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NBXG: Deep Discount For This Interesting Fund


  • NBXG launched at a poor time for the growth-oriented investments that they target.
  • The poor results and the fund being new have contributed to a significantly wide discount.
  • The fund's distribution would seem to be at risk, barring any sharp snapback.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »

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Written by Nick Ackerman, co-produced by Stanford Chemist. This article was originally published to members of the CEF/ETF Income Laboratory on August 31, 2022.

Neuberger Berman Next Generation Connectivity Fund (NYSE:NBXG) shares similarities with BlackRock Innovation & Growth Trust (

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This article was written by

Nick Ackerman profile picture

Nick Ackerman is a former financial advisor using his experience to provide coverage on closed-end funds and exchange-traded funds. Nick has previously held Series 7 and Series 66 licenses and has been investing personally for over 14 years.

He contributes to the investing group CEF/ETF Income Laboratory along with leader Stanford Chemist, and Juan de la Hoz and Dividend Seeker. They help members benefit from income and arbitrage strategies in CEFs and ETFs by providing expert-level research. The service includes: managed portfolios targeting safe 8%+ yields, actionable income and arbitrage recommendations, in-depth analysis of CEFs and ETFs, and a friendly community of over a thousand members looking for the best income ideas. These are geared towards both active and passive investors. The vast majority of their holdings are also monthly-payers, which is great for faster compounding as well as smoothing income streams. Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BIGZ, BSTZ, MSFT either through stock ownership, options, or other derivatives. 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 (18)

MicroValue profile picture
"They share some overlap, but the average market cap for the underlying holding for BIGZ comes to $10.164 million. For NBXG, the average market cap of the underlying holding is $79.358 million."

Hi Nick, I assume you are quoting these numbers using European style and not claiming that these funds own microcap stocks. One of your portfolio graphics has $79,358 million, and many of the top holdings are large companies. Since NBXG trades on a U.S. exchange and most readers are from the U.S., you should use the American notation to prevent confusion.

Aside from that, to me, NBXG has the least-overvalued holdings compared to BIGZ and BSTZ, so it could be worth a dart here at a 20% discount. That said, I think shareholders should demand at least a buyback after being scammed into buying into this fund at the top.
Nick Ackerman profile picture
@MicroValue good spot! I should have put commas, not decimal points. I seem to have done that by accident. I'll send it in for an edit.

That being said, yes, a repurchase would be great to see. BIGZ and BSTZ were buying back their shares. Neuberger, a relatively smaller operation, might be a bit more hesitant to repurchase fee-generating assets.
Loophole69 profile picture
@MicroValue - No kidding, I am one who bought at the top and have watched it drop by 50% or more. At least I have this on drip and am buying more at its all time lows - which won't mean diddly if it doesn't increase someday.
tjhoppe profile picture
Initiated a partial position this morning at $9.55.
Addressing some of the previous comments:
1) I learned a long time ago that you cannot trust the data on cefconnect.com.
Always go to the fund website to verify.
2) The September distribution was 100% ROC according to the 19a-1. The website does not show previous months 19a-1 and I have an email in to obtain the YTD data
3) If you go to the website, you can open the fund holding spreadsheet and see all of the covered calls that they are writing.
4) The last monthly update posted on the website indicates that 14% of their positions are overwritten with covered calls.
5) Approximately 61% of the private/restricted equity holdings are non publicly traded preferred stock and therefore the valuations would be static. It would not surprise me if some of these take the form of private equity financing structure and pay large and possibly monthly dividends.
6) Approximate private position company valuations as of their last financing round just for reference:
Grammarly = $13B
Fabletics = $5B
VideoAmp = $1.4B
Arctic Wolf = 4.3B
Cybereason = $5B
Savage X = $3B
Thoughtworks ($TWKS) went public in September 2021 and went to about a 9B valuation at the IPO. It is down about 2/3 from the IPO. The fund holds 568,000 shares of the common and writes covered calls against about 10% of this position. The fund also holds 1,086,533 shares of the restricted common stock.
7) Note that Fabletics and Savage X are (high growth) apparel companies not high tech.
Nick Ackerman profile picture
@tjhoppe thank you for all this input! Good luck with your position!
Excellent data and commentary.
Loophole69 profile picture
"NBXG launched at a poor time for the growth-oriented investments that they target".

And I picked a poor time to buy this fund but I am faithfully reinvesting my monthly dividends, so if and when it turns around I should do okay.
Nick Ackerman profile picture
@Loophole69 I feel that! I own BIGZ and BSTZ, which have actually done worse. That's why we run a diversified portfolio though, right?!
Loophole69 profile picture
@Nick Ackerman Correct and why NBXG and BIGZ are about only 3% of my total portfolio. They are, however, in my vacation portfolio, so I am limited in my spending on vacations until they come back. Woe is me.
It seems a bit early in the recession/Fed hiking cycle for something like this. My belief is that the downward trend in NAV and a reduction in the distribution will continue through the end of the year at least. There will be plenty of time to dip one's toe in the water in the 1st half of 2023 for funds like this. In the meantime my focus on my CEF portfolio is to stay with covered call writing funds.

Final comment -- I really don't like funds with opaque holdings. Flying blind is never a great idea. One has to fundamentally trust the managers to know what they are doing. I prefer being able to review a manager's portfolio and be aligned and in agreement with him/her as opposed to blindly trusting.
Nick Ackerman profile picture
@TimNeuman I think those are quite fair thoughts! I believe there is a very good chance you could be spot on too. Thank you for taking the time to share your input.
@TimNeuman You are raising a viable point.
hsrendeb profile picture
You are absolutely right that this is an interesting fund.
However, we have no clue as to when the book value will start increasing.
CEFCONNECT shows zero return of capital on recent monthly payments. Is this correct? and if so where is the money coming from?
On their last conference call they mentioned an 'option strategy' but I can find no written references to this option strategy. Could the monthly payout be coming from options?
They also have a large number of private companies. Valuation of private companies in these high tech businesses is very 'iffy'. Could some of the discount be coming from faulty valuations.

After taking some major hits on bigz, bstz, bst I am quite wary, but I do like the idea of receiving a hefty monthly dividend while I wait for the market to turn around.
Thank you for your thoughts
Nick Ackerman profile picture
@hsrendeb I'm not sure how they expect to generate the gains, it's possible they could. However, they showed that only realized losses in their first half of the fiscal year. That would include any options premium received.

Yes, I think the private holdings would have an impact. Check out the valuations on their restricted securities (I included it in the article.) Some haven't changed values in three to six months!
Nick Ackerman profile picture
@hsrendeb also I'm in BIGZ, BSTZ and BST. I added to BST recently, so those are the tech ships I'm going down with. But I'd otherwise seriously consider NBXG at these levels.
@Nick Ackerman Dripping into BST and BSTZ. At least keeping my invested capital in the positions.
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