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Alpine Dynamic Dividend Institutional Message Board

  • mysonchino mysonchino May 12, 2010 1:51 PM Flag

    Sell pressure from redemptions

    It has been posted many time that complainers should move on because they cause redemptions which result in sales to raise cash and this hurts the stock price. I agree that sell pressure generally puts downward pressure on a stock's price and buy pressure generally moves the price up. But stop and think of the implications.

    Liquidations requires the fund to raise cash they can sell a little of this and a little of that to raise the cash and this wouldn't put any price pressure on the stocks in the portfolio. Compare this to the fund constantly churning their portfolio to chase dividends and selling out of 100% of their postion on a stock they own. This would create sell pressure on that stock price. Now they take the cash and buy something else for the dividend this will create buy pressure on that share price.

    This fund constantly churns it's portfolio selling out of a position and buying into another creating negative sell pressure and buy pressure.(sell low and buy high). The reality is the fund has consistently been rated in the basement compared to 1400 funds in it's class. It is not working and compounding a negative return simply causes you to lose net worth faster rather than grow it at all.

    As stated, the fund won't earn 20% for a variety of reasons. If it continues to pay out a 20% distribution and earn anything less than a 20% total return based on last year end close the Nav has to decline. To prevent the NAV from declining the dividend would have to be cut. The only way this doesn't happen is the fund earns a total return in excess of 20% and this is not happening or going to happen.

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    • Although I agree with most of what you say! I have to say the more you post the more you look like an idiot. All of the problems you point out existed when you bought this fund and yet you bought it anyways. You also continue to hold it even though you claim there are 1400 better funds. Not sure how you sleep at night with your money in this fund...

      • 2 Replies to rcossey73
      • rcossey, I won't tell you that your posting makes you look like the idiot but please consider the following:

        You stated the things I am complaining about existed when I bought the fund. Believe me,I have not purchased a house near the airport and now complain about the noise. You don't understand what has happened to this fund in the past 2 years and calling me an idiot does not eliminate your ignorance.

        Within the past two years the fund has increased the percent of the portfolio dedicated to dividend capture.

        The fund has increased the turnover rate of the portfolio so as to capture and "earn" the 1.04 dividend. Alpine has told us both of these things. Maybe you missed it, but these actions have implications you should think about.

        As of the end of April the fund was up 45% from the lows of March 09 while the DOW and S&P were up 75%. This means that what is sold now after capturing the dividend must be reinvested in something comparatively costing 30% more than it did 14 months ago.

        None of these things were happenning when I initially invested with Alpine.

        Thank you for your kind post but you should realize that just because you don't understand what is being said does not make the other person the idiot.

      • Some of us call ourslves investors, but truth is we are really addicted to risking in the face of bad odds. but we think with
        good dd, and vigilance we can beet the odds, hopefully more than not. Personally i only bet when i have two chances to win against the risk. one with high div, two with up market, or sector strength, or news that compels me. like when the congress did awaY WITH 'MARK TO MARKET'.i went in with 3x and won big, like when europe refused to help greece, another big score by selling and waiting...you get the idea..chino knows, and i know, there is money to be made in advdx esp if buy low and sell high...LOL

    • davcot@att.net davcot May 12, 2010 6:36 PM Flag

      As of today I'm down $13,661 on paper.If the fund were to get back up so that I were even,I would sell out.The only thing that would keep me here is if the fund managers eliminated the $0.05 quarterly bonus,or dropped the monthly dividend to $0.06 per share.

      • 1 Reply to davcot
      • davcot i am down BIG with my ADVDX as well .If it would go back up to 5.08(my average cost price in my main brokerage account) i would probably sell atleast half my position.

        I am overweight in my ADVDX position.That was my mistake.Even if it goes back up to 5.00 i might sell a few shares.
        My GABUX and GAUCX are performing better than this fund.Those i would keep and recommend.

    • I agree with some of your points.

      My opinion is that some of the new(or casual in/out) investors into this fund do so because of the high yield.Most are probably suspicious of how they can maintain this yield, therefore when the share price takes a bigger beating than the market in general they get nervous and redeem their shares.

      This would be a partly logical explanation of how could ADVDX underperform persitently.

      I know they have exposure to some volatile markets(Europe) but that on its own(in my humble opinion) does not fully explain the HUGE drop in share price.In the last 30 days ADVDX has gone from 5.19 to 4.34, that is almost a 17% drop in share price.NO FOREIGN market has gone down that level(17%).

      Redemptions have to be a part of the reason ADVDX has been taking such a big beating.

 
ADVDX
4.150.00(0.00%)May 22 6:25 PMEDT