There are some people that own AOD and they like the stock.
There are some people that own AOD and question that stock
There are some people that don't own that stock and don't care about it
There are some people that don't own that stock and want to find out about it.
The people no this board that own that stock could not convince me to buy that stock. Not one fundamental reason.
all emotional reasons, with no basics
I also own PHT but as of the last financial report it started to under-earn its dividend by just a very small amount. Nothing for which to be upset since it has a sizable UNI to make up the defecit. But keep your eye on the next report. A lot of CEFs are reporting sizable decreases in their Net Investment Income on their latest financial statements. Pioneer does a great job.
i owned AOD (IRA) and AGD (taxable acct) for a quite awhile, i think at least two years (sometime in 2006 until jan 2009). i did a few "models" of div capture and it seemed pretty easy. especially when you stick with the foreign stocks that pay once or twice a year. if you rotate through one of those maybe 8 times a year and get 6% each time, you do pretty darn good. assume you lose 3% via cap loss so net 3% x 8 = 24% return. and if your buy hold component (i did a 40% div capture/60% buy hold) goes up, you use the 3% loss to avoid paying taxes on some of the buy/hold profits. this is back when the yield was around 12% and it seemed like an easy bogey for them to hit.
but they never really did hit the bogey. it was like one step forward and two steps back. so i finally threw in the towel.
so today the NAV was off 6% versus 4% for the S&P 500. same story for AOD, over the 4 yrs i've followed AOD, and i monitor qtrly performance, i think they beat the market one qtr out of 16. not good.
mgmt has to be stressing on the div now. not a good time to have to come up with a new payout number.
"The frustrating thing about AOD is that it only reports twice a year. Six months is a long time to wait when NAV is declining from $6.82 to $5.70. There is no reason AOD could not report more frequently which would end a lot of the debates that take place on this board."
Although they only report twice a year, the NAV is posted daily, and that in and of itself is a pretty telling story of how
well, or poorly, AOD portfolio is performing.
I am scared about the reduction in dividend as well as the decline in net asset value. If you combine a reduction in dividend (if it happens) which means reduced net income and a lower NAV which means they are taking continuous losses on their dividend capture transactions then AOD is not a buy unless it sells at a discount to its NAV and that number which is $5.70 is a scarey number. I am not going to buy until I see first half financial numbers in mid to late June. I may be wrong and may miss out but all the signals AOD is sending make me very cautious. Contrast AOD with WEA a fund run by Legg Mason. WEA generates .13 per month in Net Investment Income. It pays .11 per month in dividend. That is .02 excess revenue over payments. In addition it has a UNI reserve of .89 per share. That means WEA can pay the same dividend for the next eight months even if it has no investment income for that time period. WEA only yields 9.5% but I believe that yield is safe and that the yield at the end of the year will actually be higher due to an increase in dividend and/or a special year end dividend. They did both over the last twelve months. A fund manager that runs a fund in that conservative style generates a lot of confidence on the part of its shareholders. In addition WEA reports financials quarterly which gives shareholders more frequent updates. The frustrating thing about AOD is that it only reports twice a year. Six months is a long time to wait when NAV is declining from $6.82 to $5.70. There is no reason AOD could not report more frequently which would end a lot of the debates that take place on this board.
If you buy at $7, good luck to you.
I also would like to thank rlaimbeer for all his excellent post.
Last time they announced the dividend on Feb. 19 1 day after ex.div.
The price of 7$ looks like a good price even if they lower the div to 9ct. What is your opinion?
cmeyner: The reason for buying this fund (it is not a stock) is not based on anything anyone on this board says or does not say. It should be based on the hard real life financials. Those financials say that for the last reporting period (the last six months of their financial year) AOD was earning .099 in net investment income per month. They were paying .12 in dividends per month. They had $44 million in undistributed net income reserve to cover the deficit of .02 per month. That means they are taking just over $4 million per month out of the UNI reserve if the net investment income for the first six months of their new year is equal to .099. If it is less than .099 then they will run out of their reserve sooner. If they are able to generate more than .099 per month in net investment income per month then they can pay the .12 dividend for a longer period of time. My guess is they are earning less than the .099 per month in net investment income and therefore will be forced to reduce the dividend with their next announcement for the next three months this coming Friday or Monday. We will learn about reality when AOD releases their first half financial report the middle to the end of June. You should let those results determine your actions, not the hear-say that is provided by most of the people who post on this board. One thing is for sure, the future is murky enough that it makes sense not to be holding AOD prior to the X date and prior to their announcement on the next three months of dividends. For those that are holding AOD they risk a substantial decline in market price which may be as low as today's NAV of $5.70.