Woop! Woop! Blue light special

[brewer12345]

GIM is now trading at a 7 or 8% discount to NAV. Anyone holding a roughly equivalent open-ended fund might do very well by swapping.

 

[soupcxan]

Thanks for the tip. Just to play devil's advocate...hasn't GIM traditionally traded at a 5-10% discount over the long term, even up to -20% at one point? Is it possible that the last few years where it's been trading at a premium were just a fluke due to the dollar's decline?

I'm debating whether to trade in BEGBX for it. The biggest thing holding me back is that the apparently irrational volatility that makes it sell at a discount right now could come back again when I want to sell.

 

[brewer12345]

Yes, it has historically traded at a discount, like many CEFs. However, it is now in the range of its historical discount, and when the discount ballooned out to 20%, the managers of the fund started liquidating assets and buying back shares.

I bought some today. I am getting something for nothing in the discount and the fund has reasonable expenses and a very long track record.

 

[nwsteve]

Brewer,
Help me understand what is going on in the trading pattern.
3/15 Closes 9.78
3/16 Opens 9.00 closes 9.35
3/21 Closes 8.90

Seems odd in a portfolio fund to see that much price action. Certainly not a quant but isn't suppose to be a concern when an open and close separate that far on the downside?
Thanks
nwsteve

 

[preben]

Re: Woop! Woop! Blue light special GIM

I picked up some GIM today - have PFUIX and PEBIX and might swap all. Will see....

 

[brewer12345]

Brewer,
Help me understand what is going on in the trading pattern.
3/15 Closes 9.78
3/16 Opens 9.00 closes 9.35
3/21 Closes 8.90

Seems odd in a portfolio fund to see that much price action.  Certainly not a quant but isn't suppose to be a concern when an open and close separate that far on the downside?
Thanks
nwsteve

Search me. It is an exchange-traded instrument, so market participants set the price transaction by transaction. What I am interested in is the underlying assets, which are about 7% higher per share than the current share price. One assumes that over the long term, premium and discout moves should more or less even out and in the meantime, I get the interest on the NAV, not the market price.

Check out cefa.org or etfconnect.com for more on closed end funds.

 

[soupcxan]

Ok, I'm in...if only I could've picked it up this morning when it was 8.65. In any case, so long, BEGBX!

 

[brewer12345]

Soup, this is a no-brainer transaction, IMO.

 

[farmerEd]

Re: Woop! Woop! Blue light special/getting blue-er

Soup, this is a no-brainer transaction, IMO.

Why does the "no brainer" keep falling? Not saying you are not right, but almost a 15% drops in price on very, very high volume spike (a 10 year high volume spike)does not usually mean good things.

Is it possible that smart money is thinking its time for a rebound in the US dollar? By the chart, sure looks some big holder really really wanted out.

I like the yield, but a another 10-20% drop in price wipes out a lot of yield....

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=gim&sid=0&o_symb=gim&freq=2&time=13

 

[brewer12345]

Hey, if you have a view as to where you think the dollar will go, then by all means incorporate it into your investment strategy. I like to think I am a smart guy, but forecasting the direction of currency shifts is well beyond me. As such, I just want the exposure as a diversifier and I am willing to go along for the ride for a loooooong time.

For soup, this is a no-brainer because he was already holding an unhedged foreign bond fund. He swapped out the open ended fund for a closed end fund with substantially the same underlying investment and got a ~7% discount. Sounds like a no-brainer to me.

Sometimes I think the "smart money" isn't so smart. Was this the same "smart money" that pushed GIM to a ~7% premium not too long ago? Doesn't sound to bright to me. Really, I think this is a case of idiot momentum crowd followers doing what they think everyone else will do. Perfect time to take advantage of some orrational pricing in the market, IMO.

 

[Zipper]

Blue light.

The light version of Labatt's Blue.

Made right here in London and exported south!

 

[oliver3]

Hi Brewer,

I sold my shares in another international closed-end bond fund (selling at a Premium) and bought some Templeton Global Income Fund. Thanks for the info!!

