6.79% -9.14% -2.2 29% 7/2/2018 7/13/2018
Nuveen All Cap Energy MLP Opps (JMLP) -16.7% 0.225 0.1875 9.65% -6.27% -2.9 0% 7/2/2018 7/12/2018
Nuveen Energy MLP Total Return (JMF) -16.7% 0.3 0.25 9.35% -9.17% -2 0% 7/2/2018 7/12/2018
BlackRock Muni Inc Inv Qty Tr (BAF) -14.6% 0.0685 0.0585 5.19% -9.38% -1.5 101% 7/2/2018 7/13/2018
BlackRock CA Municipal Income (BFZ) -14.5% 0.055 0.047 4.39% -13.38% -1.3 110% 7/2/2018 7/13/2018
BlackRock MuniYield Qty III (MYI) -13.7% 0.0585 0.0505 4.83% -10.23% -1 107% 7/2/2018 7/13/2018
BlackRock Muni Target Term Tr (BTT) -13.1% 0.0718 0.0624 3.50% -9.39% -0.9 108% 7/2/2018 7/13/2018
BlackRock NY Muni Inc Qty (BSE) -12.9% 0.0465 0.0405 3.89% -13.26% -0.8 108% 7/2/2018 7/13/2018
BlackRock Muniyield Inv Qty (MFT) -11.9% 0.067 0.059 5.43% -6.19% -0.9 100% 7/2/2018 7/13/2018
BlackRock NY Municipal Income (BNY) -11.9% 0.0505 0.0445 4.24% -13.28% -1.4 106% 7/2/2018 7/13/2018
BlackRock MuniHoldings NY Qty (MHN) -11.9% 0.0505 0.0445 4.27% -12.77% -1 109% 7/2/2018 7/13/2018
BlackRock MuniHoldings NJ Qty (MUJ) -11.8% 0.0595 0.0525 4.86% -15.17% -1.7 107% 7/2/2018 7/13/2018
BlackRock MuniHoldings CA Qty (MUC) -11.2% 0.0535 0.0475 4.33% -12.57% -1.1 108% 7/2/2018 7/13/2018
BlackRock MuniYield Quality II (MQT) -11.1% 0.054 0.048 4.80% -11.04% -1 106% 7/2/2018 7/13/2018
BlackRock MuniYield Quality (MQY) -11.1% 0.063 0.056 4.83% -9.56% -1.1 107% 7/2/2018 7/13/2018
BlackRock Municipal Income II (BLE) -10.8% 0.065 0.058 5.10% -6.57% -0.8 106% 7/2/2018 7/13/2018
BlackRock MuniYield NY Quality (MYN) -10.5% 0.0475 0.0425 4.26% -12.88% -1.1 107% 7/2/2018 7/13/2018
Templeton Global Income (GIM) -9.9% 0.0343 0.0309 5.15% -13.02% -1.1 98% 7/2/2018 7/12/2018
BlackRock Taxable Muni Bond (BBN) -9.9% 0.1318 0.1188 6.51% -4.78% -0.6 101% 7/2/2018 7/13/2018
BlackRock Municipal Income Inv (BBF) -9.0% 0.0665 0.0605 5.43% -3.55% -0.4 105% 7/2/2018 7/13/2018
BlackRock MuniHoldings Fund II (MUH) -8.9% 0.0675 0.0615 5.33% -8.94% -0.8 104% 7/2/2018 7/13/2018
BlackRock MuniYield MI Quality (MIY) -8.8% 0.057 0.052 4.84% -14.29% -1.9 105% 7/2/2018 7/13/2018
Putnam Municipal Opportunities (PMO) -8.0% 0.0461 0.0424 4.36% -10.58% -1.1 108% 7/11/2018 7/23/2018
First Trust/Aberdeen Global (FAM) -6.7% 0.075 0.07 8.28% -13.26% -1.6 92% 7/19/2018 8/1/2018
MFS Municipal Income (MFM) -1.6% 0.0305 0.03 5.28% -6.32% 0.1 104% 7/2/2018 7/17/2018
Delaware Enhanced Gbl Div&Inc (DEX) -1.2% 0.1042 0.1029 10.79% -5.45% 1 26% 7/2/2018 7/12/2018
MFS Intermediate Income (MIN) -0.6% 0.02959 0.02942 9.34% -8.25% -1.5 26% 7/2/2018 7/17/2018
MFS Special Value Trust (MFV) -0.5% 0.04725 0.047 10.26% -3.39% -2 28% 7/2/2018 7/17/2018
MFS Intermediate High Income (CIF) -0.5% 0.02068 0.02058 9.80% -2.70% -1.5 59% 7/2/2018 7/17/2018
MFS Multi-Market Income (MMT) -0.5% 0.04185 0.04165 8.94% -10.42% -1.4 50% 7/2/2018 7/17/2018
MFS Charter Income (MCR) -0.5% 0.05873 0.05845 8.97% -10.73% -2.1 49% 7/2/2018 7/17/2018
MFS Government Markets Income (MGF) -0.3% 0.02913 0.02904 7.81% -6.50% -1.2 36% 7/2/2018 7/17/2018


