Weekly Closed-End Fund Roundup: VAM To Merge Into FINS, EGIF To Liquidate (May 31, 2020)
Summary
- The rebound continues, with 23 out of 23 CEF sectors positive on price and 22 out of 23 sectors positive on NAV last week.
- VAM will be merged into FINS this week.
- EGIF to liquidate as new advisory contract was not approved by shareholders.
- Activist battles for Western Asset/Legg Mason CEFs heats up.
- This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Get started today »
Author's note: This article was released to members on June 1, 2020. Please check latest data before investing.
The Weekly Closed-End Fund Roundup will be put out at the start of each week to summarize 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 is taken from the close of Friday, May 29th, 2020.
Weekly performance roundup
23 out of 23 sectors were positive on price (same as last week) and the average price return was +3.46% (up from +4.19% last week). All sectors were positive by Price this week, the lead gainer was Real Estate (+8.13%), followed by Global Allocation (+4.66%) and Convertibles (+4.41%), the lowest sector by Price was Commodities (+1.06%), followed by Investment Grade (+1.85%) and Covered Call (+1.98%).
(Source: Stanford Chemist, CEFConnect)
22 out of 23 sectors were positive on NAV (down from 23 last week), while the average NAV return was +2.14% (up from +3.03% last week). There were almost no negative sectors by NAV this week, the top sectors by NAV were Real Estate (+5.65%), Global Equity (+4.03%) and U.S. Equity (+3.96%). The only negative sector by NAV was Commodities (-0.74%), Single-state Munis (+0.46%) and California Munis (+0.48%).
(Source: Stanford Chemist, CEFConnect)
There were only three premium sectors this week, the leader was Preferreds (+4.26%), while the sector with the highest discount is MLPs (-16.44%). The average sector discount is -7.25% (up from -8.29% last week).
(Source: Stanford Chemist, CEFConnect)
There were only four negative sectors this week and the sector with the highest premium/discount increase was Real Estate (+2.21%), Sector Equity (-0.28%) showed the lowest premium/discount decline. The average change in premium/discount was +1.00% (down from +1.02% last week).
(Source: Stanford Chemist, CEFConnect)
The sector with the highest average 1-year z-score is Commodities (+0.93), followed by Taxable Munis (+0.88). The sector with the lowest average 1-year z-score was MLPs (-1.39), followed by Asia Equity (-1.21). The average z-score is -0.45 (up from -0.79 last week).
(Source: Stanford Chemist, CEFConnect)
The sectors with the highest yields are MLPs (19.51%), Global Allocation (12.40%), Senior Loans (10.60%), Real Estate (10.22%) and Limited Duration (9.89%). Discounts and z-scores for the sectors are included for comparison. The average sector yield is +8.22% (down from +8.56%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.
Fund | Ticker | P/D decrease | Yield | P/D | Z-Score | Price change | NAV change |
Eagle Point Credit Company LLC | (ECC) | -25.46% | 13.10% | +16.72% | -1.5 | 13.64% | 0.00% |
Virtus Total Return Fund Inc | (ZTR) | -7.64% | 16.24% | -4.13% | -0.9 | -2.22% | 5.58% |
Gabelli Utility Trust | (GUT) | -5.89% | 8.63% | 71.18% | 1.6 | 2.21% | 5.73% |
RENN Global Entrepreneurs Fund | (RCG) | -5.51% | % | -23.41% | -1.7 | -5.26% | -2.47% |
Vivaldi Opportunities Fund | (VAM) | -4.43% | 10.96% | -9.93% | -1.5 | -4.46% | 0.25% |
PIMCO Energy & Tactical Credit Opps | (NRGX) | -4.30% | 19.44% | -11.70% | -1.4 | -2.02% | 2.76% |
Nuveen High Income 2023 Target Term Fund | (JHAA) | -4.23% | 6.19% | 1.20% | -0.4 | -2.11% | 2.00% |
FOXBY CORP | -3.28% | 0.61% | -39.71% | -1.8 | 0.00% | 5.43% | |
Voya Asia Pacific High Div Eq Inc Fd | (IAE) | -3.10% | 12.43% | -13.17% | -0.9 | -0.72% | 2.84% |
MQ/FT Global Infrast Util Div&Inc | (MFD) | -2.79% | 10.09% | -14.64% | -1.5 | 0.51% | 1.53% |
(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.
