Note: "During this suspension period, the Fund will pay out, on an annual basis, any dividends or distributions required by the Internal Revenue Code of 1986, as amended." and in 96 through 99 before the 8% payout policy, they made substantial year end payouts; moreover, their year end payouts even with the Quarterly were often large. So, I expect them to continue to make year end capital gain pay outs. Comments?
They would have to make capital gain payouts if the stocks are sold and the gains are REALIZED. But these gains could be offset by losses in other holdings that are also realized.
As an IRA holder of HQL I have no complaints about the change. Where I might have fewer shares because of the re-investment oppurtunity lost, the shares I do have will have a higher value. Won't have the .20 (or whatever) coming out of the NAV every quarter.
It looks like your positive feelings are primarily from the viewpoint of someone looking to acquire shares not necessarily an existing shareholder. I anticipate that it will be a mild negative in the short run as a certain percentage of the present shareholders were probably invested for a predicable income stream. However, that said I think the present HQL 18% discount to NAV will help put a floor in.
Unlike previous times when mergers occur because of excess liquidity, I think the current round of mergers in healthcare and especially bipharma are valuation and pipeline driven. HQH and HQL provide a good way to play this trend at a discount.