Name Ticker Change Previous Current Yield Discount z-score Coverage Announced Ex-date
Clough Global Div and Inc Fund (GLV) 0.3% 0.1135 0.1138 10.80% -7.05% -0.2 15% 7/10/2018 7/19/2018
EV Floating-Rate Inc Plus Fund (EFF) 1.3% 0.075 0.076 5.51% -8.72% -0.6 99% 7/2/2018 7/23/2018
Clough Global Opportunities (GLO) 1.6% 0.1 0.1016 10.86% -6.54% 0.9 -3% 7/10/2018 7/19/2018
EV Float-Rate 2022 Target Term (EFL) 2.4% 0.042 0.043 5.51% -3.60% 0 75% 7/2/2018 7/11/2018
BlackRock Corp High Yield (HYT) 2.9% 0.07 0.072 8.22% -11.75% -1.1 95% 7/2/2018 7/13/2018
EV Senior Income Trust (EVF) 3.2% 0.031 0.032 5.99% -11.34% -1.7 100% 7/2/2018 7/11/2018
Clough Global Equity (GLQ) 3.6% 0.1234 0.1278 10.36% -2.82% 2.2 1% 7/10/2018 7/19/2018
BlackRock Float Rate Strat (FRA) 5.7% 0.061 0.0645 5.62% -7.52% -1.6 102% 7/2/2018 7/13/2018
BlackRock Floating Rate Inc Tr (BGT) 6.0% 0.0583 0.0618 5.60% -7.90% -1.7 101% 7/2/2018 7/13/2018
Liberty All-Star Growth (ASG) 9.1% 0.11 0.12 7.01% 14.74% 2.3 -2% 7/16/2018 7/26/2018
BlackRock Science and Technolo (BST) 15.4% 0.13 0.15 5.21% 8.45% 1.6 -4% 7/2/2018 7/13/2018
Ellsworth Growth and Income (ECF) 36.4% 0.11 0.15 6.20% -11.12% -0.5 5% 7/12/2018 8/23/2018

CEF analysis from around Seeking Alpha...

Recommended reads are in bold.

ADS Analytics presents Fixed-Income Valuations: Are We There Yet? (Jul. 27)

Arbitrage Trader presents Weekly Review: High-Yield CEFs (Jul. 25), Weekly Review: Municipal Bond CEFs (Jul. 25), Weekly Review: Master Limited Partnership CEFs (Jul. 25), Not So Common Fixed-Income Preview (Jul. 25), Weekly Municipal Bond CEF Trades (Jul. 26), Municipal Bond CEFs: Rare Arbitrage Opportunity (Jul. 27) and DDT Revisited: Utilizing The Short Squeeze (Jul. 30)

George Spritzer presents This India Closed-End Fund Has A 12% Discount And Yields Over 11% (Jul. 24)

Left Banker presents PHK: Can The High Yield Sustain That Hefty Premium? (Jul. 21)

Nick Ackerman presents Closed-End Funds: 7 Muni Bond Funds Trading At A Wide Discount (Jul. 23), CEF DDF: This Fund Continues Higher (Too High) (Jul. 24), CEF ECF: This Fund Currently Trades At A Significant Discount And Is A Buy (Jul. 25) and CEF UTG: Still A Buy With Consistently Reliable Distributions (Jul. 26)

*Stanford Chemist presents Quick Notes On Tortoise MLP Fund's Rights Offering (Jul. 23), The Chemist's 'High-High-Low' CEF Report - June 2018 (Jul. 26), Weekly CEF Roundup: NTG Rights Offering Expires, ECF Boosts Distribution (Jul. 26) and The Chemist's CEF Report - July 2018: Treasury Yield Spread Continues To Narrow (Jul. 28)

*To subscribers: these link to the public version of the article, which you will already have seen in the members section.