Fund | Ticker | P/D increase | Yield | P/D | z-score | Price change | NAV change |
Eagle Growth & Income Opportunities Fund | (EGIF) | 12.45% | 7.64% | -4.16% | 3.0 | 19.20% | 3.72% |
OFS Credit Company Inc | (OCCI) | 11.26% | 22.02% | 5.94% | -1.3 | 19.92% | 0.00% |
PIMCO NY Municipal Income III | (PYN) | 8.84% | 4.48% | 9.18% | 1.7 | 9.44% | 0.58% |
Massachusetts Tax-Exempt Trust | (MHE) | 7.00% | 3.60% | -0.52% | 2.1 | 8.20% | 0.60% |
Eagle Point Income Co Inc | (EIC) | 6.88% | 9.04% | 1.13% | 0.0 | 13.56% | 0.00% |
Nuveen Municipal Credit Opps Fund | (NMCO) | 6.08% | 5.36% | -1.59% | 0.0 | 8.29% | 1.62% |
Cohen & Steers Qual Inc Realty | (RQI) | 6.06% | 8.94% | -8.21% | -0.7 | 13.77% | 7.18% |
DoubleLine Income Solutions Fund | (DSL) | 5.85% | 12.50% | 0.00% | -0.2 | 10.34% | 3.90% |
JHancock Financial Opportunities | (BTO) | 5.76% | 9.26% | 12.33% | 2.8 | 15.67% | 12.86% |
Stone Harbor Emerg. Mkts Income Fund | (EDF) | 5.47% | 13.30% | 15.89% | -1.9 | 8.25% | 3.15% |
(Source: Stanford Chemist, CEFConnect)
Recent corporate actions
These are from the past month. Any new news in the past week has a bolded date:
None.
Upcoming corporate actions
These are from the past month. Any new news in the past week has a bolded date:
May 27, 2020 | Vivaldi Opportunities Fund (NYSE: VAM) and Angel Oak Financial Strategies Income Term Trust (NYSE: FINS) Announce Shareholder Approvals for Reorganization. Vivaldi Opportunities Fund (VAM) has announced that a merger proposal with Angel Oak Financial Strategies Income Term Trust (FINS) was approved at a Special Meeting of VAM shareholders held on May 26, 2020. Similarly, Angel Oak Financial Strategies Income Term Trust announced that the issuance of additional common shares of beneficial interest of FINS in connection with the merger proposal was approved by its shareholders at a Special Meeting of FINS shareholders held today. With shareholder approval, the closing of the transaction is anticipated for the close of business on Friday, June 5, 2020. After June 5, 2020, VAM shares will no longer be available to purchase or sell on the New York Stock Exchange. Holders of VAM shares will exchange their shares for FINS shares based on the funds’ relative net asset values (“NAV”) at the close of business on June 5, 2020. When the New York Stock Exchange opens on June 8, 2020, the shareholders of VAM will hold newly issued common shares of FINS, issued at FINS NAV as of close of business on June 5, 2020, with the same value as their VAM shares, with any fractional shares to be paid out in cash. In anticipation of the reorganization transaction, the VAM Board of Directors voted to cease any further distributions after the May 2020 distribution that was paid on May 15, 2020. The first post-closing monthly distribution by FINS is anticipated to have an ex-dividend date of June 15, 2020.
May 27, 2020 | Eagle Growth and Income Opportunities Fund Announces Plans to Liquidate. Eagle Growth and Income Opportunities Fund (EGIF) today announced that it intends to dissolve, liquidate and distribute its net assets to shareholders. In August 2019, the Fund's Board of Trustees (the "Board") appointed First Eagle Alternative Credit, LLC (then THL Credit Advisors LLC) ("FEAC") as the Fund's interim investment adviser and approved a new interim sub-advisory agreement between FEAC and Eagle Asset Management, Inc. ("EAM"), which has served as the Fund's sub-adviser since the Fund's initial public offering in June 2015. The Fund's shareholders were asked to vote on proposals to approve non-interim arrangements with FEAC and EAM. Additionally, shareholders were asked to vote on the change in the Fund's termination date from May 14, 2027 to May 14, 2024. Although the substantial majority of the Fund's shareholders who voted their shares in connection with these proposals voted in favor of each of these proposals, the Fund was unable to obtain the statutory quorum required to approve any of the proposals. Accordingly, the Fund's term was not reduced and FEAC and EAM have continued to serve the Fund on an interim basis without any compensation or expense reimbursement while the Board considered various alternatives for the Fund, including merging it into another investment company and liquidation. After significant consideration, it was determined that a merger is not feasible and that liquidation is in the best interests of the Fund and its shareholders.
