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Royce Value Trust, Inc. Common Message Board

  • jrstewart73 jrstewart73 Apr 19, 2003 10:57 PM Flag

    Discounts/Premiums to NAV

    It's been a while since RVT sold at a nice discount at 10% or greater probably due to it having a decent performance. Sometimes a stock price will disconnect from its net asset value, GUT being an excellent. GUT, Gabelli Utility Trust, a CEF trading on the NYSE is worth $5.96 per share but closed at $8.86 per share on Friday, about a 50% premium. No person that understands what is happening would buy GUT at that price. There are a lot of novice players out there and they don't know what they are doing, and they consider GUT a good purchase. People get carried away such as with the tech stocks a few yrs. ago. The recent rights offering was a good opportunity for people that took advantage, but many did not. I over subscribed and got all I wanted, and a friend of mine requested an additional 60% and got them. The people that did not participate are giving up equity to the ones that oversubscribe. A person should really understand these or not buy them in the first place.

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    • Besides the novice investors, one of the reasons some of these stocks stay at such impossible premiums is that it's impossible to short them, there's some rule called Nasdaq UPC 1150 which prevents shorting of a stock where the short interest has reached a certain percentage of the float..

      You'd think in the land of capitalism the market would be allowed to take these things down as low as the laws of supply and demand determine, but I guess that's not the case in clubby Wall Street land..

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