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Alpine Global Premier Propertie Message Board

mike57dk 3 posts  |  Last Activity: Jul 12, 2016 2:01 PM Member since: Oct 30, 2009
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  • Reply to

    ETY - Semi-annual report broken down ....

    by mike57dk Jul 9, 2016 1:19 PM
    mike57dk mike57dk Jul 12, 2016 2:01 PM Flag

    Good thought ...and pretty much exactly why I try and figure out where they get the cash to fund that $155 million per year dividend requirement ....they have about $134 million in Unrealized appreciation on the books , plus standard dividend stream income from the 58 stocks in the portfolio ( pretty much a wash when you subtract the investment management fee and other fund expenses though ) ....
    They are sustaining about an 80% annualized portfolio turnover and a quick , back of the napkin calculation, makes the proceeds from selling 80% of $1.6 billion in assets at roughly $1.28 billion ...so they have plenty of cash on hand thru normal proceeds of SELL transactions ...and doubtless are using a portion of the proceeds to fund the approximate $13 million per month of dividend distributions ....in their managed distribution program and can easily just call a big portion of the dividend non-taxable ROC ....
    Another metric to evaluate the sustainability of the $0.084 per month dividend is to look at the annualized dividend distribution as a percentage of the $11.44 NAV ( ETY pays $1.008 per share annually / $11.44 NAV = 8.81% they need to EARN from portfolio assets ...) Not an impossible task and certainly achievable in a sluggishly upward market ...like we have seen thus far in 2016.
    Finally, historical perspective and lessons learned are a BIG FACTOR with this management team ...They slashed the quarterly dividend from $0.406 per share to $0.29 per share back in Sept 2011 ...a 28.5% cut ...and surprisingly investors didn't punish them and again in May of 2012 with a further 12.7% cut to the dividend ...and investors stayed with them as the cuts were prudent given the market. EV management can and will cut the distribution when conditions demand it ...It seems likely they can sustain the dividend as long as the NAV that they are working with only requires a sub 9% performance ....
    Just my opinion ...but hope it proves helpful -
    Thx - Mike

  • Reply to

    ETY - Semi-annual report broken down ....

    by mike57dk Jul 9, 2016 1:19 PM
    mike57dk mike57dk Jul 9, 2016 1:43 PM Flag

    ETY - continued -
    and the annualized turnover would be right at 76% as compared to 85% in 2015 , 83% in 2014 ...so we can impute that fund management is continuing its tactic of selling appreciated stock positions as soon as they get past the 365 day minimum holding period ...passing thru to investors a 15% capital gains tax rate ...HEY ...it beats the socks off paying typical marginal tax rates of 25% or more ....and is a key feature that may tend to attract investors looking for a good / tax efficient yield.

    No information on Return of Capital in this "half time" report ...but recall the management team's earlier tendency to re-characterize dividend distributions from ROC to capital gains in 2015 and 2013 ....to ZERO ROC ...
    As I have speculated before, with ONLY 58 stock positions in their fund; and an 80% annualized portfolio turnover ( three years in a row now ) , it must be a delicate balance for them to have to maintain ...selling positions AFTER they clear the 365 day holding period and sustaining the $0.084 per share monthly dividend distribution ....all in a tax advantaged / favorable manner ....

    At this writing , market price is $10.50 per share with an NAV of $11.42 ...to equal an 8.04% discount to NAV ...( am suggesting a NORMAL discount rate of -5% ) so ETY is trading at an increased discount as are many other closed end funds ....WE are getting a current market YIELD of +9.6% on this fund ...much of which will be tax advantaged capital gains or non-taxable ROC when the tax forms are sent out ...

    Summary - Good way to HOLD those TOP TEN BLUE CHIP stocks ...at a nice discount to their inherent market value ....while collecting the + 9.6% annualized dividend yield ...much of which is automatically reinvested back into buying more shares ...sort of a DOLLAR COST AVERAGING methodology with 12 new purchases per year ....Over time ...your 9.6% per year reinvestments of the dividend will REALLY add up to a significant number of new shares ...

    Sentiment: Buy

  • Received the paper copy of the semi-annual report ending April 30,2016 and here are some takeaways along with some opinions ...Hope they prove helpful.
    Performance - Trailing six months - ETY - ( -4.15% ) at market price VS S&P 500 at +0.43% over the same period.
    OK ..that is not good ...but wait ...performance trailing from Jan 1, 2015 - Jul 9, 2016 = +8.23% for ETY and + 6.77% for the S&P 500 index with dividends reinvested. Call it a 1.51 year measurement and that makes the relative performance in hard TOTAL RETURN dollars much easier to accept.

    ETY management reports that the fund holds 58 total stock positions in an aggregate $1,662,967,228 in value.
    Top positions are : Alphabet 4.6%,GE 3.6%,Amzn 3.3%, MSFT 3.2% , J&J 3.1%, Visa 2.8%,Apple 2.7%,Danaher 2.5%, NXP semi 2.3% and JP Morgan 2.3% - these 10 stock total 30.4% of the fund ...

    21% of fund investments are in INFORMATION TECHNOLOGY, 14% FINANCIALS, 14% Consumer Discretionary and 14% HEALTH CARE ....

    ETY continues to SELL CALL OPTIONS against about 48% of portfolio with an average 18 days to expiration.

    Some areas of concern : ETY has LOST value ...a NET decrease in value over the six moths ending April 30 , 2016 of $119,551,688 ....They scored a net LOSS of $86 million during the first six months of their fiscal year from investment transactions as compared to a GAIN of $121 million the previous fiscal ending year ....Their net investment income is WAY DOWN ....from $31,557,069 for fiscal 2015 to a measly $8,792,856 for the first six months of fiscal 2016 ....OUCH / OUCH ....but much of this can be attributed to the volatile market in the early months of 2016.

    ETY does have overall NET UNREALIZED APPRECIATION on its books of $135,692,872 which is a SOLID / GOOD sign ....and gives management the ability to SELL and pay the estimated $151,177,773 annualized dividend distribution in the form of long term capital gains ...

    Portfolio turnover is still a ROBUST 38% for the six month period

    Sentiment: Buy

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