Eliciting opinions about what is going on here. The volume spike on yesterday's drop was huge. I don't like the 'return of capital' feature that has crept into FAX's distributions since late last year but I feel something else is in play here. Possibly Japan poisoning interest rates for the whole Pacific trading group but that's just a guess.
From a historic 0% ROC in the distribution to 28% of the total distribution made up of return of capital. Investors noticed - and it coincided with drops in the aud/usd and the nzd/usd. Surprising that FAX hasn't dropped more. Mid 6's would be a nice place to better one's DCA.
I sold half my FAX at a small loss. Here's why: The return of capital is 28% of the distribution. That means the apparent 5.8% yield is actually 4.1% with the remainder being return of my own money. I think I can find better places to earn 4.1%. Picked up some WRB preferred stock. Should be a lot more stable and better paying. And if the premium on AWF comes down a little, I might roll the rest of FAX into that fund.
It did the same thing last November - a big spike down and a quick rebound.
FAP on Toronto , FAX's sister fund on the TSX hasn't budged...so I'm hoping it's an isolated event.
Last spike down in November, was due to a big fund dumping FAX, for unknown reasons.
Could be the same story this time around - maybe triggered by the Aussie dollar falling below par?
Bought at $7.10 which works out close to 6%,
And with NAV over $7.50, I can live with this stock , if it drops more.
As a matter of fact, will probably buy more , if it drops more.
Great short term trading opportunity here. In Nov it rebounded as quickly as it fell. Notice in yesterday's trade 1.5M shares came in one minute of trade. I think there's a big holder dumping (unwinding) for some reason