Why So Steep A Discount?
With its stock trading near an all-time discount, I have to wonder why. Its net assets have increased in each of the last four years, three in excess of $10 million, growing from $10.81 a share in 2003 to $12.29 at the end of 2007. In 2007 alone, its NAV was up 7.6% from $11.42 to $12.29. The fund implemented a new dividend policy in 2008, distributing on an annual basis a minimum of 10% of its end-of-year closing price, which was $6.31 on December 31, 2007. Therefore, in 2008, it will distribute 15.8 cents quarterly to investors. (For more, check out Uncovering Closed-End Funds.) One possibility for the steep discount is the balance sheet. At the end of 2007, it had net assets of $134.7 million with $72.1 million in actual portfolio investments, $30.9 million in cash and an additional $30.3 million held in U.S. treasury bills to meet the diversification requirements for the RIC. Effectively, 23% of its assets aren’t in play. At an average of $6 million an investment, it’s missing pote
