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Alpine Total Dynamic Dividend F Message Board

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  • mike57dk mike57dk Dec 7, 2009 1:37 AM Flag

    How Does AOD Work?

    re_train - Alpine has an excellent homepage with good descriptions of the fund style ...but in-a-nut-shell:
    The fund invests virtually 98% of its assets in common stock ..domestic and international. The mgr, Jill Evans, employs a "dividend capture" tactic with 1/3 -1/2 of the fund assets ...buying big dividend payers and then selling shortly thereafter to "capture" the dividend and move on to another issue...they also seek out "special" one-time dividend payers ...and have a core holding of value stocks ...typically 100 stocks or less in portfolio ...
    Ok ...how can they be paying such a large dividend ?
    Start looking at it this way ... when they started out ...a few years ago ...AOD was one of the largest closed end funds of all time ...huge interest in a mutual fund that paid a MONTHLY dividend at 10% per annum ...started at $20 per share ...with a 10% yield ...the bad market reduced its price to $10 per share ..with the same monthly yield ...so now the fund is priced at $10 ...with a 20% annual yield ...the market continues to decline ...stock price is below $5 per share with what looks to be a 30% yield ...Alpine cuts the dividend in March 2009 ...but they have little problem sustaining the $0.12 per share per month distribution ...the fund rallys from the mid $4 range to the current $8.80+ price ..and the yield is now in the 15-16% area ...funny how nobody questioned the 10% yield when the fund was priced at $20 per share ... they still use the same strategy ...usually announce dividends in a three month payment cycle ...so we can be sure of the income ...Alpine says that most folks reinvest the dividends ...and that has worked over the past nine months or so very well ..but many folks on this board own the stock at $20 ...and have been hammered by the declining price ..not expecting that a mutual fund could lose so much ..so fast.
    The fund (AOD ) sells at a ricidulous PREMIUM to its underlying securities ...25% or so ...I urge you to look for closed ended funds selling at a mild discount to their underlying value ...because PREMIUMS tend to dissappear in nano-seconds ...and more practically ...Why pay premium ...when you can get "sticker-price" or less on something similiar ?

    Summary - AOD may cut their dividend ...or not ... that will depend on the market conditions early next year ...and their respective success or failure in capturing special dividends and "flipping" the positions to capture more than 5-6 dividends per issue per year ... Quien sabe ?
    This is a good fund ...put it on your shopping list and wait for a string of bad days in the market ...( probably a short wait ) ...look to BUY it at a discount to NAV ...5% is the target I try for ...that would be a good value..
    hope this helps ... the fund is NOT doing anything leveraged or borrowed ... just straight value and dividend capture ...
    Good luck

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    • EXCELLENT reply with lots of great info!!! Thanks!!! Merry Christmas!!!!

    • Mike57,

      Thank you for kind response. It helps a lot.

      Good Luck to you and Happy Holidays.

    • One of the best, if not the best, post on this web site. Well thought out and presented.

    • look at the PGP premium. might that be because their mgrs are on CNBC morning noon and night?

    • We are some of those investors you refer to who bought in at 20.12 per share on 3 Aug 07. We hold 4975 shares. No one, including us, ever expected such a drop in the market. We do not blame AOD for this drop, nor do we intend to sell at this price. AOD is one of 15 funds we have and all of them took a hit. Two of those funds we own are worth more than we paid because we bought more of their shares when they were in the dumps, namely, PTY and PGP. We buy for long term and expect ups and downs in the market. The blame for this recession can be traced to sorry policies by the Feds and crooked politicians, Barney Frank and execs in Gov't real estate bond agencies. Banks were being forced by the Fed to allow mortgages to people who had no intent to pay them off or the mentality to understand the requirements of having a mortgage. We need to also let auto unions in the blame for our predicament, namely, their greed and never ending demand for more freebies for a job that does not even require any skill. Enough griping for one day. Good luck with your holdings.

      • 1 Reply to walsingmalinda
      • walsingmali - Sincerely did NOT mean to cast any negative innuendo on those original BUYERS of AOD @$20 ish per share ...I think AOD has returned something like $5 per share in dividends since inception and i know the last 12-13 dividend reinvestments have ALL been profitable ...We started picking up shares in the early $8 range when the discount to NAV was above 12% and the fund represented a compelling BUY ...plus the LUNACY in the corporate and government bond market made the REAL pricing of virtually all bond based funds something of a joke ... NOBODY knew what bonds were really worth ...I figured that with a fund of about 100-120 stocks that the NAV was at least founded on the closing price of the underlying stocks ...( still avoid bond funds for that reason ) ...Closed end funds allow us to be "nimble" ...to liquidate when we take a serious hit ...say a 25-30% loss ....and not let front loads / back loads / fees cloud that decision ...BUY and HOLD as a strategy has just crippled us ...with the market down 50%+ on average for much of our portfolio ...we NEED a 100% GAIN in value just to get back to where we were in 2007.
        AOD has helped us get a portion back ... but with a 25% PREMIUM built into the stock price ... we need to be on STANDBY ...to SELL the fund ...if only to protect the profits built up over the past 12-14 months ...as for the blamefor this "melt-down" ...I agree with you ...but let me ADD one more component ...sometime over the past 3-4 years ...corporate executives started getting paid more in cash incentives / bonuses ...instead of RESTRICTED company stock ..employees in stock purchase plans and 401-k plans faithfully piled up the stock in their own accounts ...NOT realizing that the head honchos no longer had a compelling ownership position in the stock ...and were instead pushing to take more and more risker bets ...er ...i mean investments ...thats how we created the estimated $65 TRILLION Credit default swap market ...greater than the GDP of the world ... or how some mathmaticians figured out an equation that allowed rating agencies to assign AAA ratings to crappy / complex bond instruments ...the single GIVEN in those formulas was that REAL ESTATE ALWAYS ...without exception ..went up 4% per year ...thats like your car dealer promising you a 4% APPRECIATION in value every year you held the car ... you would laugh as you walked off the lot ...but thats what our eight figure bankers were doing ...why / how they could be so stupid ? ...easy ...they were getting paid in cash and the more risk = more cash ...and to hell with the stock and the owners ...uh ...US. The same guys are back doing it to us all over again ...Shame on us if we trust them again .... Our Congress "Critters" know this but still refuse to impose the basic restictions that a SUBWAY franchise owner would demand on their employees ... they are nothing more than PAID LIARS ...and enablers for the Goldmans of the world ...OK ..that was my vent ...Happy Holidays !

 
AOD
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