Thursday, September 20, 2012

PEO NLY/Bought 50 STK at $16.3/Bought 100 of the Stock CEF $29.52/Sold 50 HMA at $8.41-LT Category/Bought 100 of the Stock CEF GAM at $29.52

The CEF Petroleum & Resources adopted a managed distribution policy, whereby the fund committed to pay a minimum payout of 6% annualized. The amount will be calculated using the average month-end market price of PEO common stock. As with Adams Express, PEO will pay small quarterly distributions with the bulk of the dividends paid in the 4th quarter. I would anticipate that most of the 4th quarter distribution will be capital gains.

I recently bought back 100 shares of PEO. Bought 100 of the Stock CEF PEO at $24.98 (August 2012 Post). The fund has a large amount of unrealized capital gains that can be tapped to support that 4th quarter distribution without resorting to a return of capital. The semi-annual report for the period ending JUNE 30, 2012 shows an unrealized gain of $259+M at page 11. That report also shows at page 2 that the fund has realized $19,185,714 or $.75 per share in net capital gains for the 2012 first six months.

^VIX: 13.88 -0.30 (-2.12%)

Microsoft boosted its quarterly dividend by 15%, raising it by 3 cents to 23 cents per share.

Annaly Capital Management (own) announced a quarterly dividend of 50 cents per share. The prior quarterly dividend was 55 cents per share. The dividend has been trending down since hit a high of 75 cents per share in the 2009 4th Quarter. Annaly Capital Management, Inc. : Dividends

According to Bloomberg, the IMF is preparing to censure Argentina's government for failing to report accurate data. I mentioned that Argentina's government, headed by Cristina Fernandez de Kirchner, was substantially underreporting the inflation rate. 4/2/12 Post The actual inflation rate is easily running over 20%, with the government's latest number claiming about 1/2 of that amount. Argentina is now, and has been for decades, a country whose potential has been ruined by inept and totally incompetent politicians. Item # 3 3/28/12 Post.

The National Association of Realtors reported yesterday that existing homes sales increased 7.8% in August, compared to July, and were up 9.3% compared to August 2011. NAR Research

It is hard to discern much difference these days between the monetary policies of the Federal Reserve and the Bank of Japan. Yesterday, the Bank of Japan increased its asset purchases by $126.7 billion while maintaining its interest rate target at 0% to .1%. pdf

1. Bought 60 of the Stock CEF STK at $16.3 Last Friday ($500 to $1,000 Flyers Basket Strategy)(see Disclaimer): The Columbia Seligman Premium Technology Growth Fund is a closed end fund that invests in technology stocks and is managed by Paul Wick, along with two others. Wick has managed  the Columbia Seligman Communications & Information Fund  A (SLMCX) since 1990. The expense ratio of that fund is 1.34% with a 5.75% front load. SLMCX 

I took a snapshot of STK's top ten holdings as of 7/31/12:

Top Ten Holdings
The holdings are similar to the mutual fund SLMCX: Top 25 Unlike the mutual fund, I did not have to pay a sales load when purchasing the CEF STK.

Instead, when STK was originally offered to the public in an IPO, the purchasers were charged then a 4.5% load, see page 23 Prospectus. The offering price was $20 per share, so the fund was left with assets of $19.3 per share after the sales charge and another .2% was lost in IPO offering expenses. 

On the day of my purchase (9/14/12), STK closed at $16.23. Based on a net asset value per share of $17.03, the discount to net asset value was -4.7 at that time.

SEC Filed Shareholder Report for the period ending 6/30/12: Columbia Seligman Premium Technology Growth Fund, Inc. The expense ratio is shown at page 13 of that report and has ranged between 1.1% to 1.22% since inception.

STK Page at the Closed-End Fund Association

STK page at Morningstar. As shown at that page, the dividend has been significantly supported by a return of capital.  

The fund is currently paying out a managed quarterly distribution of $.4625 per share:

Managed Distribution Policy
If the fund does not start earning this distribution with realized capital gains, I would anticipate a reduction of the dividend.

Quote: STK 

2. Sold 50 HMA at $8.41 Last Friday (Lottery Ticket Basket Strategy)(see Disclaimer): The LT strategy is not taken seriously at HQ and is intended for the RB's amusement. This transaction brings my realized gains to $10,988.70 and decreases my total dollar exposure to the remaining 44 stocks to $9,569.9, see snapshots at the end of Stocks, Bonds & Politics: Lottery Ticket Strategy: New Gateway Post. Under this rule based strategy, the difference between the total realized gain and the total outstanding cost ($1,418.8) can be used to buy more LTs.

2012 HMA 50 Shares +$61.1

Yesterday's close: HMA: 8.66 +0.10 (+1.17%)

3. Bought 100 Shares of the Stock CEF GAM at $29.52 Last Monday (see disclaimer): General American Investors Co. (GAM) is a stock CEF that has been around for a long time.

I took a snapshot of its ten largest holdings as of 6/30/12:

Of those holdings, I was unfamiliar only with Epoch Holdings, EPHC Interactive Chart (Form 10-K).

This fund does not do much trading so I would not expect much of a weighting change since 6/30.

Last Friday, GAM closed at $29.54, with a net asset value per share of $35.07, creating a discount to net asset value at that time of -15.77.

The fund does use leverage. The leverage consists of a $25 preferred stock with a $25 par value. As of 6/30/12, 7,604,687 preferred shares were outstanding out of the original 8 million issued by the fund. There is an outstanding Board authorization to purchase up to 1 million shares of the preferred shares in open market purchases as below $25. (note 5 at page 10). The preferred shares are currently selling above par value: General American Investors Co. Inc. 5.95% Cum. Pfd. Series B $1 par value, GAM.PB Stock Quote - (NYSE) GAM.PB, General American Investors Co. Inc. 5.95% Cum. Pfd. Series B $1 par value Stock Price

GAM website: General American Investors. This fund focuses on long term appreciation "with growth potential at reasonable valuations", rather than current income.

GAM Page at the CEFA

Morningstar gives the fund two stars. Recently, dividends have been paid annually with a November ex dividend date.

The fund was launched in 1927 and is one of the few CEFs that survived the 1929 Crash and the Great Depression. Adams Express is another one.

The fund is authorized to purchase up to 1 million shares when the discount to net asset value per share is greater than 8%. Over the past 17 1/4 years, the fund had purchased 17.9M shares for $494M at an average discount of 12.2%: PressRelease.pdf

Quote: General American Investors (GAM)
Yesterday's close: GAM: 29.58 +0.18 (+0.61%) 

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