As approved by the Board, effective immediately, the Fund has entered dissolution and will begin the orderly liquidation of its assets and pay or make reasonable provision to pay all of its claims and obligations, including potential claims and obligations. During this period, the Fund will cease to pursue its investment objective and policies. The Board also has approved the termination of the Fund's credit facility and the Fund is no longer utilizing any leverage. The Fund anticipates that, in order to make reasonable provision for certain potential claims and obligations, a substantial portion of the proceeds from liquidation will not be able to be immediately distributed to shareholders. It is therefore anticipated that the Fund's liquidating distributions will be comprised of a cash liquidation distribution plus a 1:1 per share interest in a liquidating trust established to hold the Fund's remaining assets and liabilities, including potential contingent liabilities. The liquidating distributions together will represent substantially all of the Fund's net assets at the time of liquidation. The Fund will announce additional details concerning the Fund's liquidation, including material terms of the liquidating trust as well as the amount of the Fund's net assets that will be held back and transferred to the liquidating trust, once those details have been finalized by the Fund's Board. Shareholders will not have the right to sell, transfer, or otherwise dispose of or in any way encumber the interests they receive in the liquidating trust, except by operation of law or death of the shareholder, or as required by law or order of a court of competent jurisdiction. The interests in the liquidating trust will not be offered to the public and will not be traded. The Fund will announce the effective date for determining the shareholders of the Fund entitled to receive liquidating distributions and the date on which the Fund will be suspended from trading on the New York Stock Exchange once those details have been finalized by the Fund's Board.
May 21, 2020 | Virtus Closed-End Funds Announce Adjournment of Duff & Phelps Select MLP and Midstream Energy Fund Annual Meeting. Duff & Phelps Select MLP and Midstream Energy Fund Inc (DSE) adjourned its annual meeting until July 23, 2020, at 9:00 a.m. Eastern, solely with respect to its proposal that the shareholders approve the liquidation and dissolution of the fund, in order to provide additional time for shareholders to vote on the proposal.
May 8, 2020 | Cushing® Announces Shareholder Approval of Closed-End Fund Merger. Cushing Asset Management, LP ("Cushing") announces today that at a reconvened special meeting of shareholders of The Cushing® MLP & Infrastructure Total Return Fund (SRV) shareholders voted to approve the merger of The Cushing® Energy Income Fund (SRF) with and into SRV (the "Merger"). Shareholders of SRF approved the Merger at the special meeting of shareholders held on May 1, 2020. It is currently expected that the Merger will be effective after the close of trading on the New York Stock Exchange on May 29, 2020, subject to the satisfaction of customary closing conditions.
May 1, 2020 | BlackRock Announces Shareholder Approval of Municipal Closed-End Fund Merger. BlackRock Advisors, LLC announced today that at a special meeting of shareholders of BlackRock Muni New York Intermediate Duration Fund, Inc. (MNE), the requisite shareholders of MNE approved the merger of MNE into BlackRock New York Municipal Opportunities Fund (“NYMO” and together with MNE, the “Funds”), an open-end mutual fund and a series of BlackRock Multi-State Municipal Series Trust, with NYMO being the surviving Fund (the “Merger”). Common shareholders of MNE who become shareholders of NYMO will be permitted to redeem, purchase or exchange shares of NYMO received in the Merger at the then-current net asset value. It is currently expected that the Merger will be effective with the open for business of the New York Stock Exchange on June 22, 2020, subject to the satisfaction of customary closing conditions and the prior redemption of all of MNE’s outstanding variable rate demand preferred shares. The aggregate net asset value of NYMO shares received by MNE common shareholders will be equal to the aggregate net asset value of the common shares of MNE held by its common shareholders, in each case as of the close of business on the business day immediately prior to the closing date of the Merger.
Recent activist or other CEF news
These are from the past month. Any new news in the past week has a bolded date:
May 26, 2020 | Leading Independent Proxy Advisory Firms ISS and Glass Lewis Recommend Western Asset Global High Income Fund Inc. Shareholders Vote to Approve New Agreements Between the Fund and its Investment Manager and Subadvisers. Western Asset Global High Income Fund Inc. (EHI) (the “Fund”) today announced that Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”), two of the leading independent proxy advisory firms, recommend that shareholders vote to approve the new agreements between the Fund and its investment manager and subadvisers.
May 26, 2020 | Leading Independent Proxy Advisory Firms ISS and Glass Lewis Recommend Western Asset Variable Rate Strategic Fund Inc. Shareholders Vote to Approve New Agreements Between the Fund and its Investment Manager and Subadvisers. Western Asset Variable Rate Strategic Fund Inc. (GFY) (the “Fund”) today announced that Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”), two of the leading independent proxy advisory firms, recommend that shareholders vote to approve the new agreements between the Fund and its investment manager and subadvisers.
