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Alpine Global Premier Propertie Message Board

  • puttosleep puttosleep Jul 24, 2008 3:03 AM Flag

    Realized Securities Losses

    I just finished reading the semi-annual report and it looks like they had massive losses in realized securities losses over the first half of the fiscal year. More than 200 mil. I would guess this is from selling securities at huge losses and losing big on their dividend capture strategy. If this is correct, they are losing 2 to get 1. Any thoughts?

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    • These funds have an abysmal bear market record as far as sustaining their NAV is concerned.I sold my awp several months ago but held on to aod. To me this fiasco shows clearly their dividend capture model is great in bull markets but flawed during market corrections. Anyhow, I doubt if they are going to zero and they will always pay a decent dividend so it seems to me you just take your poison and hold.Falling world markets probably mean you can expect more of the same for months.A market rally is the time to get out-not now. When looking at other CEFs I would have to say their NAV loss is pitiful even after taking dividends into account.However if you get out now you are guaranteeing a big, big loss whereas holding puts cost averaging on your side as the dividends are paid. Should have sold all Alpine Funds earlier but too late now. RRW

    • I don't think dividend capture is primary culprit. AWP is invested in real estate and the market has tanked world wide.

      How a dividend capture affects NAV is a legitimate question. I've spent some time looking for an analytic and authoritative answer and have found none on line.

      I undertook a study comparing the NAV of an open end fund to a CEF practicing dividend capture to try and measure this effect.

      Alpine has two international real estate funds engaged in very similar markets. One is the open end fund EGLRX and the other is AWP. There are many factors affecting the NAV of a fund engaged in international real estate. In this case we have the same management, the same markets, similar holdings and almost the same expense ratio. So it's possible to factor out many of the suspected effects and attempt to measure how dividend capture affects NAV.

      The hypothesis H1 is XAWPX is reduced by dividend capture vs. the null hypothesis no NAV reduction is detected.

      The procedure I used was to find the difference in adjusted closing price for EGLRX and XAWPX and plot the trend line. If the difference increased then conclude dividend capture reduced NAV. Otherwise apply the null hypothesis. I downloaded the last 65 weeks closing price data for EGLRX and XAWPX into a spread sheet, found the difference in NAV and checked the trend line.

      AWP has paid over two dollars in dividends during that time period so I thought it reasonable a pay out of that magnitude would have a detectable effect on NAV.

      The result surprised me. The NAV difference between EGLRX and XAWPX over the last 18 months actually decreased ! It also has very distinct downward trend ! I haven't done a correlation or regression analysis. For example, the adjusted closing price on 5/8/2007 for EGLRX and XAWPX was $42.90 and $19.01 respectively for a difference of (42.90 - 19.01)= $23.89. On 7/28/08 the adjusted closing prices were:
      $28.61 and $10.36 for a difference of (28.61 - 10.36) = $18.25.

      My conclusion is the effect of dividend capture on NAV is so small compared to other factors that it can't be measured by this study. A much longer time period may be needed to see an effect.

    • I agree, But, if the explanation is valid, they are repositioning to what they think are the most undervalued properties relative to the REIT prices.

      If they are doing this with proper analysis then this is good for the long term.

      Hard to tell at this point, but I wouldn't read it as an overall negative either.

      The yield is nice and looks sustainable to me, at least for the next 6 months.

      I plan to continue to hold and may add a little more.

    • I saw that too. They had a lot of losses and they knew to regroup and play some safe investments. Did they make any money? Another 6 months like that and they will be at 5 bucks. I am mad about that their massive losses, that was mismanagement. The best bet for AWP until they start making money is buyback the stock. At least they are getting a dividend too.

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