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Special Opportunities Fund (SPE) Likely To Adopt A Monthly Managed Distribution Policy

|About: Special Opportunities Fund (SPE)

Our guest author acamus recently wrote a report on Special Opportunities Fund (SPE) for our members.  He thinks its a classic double-discount opportunity whereby the fund sells at a discount to NAV, plus the funds inside of it also trade at a discount.  

A couple of key points from the report:

  • With its substantial allocations to other funds, SPE looks like a fund of funds - and it is - but it’s more than that. In addition to investing in funds that the adviser believes offer good value, SPE is unique in that it employs activism. 
  • Having made investments, the adviser doesn’t just hope those investments produce the returns they expect; they take action to increase the value of their investments.

  • After closed-end funds, the second largest group in the portfolio is Special Purpose Acquisition Companies (SPACs), which are another unique element of SPE.

  • What makes SPE valuable is its relatively low correlation to other asset classes.

  • The discount is currently more than -12%: historically wide for this fund, suggesting a reasonable entry point.

  • SPE pays its adviser fees equal to 1% of total assets annually with no performance fee. 

  • Historically, SPE has paid one distribution per year, at year end, making it less appealing to income investors. That should soon change though.

  • We think SPE is a diversifier and source of uncorrelated returns because of its unique investment strategies.

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Disclosure: I am/we are long spe.