I am considering selling a portion of my investment in PIMCO Foreign Bond Fund PFUIX. If I do, I will be looking at a number of funds. A search for "large" discounts uncovered these funds.

Take care,

Oliver

Source http://www.etfconnect.com

GIM - Templeton Global Income Fund, Inc.
Pricing Info As Of: 3/23/2005
Closing NAV: $9.30
Closing Share Price: $8.59
Premium/(Discount): -7.63%
Current Market Yield: 5.59%
Total Fees 0.77%

FAX - Aberdeen Asia-Pacific Income Fund
Pricing Info As Of: 3/23/2005
Closing NAV: $6.61
Closing Share Price: $6.12
Premium/(Discount): -7.41%
Current Market Yield: 6.86%
Total Fees 1.30%

TEI - Templeton Emerging Markets Income Fund
Pricing Info As Of: 3/23/2005
Closing NAV: $13.75
Closing Share Price: $12.60
Premium/(Discount): -8.36%
Current Market Yield: 7.94%
Total Fees 1.24%
(The Fund will invest at least 65% of its total assets in U.S. dollar denominated securities.)

MSD - Morgan Stanley Emerging Markets Debt
Pricing Info As Of: 3/23/2005
Closing NAV: $10.20
Closing Share Price: $9.20
Premium/(Discount): -9.80%
Current Market Yield: 7.83%
Total Fees 1.22%

 

[oliver3]

FYI - Details at link http://biz.yahoo.com/bw/050323/235474_1.html

Oliver

Templeton Releases Closed-End Funds' Portfolio Allocation Updates

Wednesday March 23, 11:37 am ET

FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--March 23, 2005--The Templeton closed-end Funds referenced below, which trade on the New York Stock Exchange, today released portfolio allocation updates containing the following information as of February 28, 2005:

* Asset Allocation
* Ten Largest Positions/Portfolio Characteristics
* International Allocation/Net Currency Distribution
* Industry Allocation/Country Distribution .....

 

[preben]

GIM had a nice comeback today - still some way to go. Cheers!

 

[soupcxan]

In case there was any doubt of brewer's genetic superiority, GIM went from $7.63 in March of 05 to $9.73 today (prices are adjusted for dividends from Yahoo Finance). A handy 27% return thanks to the dollar tanking and the CEF going from a discout to a premium to NAV.

If only I had held it!

 

[HelpMeRhonda]

Bought it before I knew Brewer (thanks FA).

Sold it today.

 

[farmerEd]

I was skeptical but bought some too at the time anyway...so is it time to sell yet?

 

[soupcxan]

I was skeptical but bought some too at the time anyway...so is it time to sell yet?

Per brewer, the time to sell is when GIM reaches a 5% premium to NAV. Draw your own conclusions.

 

[Texas Proud]

Looking at the chart.... in the last 2 years it is flat..... my company up 20%...

In the last year, up maybe 20%.... my company up 15%

My company stock did better... and higher dividends...

 

[brewer12345]

I sold last week. Always happy to sell a dollar for $1.05 to some other sucker.

 

[AlmostDone]

Ok, Brewer, I'm totally lost. I can't tell if you bought it or sold it or if you sold it last week and bought it back this week. Can you give me a simple explanation?

 

[brewer12345]

Bought in early 2005. Sold on Tuesday, 12/4/06.

 

[Gonzo]

Hey Brewer...

What did you replace GIM with?

Gonzo

 

[saluki9]

Looking at the chart.... in the last 2 years it is flat..... my company up 20%...

In the last year, up maybe 20%.... my company up 15%

My company stock did better... and higher dividends...

Let's recap. You are comparing a single equity issue with a diversified portfolio of bonds.

Gotcha

 

[brewer12345]

Hey Brewer...

What did you replace GIM with?

Gonzo

I decided to live dangerously. I bought some Asian currency warrants with a small proportion of the proceeds and left teh rest of it loose to pursure higher return opportunities. I will buy back into GIM when it drifts back to a discount.