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Credit Suisse High Yield Bond F Message Board

  • As of the close of the market yesterday, the net asset value was $2.91. The last trade was at $2.90. So, DHY is not selling at a discount to NAV.

    I believe it will go lower. Drive the stock price down to get a lower 5 day average price calculation for the cost to exercise the rights. Now, if we exercise our rights that would be of benefit to us providing the stock moves back up afterwards. A lot will depend upon how successful DHY is in investing the funds to yield a return good enough to prevent any earnings dilution. Plus, there are other variables such as the economy and the stock market action in general. Sounds like a lot of "ifs".

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    • Yes, I don't have an IRA, did once but followed the advice from a jacka$$ broker and it got virtually wiped out.
      I have a different take on it, as I got the rights for free anything I made on them by the sale is pure profit. I'll have to ask an accountant. I really wish the gov can figure out a vastly simpler tax code because this one is BROKEN.

    • That's an interesting question. I assume you are outside an IRA. I would take the position that you had a short term loss on the rights transaction. You received something that was worth 7 cents and sold it for example at 5 cents. I think your cost basis is essentially the amount that DHY went down on the ex rights day. I could be wrong but that is the position I would take. Of course that means you have to "remember" to decrease the cost basis of you remaing DHY shares by you cost basis in the rights.

    • Furthermore, How do I account for a revenue from the sale on my taxes? Do I treat it like a dividend? It's not technically a Cap Gain.

    • As I already have enough DHY I'm not in the market for more therefore I've sold my rights. Besides I don't have the avail funds at the moment.

    • Just to put things into prospective, let’s assume the following:
      Let’s say NAV is 2.91 and share price of 2.90 is the average price at cutoff.
      If someone has 1000 rights, they could purchase approx. 333.33 shares @ 92.5% of share price. So 2.90 x 92.5% = 2.6825 x 333.33 = 894.1577 + 25 broker fee = 919.1577 divided by 333.33 = $2.7575 average share price. Also aprox.5.15% discount to NAV.
      Not bad assuming my math is correct.

      • 1 Reply to houtech0829
      • Assuming NAV remains the same at 2.91, we'll be getting the shares for 2.69 which is at 7% discount to the NAV. This prices the rights at 7.25 cents a share. Thus selling the right at 7.25/rt is breakeven if my math is correct. (comissions excluded).
        Good deal other things being equal since leaving the little money I have at 1% in a CD is not good. If the economy tanks, oh well I'll add this loss to the losses I already have....ugh.

2.33+0.04(+1.75%)Nov 25 4:00 PMEST