Did You Sidestep THW's Latest Price Drop?
Summary
- We recommended swapping from THW to THQ last Friday.
- THQ has outperformed THW by +15% in the two days since then.
- One member has the chance to "swap back" to gain +18% "free shares" of THQ, for absolutely free.
- CEF corporate actions are not easy to keep track of, let our team help!
Our membership is exceptionally popular because we help you:
- (1) Identify the most profitable CEF and ETF opportunities.
- (2) Earn a ~8% dividend yield together with capital appreciation.
- (3) Avoid the overpriced funds that can sink your portfolio.
The great news is that we’re currently offering a limited-time-only free trial so there's no better time to try us out! Start generating safe and reliable 8% yields from our portfolios today!
Best Present Ever!
====================
Tekla World Healthcare Fund (THW) has had a rough two days, dropping by over -10% in quick fashion. We'll have a full report coming out on the public side about the mechanics of the offering soon, but I wanted to share with readers one of the key benefits of a membership to CEF/ETF Income Laboratory: actionable trade ideas.
In our CEF Weekly Roundup released to our members only last Friday, we advised swapping from THW to the sister fund, Tekla Healthcare Opportunities Fund (THQ) as investors did not appear to realize that THW was about to undergo a rights offering soon.
Here's a few comments on why we recommended selling THW:
All of this is just to say that even if THW isn't undergoing a rights offering, I would still prefer to invest in THQ rather than THW due to the 20 point difference in valuation. However, the upcoming rights offering might just be the catalyst for the discount spread to close. This is because our research has previously shown that the share price of a fund comes under pressure during the rights offering period (see: Rights Offerings: Dates To Be Aware Of). This can be because of several reason:
- The ability to purchase the fund at a discount through the rights offering makes buying the fund at the current market price less attractive.
- There will be an ex-rights day drop for the fund as the shares are less valuable after the ex-rights day as they do not come with rights attached.
- Relating to the point above, for some reason or another, the drop on ex-rights date has frequently exceeded the intrinsic value of the rights.
- For a non-transferable offering like THW's, there is no ability to sell the rights on the open market, hence no compensation for a shareholder for the dilution that they would experience unless they subscribed. Such shareholders may choose to sidestep the fund for that reason.
- Finally, shareholders who did subscribe (to avoid dilution) might not want the increased position size anyway, and may sell the fund after receiving the subscribed-for shares.
Hence, my recommendation is to sell THW now and repurchase after the offering period is over, on April 6, 2021.
In only two days after our recommendation, THQ has outperformed THW by nearly +15% (!). This means that by following our advice, a member could simply execute a "swap back" to THW and gain +18% "free shares" of THW in only 2 days (equivalent to DRIPing nearly 2 years' worth of the stock!).
Our ability to generate "free shares" of our favorite funds by CEF rotation is one of the key elements of our unique "double compounding" approach.
One member reported having the ability to swap back and gain +18% "free shares" of THW by following our advice. Even on a modest $10K position this would pay for many years of membership to our premium service, and much more.
CEF corporate actions like rights offerings and tender offers are not easy to keep track of. Let our team of dedicated CEF experts help you take advantage of potentially lucrative events like this!
Start your 2-week free trial now!
====================
Take advantage of our annual membership and free trial
Take us for a free trial! That allows you to test out our service on a no-risk, commitment-free basis. You'll also get to experience our vibrant community of over one thousand income-orientated CEF and ETF investors, counting numerous full-time and professional traders and investors amongst our ranks.
If you're not satisfied, simply cancel before your 2-week period is over and you won't be charged a single penny.
With an annual membership, you save 25% versus the monthly membership. There's no better time to try us out!
The CEF/ETF Income Laboratory membership normally costs $588 per year (on a monthly plan). That gets you 1000's of research hours conducted on your behalf each year by our team of experts which we share with our members at only a fraction of the cost. Today, you have the opportunity to access a discounted price of $439/year (25% off) by joining us on an annual plan.
All members are grandfathered for life at the membership rate that they signed up at (note: excludes any introductory discounts). So I highly suggest that you lock in the current rate while you still can.
Remember, "time = money", so being able to save hundreds of hours of time of CEF and ETF research each month with what amounts to the price of a cup of coffee every few days is truly an incredible bargain. And our members agree!
====================
"Don't head into retirement without Income Laboratory!"
Consider reading some of the reviews that members of the community have left us!
====================
CEF/ETF Income Laboratory: Profitable CEF and ETF Income and Arbitrage Ideas
Whether you're a novice or experienced closed-end fund ("CEF") and exchange-traded fund ("ETF") investor, the "Income Lab" is the right place for you. Our goal is to help you benefit from income and arbitrage strategies in CEFs and ETFs, all without having to be an expert, because we do the heavy lifting for you. If that sounds like something you'd be interested in, we hope you'll consider joining us here at CEF/ETF Income Laboratory.
We would love for you to join us. We are sure that you will enjoy our service and benefit from what we have to offer!
Sincerely,
Stanford Chemist, Nick Ackerman, Juan de la Hoz and Dividend Seeker
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.