May 26, 2020 | Leading Independent Proxy Advisory Firms ISS and Glass Lewis Recommend Western Asset Corporate Loan Fund Inc. Shareholders Vote to Approve New Agreements Between the Fund and its Investment Manager and Subadviser. Western Asset Corporate Loan Fund Inc. (TLI) (the “Fund”) today announced that Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”), two of the leading independent proxy advisory firms, recommend that shareholders vote to approve the new agreements between the Fund and its investment manager and subadviser.
May 26, 2020 | Leading Independent Proxy Advisory Firms ISS and Glass Lewis Recommend Western Asset High Income Opportunity Fund Inc. Shareholders Vote to Approve New Agreements Between the Fund and its Investment Manager and Subadvisers. Western Asset High Income Opportunity Fund Inc. (HIO) (the “Fund”) today announced that Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”), two of the leading independent proxy advisory firms, recommend that shareholders vote to approve the new agreements between the Fund and its investment manager and subadvisers.
May 21, 2020| Nuveen Dynamic Overwrite Funds Announce Updates. The portfolio management responsibilities for Nuveen Dow 30℠ Dynamic Overwrite Fund (DIAX), Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), and Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX) will be updated. Effective August 3, 2020, Jim Campagna, Lei Liao, and Darren Tran will join the portfolio management team for the Nuveen Dynamic Overwrite Funds and will focus on each fund’s equity portfolio. David Friar will continue as a portfolio manager of the funds and will be responsible for overseeing the options strategies for each fund. In connection with the appointment of new portfolio managers, the Board of Trustees of QQQX and SPXX approved a modification to the funds’ equity portfolio investment strategies. Effective August 3, 2020, the fund strategies will take into consideration each fund’s tax position and employ various techniques, including tax-loss harvesting, to improve after-tax shareholder outcomes.
May 21, 2020 | Closed-End Funds Advised by Legg Mason Partners Fund Advisor, LLC Announce Investment Policy. Western Asset Intermediate Muni Fund Inc. (SBI), Western Asset Managed Municipals Fund Inc. (MMU), Western Asset Municipal Partners Fund Inc. (MNP) Western Asset Municipal High Income Fund Inc. (MHF) and Western Asset Municipal Defined Opportunity Trust Inc. (MTT) (each, a “Fund” and, together, the “Funds”) announced that effective today, May 21, 2020, SBI, MMU, MNP and MHF may enter into tender option bond (“TOB”) transactions and may invest in inverse floating rate instruments issued in TOB transactions. Also effective today, MTT’s current investment policy regarding TOB transactions is being updated to include the below disclosure. In a TOB transaction, a Fund transfers securities (typically municipal bonds or other municipal securities) into a special purpose entity, referred to as a TOB trust. The TOB trust generally issues floating rate notes to third parties and residual interest TOBs to a Fund. The net proceeds of the sale of the floating rate notes, after expenses, are received by a Fund and may be invested in additional securities. The residual interest TOBs are inverse floating rate debt instruments (“inverse floaters”), as the return on those bonds is inversely related to changes in a specified interest rate. Distributions on the inverse floaters paid to a Fund will be reduced or, in the extreme, eliminated as short-term interest rates rise and will increase when such interest rates fall. Floating rate notes issued by a TOB trust may be senior to the inverse floaters held by a Fund. A Fund may enter into TOB transactions on either a non-recourse or recourse basis. If a Fund invests in a TOB trust on a recourse basis, it will bear the risk of loss with respect to any liquidation of the TOB trust. Each Fund will look through to the underlying securities held by a TOB trust for purposes of calculating compliance with the Fund’s 80% policy, as described in each Fund’s shareholder report. TOB transactions create leverage to the extent a Fund invests the net proceeds of the floating rate notes in additional securities. Each Fund currently intends to segregate or earmark liquid assets or otherwise cover its obligations with respect to its investments in TOB trusts.
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.
