InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

How To Collect Your Share of My Million Dollar Giveaway

How To Collect Your Share of My Million Dollar GiveawayWe recently kicked off the most outrageous initiative in the history of investment research. It’s called the Income Millionaire Project. And the goal is simple: create 1,000 income millionaires. That’s a $1 billion goal! No one has ever tried it before, but that doesn’t bother me. I’m so sure you can use this program to make a million bucks… I’ll pay you $1,000 to start your journey. Go here for details.

 

Discounted Underdogs Packing a Punch

By Igor Greenwald on October 11, 2017

Eight years since the last bear market in any assets but commodities, there aren’t many investment bargains left.

Closed-end funds priced well below their net asset value (NAV) are among the few remaining blue-light specials.

Such discounts tend to narrow by the end of a fund’s life. Behavioral economist Richard Thaler, who’s just won the Nobel Prize, has done a lot of research on the closed-end fund discounts to NAV as a prime example of market inefficiencies.

Of course, large discounts can persist or even widen. But paying 90 cents on the dollar for a decent and respectably performing portfolio, managed at a reasonable cost and paying a decent distribution rate, all in a bullish trend, is seldom a ticket to the poorhouse. Here are a few to consider.

The $1.7 billion Adams Diversified Equity Fund (ADX) has been around since 1929 and invests almost exclusively in U.S. mega-caps without using leverage. Apple (NSDQ: AAPL), Alphabet (NSDQ: GOOG), Microsoft (NSDQ: MSFT), Facebook (NSDQ: FB) and Amazon (NSDQ: AMZN) accounted for more than 16% of the portfolio at midyear.

ADX has matched the S&P 500 over the last five, 10 and 15 years but was up 21% vs. 14% for the S&P 500 in the first nine months of 2017. It continues to trade at a 14% discount to NAV. The expense ratio is a reasonable 0.64%.

The fund is committed to distributing 6% of its average market price at month-end over the last year, with most of that coming in December. Last year it distributed 6.4% of the current market price.

If the mega-cap end of the market seems a little too well liked and aggressively bid at the moment, there’s the $400 million Royce Micro Cap Trust (RMT), investing in stocks with a capitalization below $1 billion. RMT was up 22% in the first nine months of the year but trades at a NAV discount of 11%.

The fund uses 10% leverage and has a 1.26% expense ratio. Over the past year it distributed 6.9% of the current price in nearly equal quarterly installments.

The $393 million Japan Smaller Capitalization Fund (JOF) is up a strong 29% year-to-date through Sept. 30, but continues to trade at a discount of nearly 12% to its net asset value. It uses no leverage and has a 1.09% expense ratio.

The Nomura-managed fund makes a single annual distribution in December. Last year it distributed 7.4% of the current market price.

Japan stocks, of course, have struggled for years before the relatively recent turnaround. Equities involved in commodity production suffered through a shorter but still vicious bear market once the China growth story soured in 2014.

Despite a 26% return last year and a 13% gain in the first nine months of 2017, the $983 million BlackRock Resources and Commodities Strategy Trust (BCX) remained slightly in the red over the trailing five-year span. It trades at a 12% discount that actually represents a tangible improvement over recent years.

The expense ratio is 1.08%. BCX has distributed 6.5% of its current market price in nearly equal quarterly installments over the past year.


You might also enjoy…

 

12 Stocks Virtually Guaranteed to Go Up in 2018

You may not believe it, but I have a calendar in my hands right now that tells me the exact date and time when a few stock are practically guaranteed to go up. 

Twelve of them, in fact.

And if you were to invest in them following the simple buy and sell instructions found in this calendar…

You could be making $1,181… $11,814…. and as much as $190,916 more than by using a “buy-and-hold” strategy.

And here’s the best part…

I’m giving away a few copies of this calendar to interested investors (First come, first served).

With this calendar, you could get higher profits with less risk.

Click here to get the full story, and to claim your copy.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.