12 may be a bit pessimistic. It looks like things may have stabilized a bit in the bond markket - at least until the threat of ending the QEs is more imminent.
I still think that we will be winding down QE3 by december and EMD will be trading south of 12 - but until there is more tangible evidence to support that I suspect that 13-13.5 would be a nice buying range.
Good luck to you. At least this one is not leveraged, which means you are probably correct your dividend is safe.
I sold in January north of 15 - obviously a bit early. At that time there was a plethora of articles detailing how Emerging Market Bonds were the only place left to get a decent yield. I take that as a sell signal
Consider the following EMD makes about 1$ a share each year in emerging market bonds. Lately the market has wanted a mere 6-7% for these loans - hence the NAV near 15.. Historically emerging markets are usually more than 10%. Assuming the bonds reprice to 9% yield than EMD will have a NAV of about $11. A NAV of 12.5 reflects an 8% yield. EMD bonds yield 7% with a lifetime to maturity of 7.5 years.
Many income oriented CEFs also use leverage. Borrowing at 0.5% can substantially increase the earnings. But as soon as tghe cost of short money goes up the funds see there profits drop. This combined with the increase in expected yield has been a double whammy on some CEFs. EMD does not fall into this category.
As for EMD, I am still waiting. If this marks the end of free money then most bonds will begin reverting towards a much more normal yield. Even 3.5% on the ten year bond probably means 8.5% on Emerging markets. It may be that the end of QE is not in sight in which case things will turn around quickly. My bet is that QE is ending by the end of the year and END will be 11 to 12.
Despite JPC being very similar to JPS, JPC has performed better and the NAV has outperformed as well. However over the past few days both of these have had significant selloffs - as have a variety of CEF that are income oriented and leveraged. (e.g. RIT, EMD, SCD).
I was early on the call for this pull back (I usually am) and got out in January. These funds take a double whammy when interest rates rise. First, the price drops to reflect the higher yield expectation, and secondly the income available for dividends drops as the cost of short term leverage funds increases.
In addition, despite (or maybe because of) the small institutional holding of these funds they do seem to react to the downside very quickly - often much more quickly than the NAV. Of course if the reaction is premature or just plain wrong this creates a nice buying opp.
Great Basin Gold (formerly GBH on NYSE) filed for creditor protection this spring. They recently sold the Hollister Mine and the Esmeralda Mill to Waterton Global Resources. The Hollister Mine produces the worlds richest ore (32g/T) and the Mill captures 92% of the gold... And they went bankrupt. The sale was approved by the court on 30 april and closed last week. Waterton acquires and improves mine ops and formerly vetted all acquisitions for Barrick Gold.
With mine operations like this available for purchase at bankruptcy prices why should anyone consider buying Courageous lake?
If there is a buyout coming it sure seems like Rudi is waiting for an extremely low price. And short squeezes usually occur when the price rises. This baby is down nearly 75% over two years. No point in waiting around anymore. I think this will go to zero - but why wait. There has got to be another "goldmine" out there somewhere.
Sentiment: Strong Sell