Closed End Funds

[Canalyst]

I have started looking more closely at Closed-End Funds. It seems like depending on the portfolio, you can buy a pretty good, levered spread at a discount. Like all discount to NAV plays, you may never see the discount close, but currently some of the yields on these seem to be both rich and reasonably safe. I recently initiated a position in BRW in my non-taxable that was heavily in cash from a bonus.

 

BRW is managed by Boaz Weinstein's Saba, excellent write up here: (Boaz’s Curious Lure of Fat Dividends - Red Deer Investments) Most of the portfolio is SPACs that are going to get liquidated (2-4% yields), levered 40% while the CEF trades at an 8% discount. Portfolio from 10/2022 annual report:

 

This is an interesting fund, and even if you aren't interested in owning a CEF, it is worth looking through some of the holdings for high-yielding or special situations. It has me digging in

to some of the other larger CEF holding in here, as Saba is fighting proxies to liquidate after buying at deep NAV discounts. IRL (The New Ireland Fund) which Saba disclosed a position in in November of 2021, announced liquidation in October of last year and has closed an almost 20% discount to NAV in that time period. BRW should file their next portfolio update towards the end of March, and it will be worth taking a look at how things have changed. 

 

Any experienced CEF investors on here have any thoughts on the space, or if there are more worth looking more closely at?

 

Most recent annual report here: 

saba-capital-income-opportunities-fund-ar-20221031.pdf (alpsinc.com)

 

[DeepSouth]

I took a position in BRW Q4 2022. Boaz is one of the better thinkers in fixed income and I am okay riding the jockey here.

Also own Pershing Square, much different but bigger discount.

 

Here's a good site to explore discounts, holdings, managers, expense ratios, etc through screeners.

https://www.cefconnect.com/

[KPO]

On 1/30/2023 at 1:27 PM, Canalyst said:

I have started looking more closely at Closed-End Funds. It seems like depending on the portfolio, you can buy a pretty good, levered spread at a discount. Like all discount to NAV plays, you may never see the discount close, but currently some of the yields on these seem to be both rich and reasonably safe. I recently initiated a position in BRW in my non-taxable that was heavily in cash from a bonus.

 

BRW is managed by Boaz Weinstein's Saba, excellent write up here: (Boaz’s Curious Lure of Fat Dividends - Red Deer Investments) Most of the portfolio is SPACs that are going to get liquidated (2-4% yields), levered 40% while the CEF trades at an 8% discount. Portfolio from 10/2022 annual report:

 

This is an interesting fund, and even if you aren't interested in owning a CEF, it is worth looking through some of the holdings for high-yielding or special situations. It has me digging in

to some of the other larger CEF holding in here, as Saba is fighting proxies to liquidate after buying at deep NAV discounts. IRL (The New Ireland Fund) which Saba disclosed a position in in November of 2021, announced liquidation in October of last year and has closed an almost 20% discount to NAV in that time period. BRW should file their next portfolio update towards the end of March, and it will be worth taking a look at how things have changed. 

 

Any experienced CEF investors on here have any thoughts on the space, or if there are more worth looking more closely at?

 

Most recent annual report here: 

saba-capital-income-opportunities-fund-ar-20221031.pdf (alpsinc.com)

 

For the most part the discounts are a function of the relatively high fee structure, but you’ll see discount anomalies during periods of market dislocations that make it worth following a few CEF’s to keep your finger on the pulse. 
 

Btw, if you’re a Berkshire fan you might check out STEW, if you haven’t already.  

[DeepSouth]

On 1/31/2023 at 3:32 PM, KPO said:

For the most part the discounts are a function of the relatively high fee structure, but you’ll see discount anomalies during periods of market dislocations that make it worth following a few CEF’s to keep your finger on the pulse. 
 

Btw, if you’re a Berkshire fan you might check out STEW, if you haven’t already.  

 

interesting, thanks for idea. 10% turnover, minor repurchases - can own in taxable account. 17% NAV discount with 4% dividend, decent long-term NAV capture/accretion. Reasonable 15% leverage. Blue chip value focused with 40%+ weight to BRK. 1% mgmt fee, certainly much higher than low cost ETFs but reasonable. Effectively kept up with large cap value index over 10 years