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Alpine Global Premier Propertie Message Board

mike57dk 9 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 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 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 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 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 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 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 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 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

  • Reply to

    Buying point achieved - Opportunity here

    by mike57dk Jan 16, 2016 12:12 PM
    mike57dk mike57dk Feb 12, 2016 3:31 PM Flag

    Thanks for your question ...Short answer- refer to the 2015 Annual report ( audited ) and see where EV management " recharacterized the entire fiscal year distributions as capital gains and income ...AFTER ...sending out monthly reports indicating that the dividend distribution was highly concentrated in ROC ...They ARE allowed to do this ..and have done so in the past ...2013 for example ...
    What are they doing ? even better question ..they have an 80-85% annual portfolio turnover and need to get the all important holding period of their some 55 stock positions to 365+ days order to QUALIFY for Long Term Capital Gains tax treatment ...I suspect that might be harder to accomplish when you are effectively SELLING 80% of your overall portfolio every 12 months ...

    Reference the actual name of the fund : Tax Advantaged Income fund ...and LTCG are definitelly tax advantaged as compared to Ordinary Income or Interest Income ...ROC is not taxable they are simply returning some of your original capital investment.

    The long arguement AGAINST funds with a high degree of ROC in their distributions is that it will eat away at your net original investment ...Ok ...look at page 12 of their 2015 annual report ...

    NAV by year - 2015 - $12.34 . 2014 -$11.87 , 2013 - $10.96, 2012 - $10.83 , 2011 - $12.21

    ETY is NOT " eating " their own NAV up with destructive ROC as evidenced above

    Distributions by year - 2015 - $1.012, 2014 -$1.012, 2013 - $1.096 , 2012 -$1.085 and 2011 - $1.274

    ETY has distributed $5.479 over the last five years ...some was definitely ROC but the NAV has remained fairly stable ..even increasing from 2012 thru fiscal end 2015.

    All numbers audited and certified by Deloitte ...

    Hope this helps answer your concerns -


    Sentiment: Buy

  • In an earlier posting, ( 11/6/15) I suggested that a $10.35 market price might be a logical point to try and " bottom fish" for additional shares of ETY.
    With the additional trouble in China and the glut of oil supplies driving down the cost of oil ...The NAV of ETY, despite owning literally thousands of defensive S&P 500 index Call options each month, has steadily declined to $10.96 per share NAV with a Friday close market price of $9.88 per share.

    This inputs a 9.85% discount to NAV on a closed end mutual fund that provides $1.008 per share in annualized dividend stream ...that implies a forward looking 10.2% yield.

    In calendar year, 2015, ETY DELIVERED a Total Return of + 9.92% versus the S&P 500 index Total Return of +1.31% ...My on-going contention is that this impressive out-performance is largely missed or ignored as the typical brokerage statement does NOT report Total Return ...preferring to show the $11.22 per share starting price on 1/01/15 and the $11.20 year end price ...essentially a flat to negative performance during 2015 ...except that , with dividends reinvested, the owner has almost +10% more in value than at the beginning of the year ...

    The fund EASILY earned its dividend stream in fiscal 2015, according to their annual report, utilizing ZERO Return of Capital and paying the rough dollar per share from invetment income and realized capital gains exclusively.

    ETY has been averaging a trailing five year rate of return of + 10.34% ...NOT too shabby for a mutual fund and especially important in view of the dismal investing year of 2015 and the horrible start of 2016.

    The fund holds ONLY 55 stocks ...with Apple, Google, GE, DIS, Visa, Gilead, Amazon, J&J ,JP Morgan, and Danaher composing 32.5% of the entire fund ...!!!! and now on SALE for approximately 10% discount to their Friday closing value.

    Move ETY to the top of your WISH LIST ...get PAID while you wait for a recovery ...10% is good ..

    Hope this proves helpful -

  • ETY continues to outperform the benchmark S&P 500 index in a meaningful way - + 7.95% ytd with two additional dividends scheduled to be paid in 2015. Realistically ...we can anticipate a total return of about 10% for the calendar year as compared to the index which will likely finish around + 5% for the year.

    NAV has IMPROVED + 5.36% for the year ...and the fund has used ZERO Return of Capital to make the high monthly distributions, preferring to utilize 80% long term capital gains to earn the dividends.

    The fund is trading at a ( -7.33% ) discount to NAV at this writing with a 52 week high of $11.96 per share and a low of $9.95 per share ...

    The fund started 2015 priced at $11.22 per share ...and is around $11.25 today ...

    That is potentially important because many investors will be " shopping " their portfolios for year end tax losses to take advantage of the $3,000 capital loss deduction that current tax law allows holders to take each calendar year ...

    My contention is that a small but significant number of investors will DUMP ETY prior to year end and because the way portfolio statements are reported ...many will believe that ETY has UNDERPERFORMED or done very little in 2015 ...This belief just tends to hammer mutual funds at year end ...but Closed end funds are specifically prone to 4 th quarter sales ...