Macro/market section

Fear & Greed Trader presents S&P 500 Weekly Update: In A Secular Bull Market, Surprises Often Occur On The Upside (Jul. 28)

Lance Roberts presents Return To Reality (Jul. 29)

Commentary and actionable takeaway

(exclusive to members of the Cambridge Income Laboratory)

This week was relatively quiet for CEFs, with no distribution boosters or cutters being announced, and no major CEF news. Nothing really stands out from the major sector gainers/losers either.

Taking a look at the individual premium/discount gainers, we see the Flaherty & Crumrine Preferred Income Opportunity Fund (PFO) gaining +7.28% in premium last week, giving it a premium of +3.82% and a 1-year z-score of +2.0. The rest of the Flaherty & Crumrine funds had price returns of between -2.26% and +1.03% last week.

PFO Price data by YCharts

The reason for the run-up was probably a huge buyer stepping in over the last several days. On Tuesday and Wednesday of last week, 321k and 238k shares changed hands respectively, which is about 7-9 times the daily average volume of 35k.

(Source: Yahoo Finance)

This is a good place to introduce a possible use of the CEF Watchlist: CEF rotation. As we can see from the table below, PFO is trading at elevated valuations compared to the rest of the Flaherty & Crumrine stable. Moreover, all of the funds have fairly similar 1, 3 and 5-year return profiles, so we would not be worried about losing performance even if we were to swap away from PFO. An easy recommendation for those holding PFO would be to swap to Flaherty & Crumrine Dynamic Preferred and Income Fund (DFP), which has a discount of -3.93% and a 1-year z-score of -0.5.

(Source: Stanford Chemist)

The top 2 premium/discount losers were Cornerstone Strategic Value Fund (CLM) and Cornerstone Total Return Fund (CRF), which lost -5.44% and -4.97% in premium respectively.

CLM Price data by YCharts

The reason for their premium/discount declines were that both funds saw big bumps in their NAVs on Friday. The two Cornerstone funds report their NAVs only weekly, but last Friday saw an extra large bump due to the new shares being released from their recent rights offering. As both funds traded at significant premia during the rights offering period, this offering was accretive (see Primer: What Is A CEF Rights Offering? (+UTG Case Study)), and therefore the issuance of the new shares ("on or about July 25, 2018") would increase rather than decrease the NAV.

Based on the reported subscription prices, I estimate the NAV boost of CLM to be +1.75% and the NAV boost of CRF to be +1.76%. However, either the market has not yet reacted to the increased NAV yet, or that subscribers were rushing to sell their newly acquired shares from the offering, causing the premia for both funds to drop to near 52-week lows, at +6.17% and +8.11% for CLM and CRF respectively.

CLM Discount or Premium to NAV data by YCharts

Given that both funds have traded at much higher premium/discount averages in the past, the single-digit premia for CLM and CRF may represent good entry points for short/medium-term swing trades.

Last Friday, Nuveen All Cap Energy MLP Opportunities (JMLP) fell by nearly -5%, substantially underperforming the index funds such as Alerian MLP ETF (AMLP) and JPMorgan Alerian MLP ETN (AMJ).

JMLP Price data by YCharts

However, it didn't make the list of top premium/discount losers this week. Why? Because its NAV also fell by -5.68% last Friday, causing the discount to even narrow from -6.94% to -6.27%.

But why did JMLP underperform the benchmark funds so severely? The answer lies in the fact that JMLP is an "all cap" MLP fund which means that it invests across the market cap spectrum. In fact, the fund "excludes the 10 largest MLPs in the Alerian MLP index and seeks to identify MLPs positioned for accelerated growth".

This is why you don't see blue-chip MLP funds such as Enterprise Products Partners (EPD) or Magellan Midstream Partners (MMP) in the top 10 holdings of JMLP.

(Source: Nuveen)

I circled JMLP's 6th largest holding, American Midstream Partners (AMID). Last Friday, AMID announced a massive -75% distribution cut, causing its share price to crater by -43% and contributing to -2.3% of JMLP's decline that day. Together with the index decline of ~2%, this was nearly sufficient to explain all of JMLP's loss on Friday.

Frankly, in the current time of uncertainty regarding the status of MLPs, I'd personally rather stick with funds holding the larger, more established MLPs such as the "gold standards" EPD and MMP (neither have incentive distribution rights (IDRs) to their general partner [GP]). Thus, even though JMLP has the lowest z-score among all MLP CEFs, I would not buy the fund here. The disaster with AMID also reinforces why I have now switched exclusively to investing in MLP funds rather individual MLP names.

Note: this report was released to members on Jul. 30, 2018 so data may be out of date.

Disclosure: I am/we are long the portfolio securities.. 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.