The payouts of pdi and all the other funds are based on NOTHING other than what the management decides to pay. So far the payouts of phk has resulted in half of the assets gone, while pdi assets have increased approx $6--25% (AFTER payouts including generous year end bonuses which result in higher payout than phk!) since start may 2012.
Cornerstone, incompetent??? Apparently all those investors bringing the premium up to approx 100% three separate times believed in management, just as you believe that pimco management is worth 50% premium for phk management, and the same wonderful management is worth minus 10% for pci management. It does not compute...danger...danger...(in robotic voice...lol).
And like lemmings, pdi is rising (up 2.04%) on gross's recommendation (on surprisingly small volume of 152K by 9:42.)
and you left all your money on the table earning less than zero since barrons article in 2012.
I guess both barrons article and Bill Gross himself recognizes the value of buying and holding closed-ends at a discount. You dvd, and uk take the opposite side--these funds sell at outrageous premiums because they are worth it--as in cornerstone, time will tell, and over the last two years, phk's performance told a sad story compared to pci and pdi, who knows what the future will bring.
to help you with your abominable ignorance, uk, cornerstone is a fund manager of cornerstone closed-end funds.
Not too long ago, they were trading at 100% premiums, the top of the closed-end premium funds universe (sort of like phk and pgp are today). Then, without warning, both the price and premium fell, sometimes fast and sometimes like slow water torture.
Of course,past history means nothing to those buying at premiums--100%. Their motto is this time is different, who cares about ancient history???--lol and while you cant spend nav, this stock (crf) paid very high distributions (usually 15% plus), and is trading at 100% premium for a reason--usually superior management (lol). Well with crf the investors/holders were fooled at least three times--shame on who????
In fact, crf, over ten years has had a negative total return (according to cef connect) while sp up approx 60% (with divs probably more than 100%) and crf is mostly stock fund, and the premium rose and collapsed many times. The distribution rate is now 17%. and the price has dropped from 2007 $40 to current $5, pdi not bad now, but pci, which i have now, is better value.
Regardless, pdi will probably jump monday on bg's recommendation.
This is guru Gross picks for 2014, the 2013 were pretty lousy.
But note that he DID NOT pick phk or pgp,
and that he DID mention in his discussion about his closed-end picks about the discount as a POSITIVE attribute of the funds. I cant read his mind but even he must realize that the fund he manages, no matter how good the management at 50% premium will NOT outperform by the 50% required!!! to be average. And he is not responsible for the "market" of foolish investors overpaying for the fund.
funds trading at a discount (always for a reason)----are dogs--uk
And what was the reason for cornerstone trading recently at 100% premium, and spain fund (years ago) trading at 300% premium. How was their track record after reaching their heights, and how is track record of phk over the last approx two years (zero or negative return post barrons story ) compared to the "dogs" pci and pdi which are trading at a discount for a "reason"????? (Note cef connect and other sources sometimes dont (or cant) adjust fund returns properly for distributions/rights offerings/tender offerings, etc).
In fact, when did funds trading at a premium EVER beat those dogs trading at a discount???? How often did the premium funds collapse--often,-- cornerstone being one example, while phk is a work in progress). And when did the "discount dogs" outperform their premium peers???--almost always.
and my "unworthy parameter" as you say uk, is the fact that over the past two years or so investors in this "wonderful" product have made exactly ZERO--less than zero if you count taxes.
Since nav is irrelevant (as you say) and you cant spend it, I am thinking of selling you a fund with zero nav and a price of $10, managed by me, and your losses are limited to your original investment. I plan to borrow money from willing shareholders each month to pay out dividends and pay my expenses--deal???
If phk has not distributed capital, how come the capital pot has decreased in value from $15 to $8???
Where did the $7 value go?
all in a period of generally falling interest rates????
If you look at the pimco announcements, they pay whatever payouts they want to, regardless of "earnings" or "profits" and many of the distributions are return of capital. PHK capital has been reduced by approx 50%since start of fund. And I am always hoping that the stocks I am short in pay HIGHER distiributions, a $14 distribution from pgp would knock the price down by $23, instant profit on my short position of $9. A distribution of $8 for phk would knock the price down by $12. And pdi has a far better track record since it started (recently) than phk. Of course,for current holders FUTURE results are much more relevant than past ones.