    Consider a logical " Good deal " price for ETY I am projecting that we will get something very temping in the coming weeks ...

    With a current NAV of $12.14 ...and a discount of -7.33% ...a slightly larger discount of say 10% would impute a $10.92 market price ...

    A general market " bad day or week " would likely drive down the NAV to the $11.50 range and applying a round 10% discount ...suggests a $10.35 market price ...which we actually saw on 8/24/15 and again on 9/29/15 ...

    The investment thesis being that the new year will rapidly see a quick recovery in the market price least back to the $11.25 present level ...
    Buy at $10.35

    Sentiment: Hold

  • From my earlier post on Sept 5, 2015 :

    ETY - on a YTD basis has a Total return of + 2.16% versus the S&P index of ( 5.38%)

    I was speculating that any market recovery in the fourth quarter of 2015 would prove VERY beneficial to the market price of ETY, particularly since the small positive YTD Total return of + 2.16% thru 9/5/15 was much better than having to make up the ( 5.38% ) negative Total return of the benchmark index over the same timeline.

    Ok ...Its 10/19/15 at this writing, and here are the Total return results as measured by Dividend Channel and annualized thru the end of 2015:

    ETY - + 7.71% with dividends reinvested and annualized for the 2015 calendar year at + 9.84%

    S&P 500 Index - + 0.40% thru today with dividends reinvested and annualized at + 0.51% for the 2015 calendar year ...( ouch )

    Wait ..what does this really mean ?

    ETY is likely ( barring another market meltdown prior to 12/31/15 ) to produce a +10% Total Return for the year ...The popular S&P 500 benchmark index will likely be producing an anemic money market like return of + 0.51% ...

    We shareholders of ETY, a long suffering bunch in many cases, looked to be VINDICATED by 2015 ...earning + 10% and cumulatively + 22.08% over the past 1.78 years of duration whereas the index delivered + 14.96% over that same timeline ..a 716 basis point difference in favor of the Eaton Vance fund.

    When your fund is punching out +10% year over year , especially when the market is " frothy" and subject to big Up and Down days ... ETY has proved itself as a dependable , monthly income and appreciation fund.

    Simply stated ... We have + 22.08% MORE money in present value than we had just 1.78 years ago ...For Mutual Fund investing ...with big cap stocks and defensive index Call options ...That's about AS GOOD AS IT GETS ...

    Hope this proves helpful ...your comments always appreciated ...Thx

    Sentiment: Hold

  • Reply to

    Stock Ownership - TNXP

    by mike57dk May 27, 2015 12:13 PM
    mike57dk mike57dk Sep 5, 2015 11:48 AM Flag

    paulstutz - Thx for the note ...for some unknown reason Yahoo was deleting my ETY update posts , especially the semi annual report update ...Oh well
    I just posted a quick performance review on the ETY message board ...hope it helps ...
    I continue to hold and reinvest dividends in ETY I think the investment strategy is really good for this crazy / uncertain market ...and the monthly dividend stream can solve a lot of performance anxiety
    Thx - mike

  • With the carnage in the equity markets and August end brokerage statements out in the mail and sure to cause great consternation; here is a little perspective to keep in mind BEFORE making the decision to tell your mutual fund managers ...' YOU'RE FIRED "

    ETY is a stock based fund that SELLS S&P 500 index CALL options each month ( thousands of contracts ) to hedge against sudden market downswings ...the idea being that as the value of the stock portfolio declines rapidly , the value of the CALL options will INCREASE dramatically ...In a great upward moving market; the investor will see ETY under perform stock indices such as the unmanaged S&P 500 , but in a turbulent market, one filled with -300 and -400 down days ...funds in this Option Income sector should do ok ...( NOT great , but not destroyed either )

    OK - lets see how that has worked out in reality by measuring Total Return as calculated by Dividend Channel with dividends reinvested.

    ETY - on a YTD basis has a Total return of + 2.16% versus the S&P index of ( 5.38%)

    ETY on a trailing 1.67 year basis ( Jan 2014 -present ) has a Total Return of + 15.79% versus + 8.34% for the popular index.

    Look ..Getting a tiny positive Total Return of +2.16% after an eight month investment duration sure does not sound like much, until you consider the S&P 500 index holders ...down over 5% on a YTD basis and facing the mathematical reality that they will need to get a +10% performance from the index ...JUST to get back to break-even from Jan 1, 2015 ...whereas holders of ETY stand to participate in an market recovery without having to make up for losses on a YTD basis. ( That's BIG , in my opinion )

    NAV performance - ETY is trading at a comfortable -5.67% discount to NAV whereas many funds in the closed end universe are at double digits ...( AOD - is trading at a whopping -15.18% discount to NAV )

    Summary - Continue to HOLD and Reinvest dividends ..but NOT a compelling BUYING opportunity here

5.79+0.07(+1.22%)Jul 29 4:00 PMEDT