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Gabelli Utility Trust (The) Com Message Board

  • clem_haskin clem_haskin Feb 22, 2010 1:01 PM Flag

    Closed End Fund trading?

    Are CEF's ever available to short? This would make an excellent prospect; but there are no shares available. Is that a rule on CEF's?

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    • Might want to try ERH to short. Another leveraged utility CEF at a bloated 40% premium and lowly 8.4% yield. What is it about these funds that allows them to trade at such absurd premiums? And LEVERAGED no less!

      I mean, you can buy equity CEF's like EOI or EOS that have 10.5% to 11.5% yields, non-leveraged, pay monthly and are at discounts. And they have much better NAV performance and will hold up better in a down market. The valuation discrepancy is so ridiculous its off the charts.

    • Clem: The fund's past year's yield was less than 1 1/2% (see my post of 2/5/10) GUT is at 7.89, NAV is 4.97 so is selling at a 59% premium. You're not the only one who would like to short it.,,,,, but there are those who just love to receive Return of Capital....I wonder if any of them have asked Gabelli where the money comes from that pays the ROC?

      • 1 Reply to spunkydunky28
      • Hardly ever available to short. Not as a law or rule, just because the demand is so high for short shares of this and other high premium CEF's. Even if it becomes available, beware! The broker because he is lending it to you to sell, can also ask you back for it anytime. Not because your in a margin call balance wise, but just because your broker's supplier of the shares has asked for them back. And when the broker's got to go fishing for shares to pass back, they'll hit the smallest clients first and force you out at a loss because its being squeezed higher. Then a while later the big players will benefit after it has plunged because their shares weren't called back. Not at all fair, but its the game the market plays on the small guys. So my recommendation is to avoid the short if you can get it... unless the SEC can figure out how to make things more fair for the small player.

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