Cutters
Name | Ticker | Change | Previous | Current | Yield | Discount | z-score | Coverage | Announced | Ex-date |
Fiduciary-Claymore Energy Infrastructure | (FMO) | -89.9% | 0.3231 | 0.0325 | 6.25% | -17.46% | -1.9 | 0% | 5/1/2020 | 5/14/2020 |
Goldman Sachs MLP and Energy Rena. Fund | (GER) | -89.2% | 1.44 | 0.155 | 7.32% | -15.97% | -1.5 | -64% | 5/8/2020 | 5/21/2020 |
Goldman Sachs MLP Income Opps Fund | (GMZ) | -86.1% | 1.47 | 0.205 | 7.59% | -18.18% | -2.0 | -86% | 5/8/2020 | 5/21/2020 |
Gabelli Go Anywhere Trust | (GGO) | -75.0% | 0.2 | 0.05 | 2.26% | -15.22% | -1.2 | -123% | 5/15/2020 | 6/15/2020 |
ClearBridge Energy Midstream Opportunity | (EMO) | -71.7% | 0.23 | 0.065 | 9.77% | -17.39% | -1.0 | -19% | 5/14/2020 | 5/20/2020 |
ClearBridge MLP and Midstream | (CEM) | -67.8% | 0.295 | 0.095 | 10.19% | -19.56% | -1.4 | -9% | 5/14/2020 | 5/20/2020 |
Salient Midstream & MLP Fund | (SMM) | -64.9% | 0.171 | 0.06 | 5.31% | -21.39% | -1.2 | 101% | 5/7/2020 | 5/15/2020 |
ClearBridge MLP and Midstream TR | (CTR) | -63.6% | 0.22 | 0.08 | 10.60% | -16.34% | -0.7 | -22% | 5/14/2020 | 5/20/2020 |
European Equity Fund | (EEA) | -44.9% | 0.2246 | 0.1238 | 3.08% | -15.03% | -0.9 | 3% | 5/8/2020 | 5/15/2020 |
BlackRock Energy and Resources | (BGR) | -30.9% | 0.068 | 0.047 | 7.74% | -10.33% | -0.8 | 60% | 5/1/2020 | 5/14/2020 |
BlackRock Resources&Commodities Strategy | (BCX) | -22.5% | 0.0516 | 0.04 | 8.08% | -16.81% | -1.3 | 36% | 5/1/2020 | 5/14/2020 |
Eaton Vance Tax-Advantaged Glbl Div Opp | (ETO) | -20.8% | 0.18 | 0.1425 | 8.17% | -1.23% | -1.2 | 26% | 5/1/2020 | 5/21/2020 |
MQ/FT Global Infrast Util Div&Inc | (MFD) | -20.0% | 0.25 | 0.2 | 10.09% | -14.64% | -1.5 | 32% | 5/14/2020 | 5/22/2020 |
Voya Prime Rate Trust | (PPR) | -17.5% | 0.02 | 0.0165 | 4.95% | -13.23% | -0.8 | 133% | 5/1/2020 | 5/8/2020 |
EV Floating-Rate Income Plus Fund | (EFF) | -15.7% | 0.07 | 0.059 | 5.16% | -8.47% | 0.5 | 138% | 5/1/2020 | 5/21/2020 |
Templeton Global Income | (GIM) | -15.1% | 0.0152 | 0.0129 | 2.88% | -14.33% | -1.1 | 223% | 5/1/2020 | 5/14/2020 |
Aberdeen Australia Equity Fund Inc | (IAF) | -14.3% | 0.14 | 0.12 | 11.35% | -11.88% | -1.6 | 10% | 5/11/2020 | 5/20/2020 |
Eaton Vance Floating-Rate Income | (EFT) | -13.4% | 0.067 | 0.058 | 6.19% | -13.74% | -0.9 | 134% | 5/1/2020 | 5/21/2020 |
Eaton Vance Senior Income | (EVF) | -13.3% | 0.03 | 0.026 | 5.94% | -14.08% | -0.9 | 137% | 5/1/2020 | 5/8/2020 |
Tekla Life Sciences Investors | (HQL) | -12.8% | 0.39 | 0.34 | 7.64% | -13.21% | -1.2 | -3% | 5/18/2020 | 5/28/2020 |
Tekla Healthcare Investors | (HQH) | -12.8% | 0.47 | 0.41 | 7.73% | -12.93% | -0.9 | -1% | 5/18/2020 | 5/28/2020 |
Eaton Vance Float-Rate 2022 Target Term | (EFL) | -11.9% | 0.042 | 0.037 | 5.50% | -5.72% | -0.9 | 113% | 5/1/2020 | 5/8/2020 |
Apollo Tactical Income Fund Inc. | (AIF) | -11.0% | 0.091 | 0.081 | 8.03% | -14.95% | -1.2 | 126% | 5/4/2020 | 5/14/2020 |
Delaware Investments Dividend & Income | (DDF) | -10.6% | 0.0831 | 0.0743 | 10.03% | 1.72% | -1.9 | 25% | 5/5/2020 | 5/21/2020 |
