Gabelli Equity Trust: A 5.00% Preferred Stock IPO From This CEF

Summary

• Overview of Gabelli Equity Trust's new Series K preferred stock.
• Brief view of all "The Gabelli CEF" preferred stocks.
• Comparison with the main fixed income benchmark.
• Comparison with all other investment-grade preferred stocks with a fixed-rate distribution.
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Introduction

Our goal is to present to you our IPO analysis for every new fixed-income security that enters the market and to find out if there is any trading potential. In this article, we want to shed light on the newest preferred stock issued by Gabelli Equity Trust (NYSE:GAB). Even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at.

The New Issue

Before we submerge into our brief analysis, here is a link to the 497 Filing by Gabelli Equity Trust - the prospectus.

Source: SEC.gov

For a total of 4M shares issued, the total gross proceeds to the company are $100M. You can find some relevant information about the new preferred stock in the table below:

Source: Author's spreadsheet

Gabelli Equity Trust Inc. 5.00% Series K Cumulative Preferred Stock (NYSE:GAB-K) pays a fixed dividend at a rate of 5.00% and has a par value of $25. The new preferred stock is not rated by the Standard & Poor's, but is anticipated to be rated an "A1" from Moody's Investors Service. The new IPO is callable as of 12/16/2024, and it is currently trading a little above its par value at a price of $25.18. This translates into a 4.96% current yield and a 4.86% yield-to-call.

Here is the product's Yield-to-Call curve:

Source: Author's spreadsheet

The Company

The Gabelli Equity Trust is a closed-end, non-diversified management investment company whose investment objective is long term growth of capital, with income as a secondary objective. Investments will be made based on management's perception of their potential for capital appreciation. The Fund seeks out undervalued companies with greater than average potential for growth. The Equity Trust maintains a 10% Distribution Policy whereby the Trust pays out to common shareholders 10% of its average net assets each year. This

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.