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Eaton Vance Tax-Managed Diversi Message Board

  • mike57dk mike57dk Jul 15, 2013 11:57 PM Flag

    Semi-Annual report - Sliced / Diced - explained ....

    Just reviewed the 4/30/13 semi annual report is the scoop - by-the-numbers:

    One year Trailing Total Return = + 22.60% ....6 month return = +16.05% based on market price.
    S&P 500 index return = + 16.89%.....6 month return = +14.42%
    Overall net Increase in net assets from operations = + $171,878,062
    Net assets are up 4.3% from fiscal 2012 year end to $1,725,712,000 ( not too shabby )
    Total Income for preceding six months = +1.148 per share ....compared to the entire fiscal 2012 where earned $1.20 per share ....( ETY has NEVER earned more than $1.70 per share in its history ...and they just published portfolio income of $1.148 for six months ....that's a very good sign )
    Over the last six months ...ETY has experienced a net change in UNREALIZED portfolio appreciation of + $162,684,828 ....
    ETY is reporting a net realized loss on its books of ( $455,705,185 ) and net unrealized appreciation of + $450,252,878....These were long term carry forward losses from 2008 mostly ...but fund management can now literally sell almost the entire unrealized appreciation amount in the investment portfolio ..and NOT create a single penny of capital gain taxation to pass thru to us
    Share buyback continues - ETY reports that it has repurchased about 2,749,000 shares at a cost of $26,262,605 ..paying about $9.47 per share over the last six months on average ...and $9.62 per share in fiscal 2012. They have authorization to BUY-BACK at least 12,000,000 more shares ...and they are " booking " an average 13%+ discount on the buy-backs ....( good /smart use of their cash )
    Option Strategy - ETY management is writing / Selling S&P Call options each month about 47% of the portfolio value ...typically opening the position ..and then closing it out after 13 days of duration. ( This defensive measure helps to protect the valuation of the 126 stock portfolio from sudden down-days in the market ....( June 2013 for example ) -
    Portfolio Turnover - next post

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    • Semi-Annual report - Sliced / Diced - explained Part Two :
      ETY is SELLING stocks at fairly robust 44% of portfolio rate when annualized ....This generates about $764 million in gross proceeds from stock sales each year ...they can initiate new positions, buy back additional shares of their own stock, pay dividends with this large amount of cash ....
      I believe they are selling off their LOSING positions, holding most of the winners and creating a massive amount of Net Unrealized Appreciation - + $450,252,878 at last report ....( makes them look very good )
      Fund management is actually Breaking even or making a small bit of money on the options positions - as they took in $56,809,000 in options premium over the last six months ...but had to spend $54,559,000 to close them out matter as the 126 stocks in the investment portfolio appreciated substantially ...It will be very interesting to see the next report ...and how those S&P Call options performed in the sharp down market we saw in June ...they should have appreciated immensely ...

      Summary - A very healthy report card from ETY ...They are OUTPERFORMING the S&P Index rather well on a trailing 6 and 12 month basis ...
      They are earning $1.14 per share over the first six months ...and having to pay out $0.59 in distributions the solid dividend looks safe for the immediate future ....
      The Discount to NAV has narrowed somewhat but we still have roughly a dollar per share discount on a market price of $10.62 ....( not shabby either )
      Fund management remains committed to buying back millions more of their own shares ....which should benefit the shareholders ...fewer shares = better market price ....
      Oh ...almost forgot - APPLE is no longer their top holding ....Gilead Sciences composes 2.3% of the portfolio ...APPLE is only 1.9% and GOOGLE is 2.3% ....
      Hope this proves helpful ....regards - Mike

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