Apollo Senior Floating Rate Fund | (AFT) | -8.3% | 0.084 | 0.077 | 7.56% | -15.39% | -1.3 | 127% | 5/4/2020 | 5/14/2020 |
Delaware Enhanced Global Div and Inc | (DEX) | -7.5% | 0.0772 | 0.0714 | 10.50% | -13.38% | -1.0 | 38% | 5/5/2020 | 5/21/2020 |
Invesco Bond | (VBF) | -4.5% | 0.066 | 0.063 | 3.79% | -1.82% | 1.1 | 101% | 5/1/2020 | 5/14/2020 |
Pioneer Floating Rate Trust | (PHD) | -4.0% | 0.0625 | 0.06 | 8.03% | -12.06% | -0.1 | 98% | 5/5/2020 | 5/18/2020 |
Eaton Vance Senior Floating Rate | (EFR) | -3.0% | 0.067 | 0.065 | 6.97% | -12.65% | -0.5 | 121% | 5/1/2020 | 5/21/2020 |
THL Credit Senior Loan Fund | (OTC:FSLF) | -1.0% | 0.101 | 0.1 | 9.91% | -14.68% | -0.9 | 96% | 5/7/2020 | 6/12/2020 |
MFS Multimarket Income | (MMT) | -0.9% | 0.03827 | 0.03793 | 8.03% | -5.34% | 0.5 | 62% | 5/1/2020 | 5/12/2020 |
MFS® Intermediate High Income | (CIF) | -0.9% | 0.0176 | 0.01745 | 9.65% | -6.87% | -1.4 | 65% | 5/1/2020 | 5/12/2020 |
MFS® Charter Income | (MCR) | -0.5% | 0.05501 | 0.05474 | 7.91% | -2.92% | 2.0 | 54% | 5/1/2020 | 5/12/2020 |
MFS Special Value | (MFV) | -0.3% | 0.04075 | 0.04061 | 9.39% | 1.17% | -0.8 | 32% | 5/1/2020 | 5/12/2020 |
Angel Oak Financial Strats Income Term | (FINS) | -0.3% | 0.1013 | 0.101 | 7.41% | -11.33% | -1.7 | 0% | 5/1/2020 | 5/14/2020 |
Boosters
Name | Ticker | Change | Previous | Current | Yield | Discount | z-score | Coverage | Announced | Ex-date |
MFS® Intermediate Income | (MIN) | 0.5% | 0.02794 | 0.02807 | 8.93% | -5.99% | 0.0 | 31% | 5/1/2020 | 5/12/2020 |
MFS® Government Markets Inc | (MGF) | 0.7% | 0.02899 | 0.0292 | 7.52% | -3.92% | 0.1 | 33% | 5/1/2020 | 5/12/2020 |
Nuveen Municipal High Income Opp Fd | (NMZ) | 4.2% | 0.0595 | 0.062 | 5.86% | 0.63% | 0.2 | 101% | 5/1/2020 | 5/14/2020 |
Nuveen AMT-Free Quality Muni Inc | (NEA) | 5.6% | 0.0535 | 0.0565 | 4.89% | -7.84% | 0.8 | 99% | 5/1/2020 | 5/14/2020 |
Nuveen Quality Muni Income Fund | (NAD) | 6.5% | 0.0535 | 0.057 | 4.89% | -8.56% | 0.7 | 98% | 5/1/2020 | 5/14/2020 |
Nuveen Enhanced Municipal Value | (NEV) | 8.0% | 0.0565 | 0.061 | 5.34% | -5.96% | -0.4 | 101% | 5/1/2020 | 5/14/2020 |
Nuveen VA Quality Muni Inc | (NPV) | 8.0% | 0.0435 | 0.047 | 4.21% | -7.65% | 0.1 | 94% | 5/1/2020 | 5/14/2020 |
Nuveen GA Quality Muni Inc | (NKG) | 8.1% | 0.037 | 0.04 | 4.01% | -14.12% | -1.1 | 99% | 5/1/2020 | 5/14/2020 |
Nuveen NY Quality Muni Inc | (NAN) | 8.3% | 0.048 | 0.052 | 4.64% | -9.79% | -0.1 | 97% | 5/1/2020 | 5/14/2020 |
Nuveen MA Quality Muni Inc | (NMT) | 8.5% | 0.041 | 0.0445 | 4.06% | -10.24% | -1.0 | 98% | 5/1/2020 | 5/14/2020 |
Templeton Emerg Mkts Income | (TEI) | 9.7% | 0.0414 | 0.0454 | 7.05% | -13.05% | -1.0 | 105% | 5/1/2020 | 5/14/2020 |
Nuveen MD Quality Muni Inc | (NMY) | 10.2% | 0.044 | 0.0485 | 4.61% | -12.18% | -0.1 | 96% | 5/1/2020 | 5/14/2020 |
Eaton Vance NY Muni Inc | (EVY) | 11.0% | 0.039 | 0.0433 | 4.09% | -12.47% | -0.5 | 97% | 5/1/2020 | 5/8/2020 |
Eaton Vance National Municipal Opprs Tr | (EOT) | 11.1% | 0.0578 | 0.0642 | 4.04% | -6.66% | -1.5 | 102% | 5/1/2020 | 5/21/2020 |
