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Adams Express
Old 04-28-2015, 02:41 PM   #1
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Adams Express

Adams Express (ADX) is one of the oldest CEF around, being around as an investment company since before the great crash of 1929. Presently there is a shareholder vote scheduled for Thursday where a hedge fund has gotten on the ballot a request to tender shares and convert possibly to an ETF, which if successful would immediately result in approximately 14% one time increase as the discount is eliminated.

I am guessing the management opinion is the vote is close as I have received 3 calls in the past 2 weeks requesting I vote with management early and over the phone. As a short term gamble for a potential 10-14% return with basically only market risk, it is an interesting play.

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Old 05-03-2015, 03:25 PM   #2
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If it is successfully forced to become an ETF, remember that there is no requirement that it suddenly trade with a zero discount. It could still have a 5% (or more!) discount. It would require big arbers to sell short all of the holdings in the ADX portfolio and buy a similar $ worth of ADX in order to get truly close to zero discount. (outside of the likes of the S&P 500 or other massively big indexes, many ETFs trade with at least some small premium/discount of 0.25%-0.75%, depending on the bid/ask at any given point in time). Absent that, why would people suddenly pay more for an ETF of the same investment company as before it became an ETF?

If it were an open-ended mutual fund, then I could understand, as it would then have a zero discount and you could pick up some 'easy money'. But is the proposal to simply become an ETF? Or a mutual fund?
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