Eaton Vance NY Municipal Bond | (ENX) | 11.1% | 0.0351 | 0.039 | 4.01% | -11.12% | -0.5 | 98% | 5/1/2020 | 5/21/2020 |
EV Municipal Income 2028 Term Trust | (ETX) | 11.1% | 0.0638 | 0.0709 | 4.22% | -3.91% | -0.8 | 92% | 5/1/2020 | 5/21/2020 |
Eaton Vance Municipal Bond | (EIM) | 11.2% | 0.0446 | 0.0496 | 4.65% | -7.72% | 0.4 | 91% | 5/1/2020 | 5/21/2020 |
Eaton Vance CA Muni Inc | (CEV) | 11.2% | 0.0401 | 0.0446 | 4.23% | -11.10% | -0.9 | 96% | 5/1/2020 | 5/8/2020 |
Nuveen Inter Dur Quality Muni Term Fund | (NIQ) | 12.7% | 0.0315 | 0.0355 | 3.07% | -3.27% | 1.6 | 97% | 5/1/2020 | 5/14/2020 |
Pioneer Municipal High Income Advantage | (MAV) | 13.3% | 0.0375 | 0.0425 | 4.75% | -10.36% | -0.1 | 97% | 5/5/2020 | 5/18/2020 |
GDL Fund | (GDL) | 20.0% | 0.1 | 0.12 | 5.75% | -20.02% | -0.7 | -32% | 5/14/2020 | 6/12/2020 |
MFS® High Income Municipal | (CXE) | 21.2% | 0.0165 | 0.02 | 5.29% | -6.78% | -0.8 | 108% | 5/1/2020 | 5/12/2020 |
MFS® Investment Grade Municipal | (CXH) | 23.3% | 0.03 | 0.037 | 4.87% | -11.55% | -1.0 | 99% | 5/1/2020 | 5/12/2020 |
MFS Municipal Income | (MFM) | 23.8% | 0.021 | 0.026 | 5.03% | -8.82% | -0.7 | 108% | 5/1/2020 | 5/12/2020 |
MFS® High Yield Municipal | (CMU) | 28.6% | 0.014 | 0.018 | 5.24% | -6.15% | -0.4 | 106% | 5/1/2020 | 5/12/2020 |
CEF analysis from around Seeking Alpha...
A1 Investments presents BBN: With Great Volatility Comes Great Opportunity (May 26)
ADS presents Oxford Lane Capital: Key Developments For Preferreds Holders (May 24), Generating Alpha Using CEFs (May 29)
Bridger Research presents EXG: 10% Yielding CEF, Earlier Than Expected Vaccine For COVID-19 Can Support The Rebound (May 23)
Dividend Seeker presents PDI: I Can't Get Excited At A 10% Premium (May 25), NEA: I See Reasons To Remain Long (May 29)
Financially Free Investor presents 5 Best CEFs To Buy This Month (May 2020) (May 23)
*Nick Ackerman presents BDJ: Overweight Financial Exposure Makes This Fund Lag For Now (May 26), Closed-End Funds: Eaton Vance's Option Funds (May 29)
*Stanford Chemist presents The Chemist's Closed-End Fund Report, May 2020: Thoughts On Our Portfolio Strategy And Why We Stay The Course (May. 25), Weekly Closed-End Fund Roundup: 2 Upcoming Mergers (May 17, 2020) (May. 27)
*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: The 'Bull' Is Alive As Equities Break Out Of The Trading Range (May 30)
Jeff Miller presents Weighing The Week Ahead: Are We There Yet? (May 31)
Lance Roberts presents Market Breaks Above 200-DMA. Is The Bull Back? (May 31)
Commentary
A few different pieces of CEF news to discuss this week!
The first is the merger between Vivaldi Opportunities Fund (VAM), which will be merged into Angel Oak Financial Strategies Income Term Trust (FINS), which is due to be completed this Friday, June 5, 2020. Nick has previously analyzed VAM and the merger here: VAM: Quick Take On This 10%+ Yielder And Merger News. In short, the new fund will retain the strategy of FINS, hence VAM would effectively disappear.
Interestingly, VAM, being a long/short diversified fund, fell much less than the S&P 500 (SPY) during the March crash, but it also rebounded less as expected. Meanwhile, FINS, a fund owning community bank debt, has also seen quite high stability. For the arbitragers, VAM's current intraday discount -10.99% vs. FIN's current intraday discount of -9.81% (as of writing) leaves little room for alpha until the merger closes this Friday. FINS is an interesting fund in its own right, which might be worth looking into the future as a separate report as well.
The second news to comment on is Eagle Growth and Income Opportunities Fund's (EGIF) announcement that it intends to liquidate. This announcement was greeted by an instant ~15% rise in the share price of EGIF, as EGIF had traded at a -15% discount before the announcement and the liquidation will distribute the proceeds after selling the portfolio at NAV. We had previously owned EGIF in our Tactical Income-100 portfolio, but sold during the market crash in March in order to de-risk the portfolio. Well done on those who still held on to EGIF!
The reason for the liquidation was because EGIF appointed a new sub-advisor for the fund last year, which required shareholder approval. The following excerpt from the press release is instructive:
In August 2019, the Fund's Board of Trustees (the "Board") appointed First Eagle Alternative Credit, LLC (then THL Credit Advisors LLC) ("FEAC") as the Fund's interim investment adviser and approved a new interim sub-advisory agreement between FEAC and Eagle Asset Management, Inc. ("EAM"), which has served as the Fund's sub-adviser since the Fund's initial public offering in June 2015. The Fund's shareholders were asked to vote on proposals to approve non-interim arrangements with FEAC and EAM. Additionally, shareholders were asked to vote on the change in the Fund's termination date from May 14, 2027 to May 14, 2024. Although the substantial majority of the Fund's shareholders who voted their shares in connection with these proposals voted in favor of each of these proposals, the Fund was unable to obtain the statutory quorum required to approve any of the proposals. Accordingly, the Fund's term was not reduced and FEAC and EAM have continued to serve the Fund on an interim basis without any compensation or expense reimbursement while the Board considered various alternatives for the Fund, including merging it into another investment company and liquidation. After significant consideration, it was determined that a merger is not feasible and that liquidation is in the best interests of the Fund and its shareholders.
What happened with EGIF is instructive because it gives us an indication of what could happen should shareholders not approve a new management contract. In this case, liquidation was a great result for shareholders.
There is one slight wrinkle with EGIF's liquidation however. The fund does not anticipate liquidating and distributing the entire portfolio at once. Instead, "the Fund's liquidating distributions will be comprised of a cash liquidation distribution plus a 1:1 per share interest in a liquidating trust established to hold the Fund's remaining assets and liabilities, including potential contingent liabilities. The liquidating distributions together will represent substantially all of the Fund's net assets at the time of liquidation." This "liquidating trust" creates some uncertainty as owners of the trust "will not have the right to sell, transfer, or otherwise dispose of or in any way encumber the interests they receive in the liquidating trust." Key questions we have to ask, but don't know the answer to yet, are (1) What is the split between the cash liquidation distribution and the interest in the liquidating trust?, and (2) How does the fund anticipate that the liquidating trust will be held for before the proceeds are distributed to shareholders? All in all, the above seems to be too much hassle to deal with for the final -4% alpha potential from the fund's current discount. I'd recommend that owners of EGIF sell the fund now.
Finally, the battles are heating up between the Western Asset/Legg Mason CEFs and the activists led by Saba. Last week, Western Asset Global High Income Fund (EHI), Western Asset Variable Rate Strategic Fund (GFY), Western Asset Corporate Loan Fund (TLI) and Western Asset High Income Opportunity Fund (HIO) announced that Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”) recommended that shareholders vote to approve the new agreements between the Fund and its investment manager and subadvisers. Remember, Legg Mason is being acquired by Franklin Templeton, and hence new advisory contracts are required to be approved by shareholders. I imagine that the activists are hoping for a situation like EGIF's to play out, i.e. shareholders vote against the new contract resulting in liquidation. Would they be successful? Saba has not had much success with the Western Asset funds in the past, unlike their victories against BlackRock and others, so I'm not hopeful. The recommendations by the proxy advisory firms to vote with fund management certainly doesn't help in that regard. Still, it would be a boon if they did succeed, and if you were looking for exposure to a particular sector anyway then the Western Asset funds are quite decent performers. We own HIO, an unleveraged high-yield fund, in our Tactical Income-100 portfolio.
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Analyst’s Disclosure: I am/we are long ECC, HIO, HQH, NMZ, OCCI. 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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Comments (9)
Excellent data and commentary,thanks.
Stay tuned !