I guess someone has to take the fall for a lousy performance, and for clients $$$ fleeing from main bond fund.
Yes, in a good year management claims to be geniuses, in a lousy year they blame it on the market--heads we win, tails customer loses.
I have nothing against most "gurus" because no one is forced to buy into their garbage opinions and investment products. If you want to be an investment "groupie" that is your choice. If you want to spend your own money on psychic readings, religion, gambling, load-funds, etc. , that is your choice.
However, I do resent that government and private pension plans decide on behalf of their membership to fund these subpar investments, using other people's money (such as mine), often in exchange for a "free lunch" and/or other consideration, from salesman masquerading as investment advisor/guru.
agree with you devil, on this one, If the price grows faster than nav, eventually, your 10% "distribution", will be 20% of the pot, and that is a tough nut to crack, --
especially compared to another fund paying the same 10% distribution which is 10% of the pot.
And for phk the nav is underperforming.
For those who cant think in the "abstract" or "theoretical" (or refuse to do so and believe in magic) see cornerstone at 100% premiums in recent past for more "concrete" real world examples.
Again, congrats to bill gross who managed to have a negative year (2013) picks in barrons roundtable in a year when sp total return was more than 30%. He is certainly adds to the value of phk management--lol.
The great and powerful wizard of wall street had four picks last year in barrons round table, three out of four were negative, with gold pick down 27%, and the positive was up only 5%.
He was asked his BEST picks, and had his choice of the whole investment universe.
And I remember that some gold touts were predicting $5000 whithin a couple of years (back when gold was peaking near $2000)
Obviously such a mighty stockmarket seer is well worth his management fees and whatever premium there is on the funds he manages. In fact, he should get a bonus (lol) because he did not pick 4 out of 4 losers--in a year when the s-p and most major indexes were up in the 30% range.
I have nothing personally against this guru, or any other financial advisers (and many other barrons round table advisers had poor records) or hedge fund managers, but most (even before fees) have mediocre performance (at best). Some investors need hand-holding and should pay for it. And I read that in 2013, the average hedge fund well underperformed the indexes.
at this time pci is better buy than pdi, and pci has no message board, but regardless,
I am comparing pci and pdi to phk as example of the lousy performance of a closed-end fund (phk) selling at a premium, over time, compared to a similar fund (in this case with the SAME management and investment goals) selling at a discount.
Those who believe in magic beans argue that, by using magic beans, the fund with the same management and investment goals, with the addition of magic beans, can match or outperform its peers.
There were many other examples of poor performing funds a premium, cornerstone being the most egregious (at 100% premium) in the recent past. PHK never reached the 100% plus mark.
PHK since May 2012 at 14 has ZERO or negative return (especially after taxes in taxable account).
PDI since founding MAY 2012 has increased 17% in value PLUS dividends of $5.57 (NOTE cefconnect chart is wrong!!)--approx 40% in 1.75 years. The nav has increased a few percent more than that.
But, hey, phk and pgp are magic beans that are worth much more than ordinary beans since by some magic they can grow faster than ordinary beans, although their growth recently has been anemic!!!
my broker never charged vig payment (just dividends subtracted). I dont know how many people that are longs on this board ever received a "vig" payment other than you uk. I certainly never received (or asked) for one for my long positions in other investments. The special dividend, or year end bonus which was a lump of coal for pgp and phk holders, made pdi have better distributions without having return-of-capital distributions.
I know, the past results are all bs (in your opinion) and this time is really different (LOL)!
I would short when the premium reaches 60%( if broker has shares to lend) at that time. I have lots of other positions, eg long peo.
The "yield" is less, but pdi in particular has extra cap distribution of .86 and $1.30 two years in a row. And phk has capital return. But the "yield" is arbitrary number chosen by management (read your prospectus) which has no relationship to actual "earnings" or growth of the fund and can be return of capital. With its high yield, the principal of phk has lost 50% since its start approx 10 years ago.
cornerstone was selling at 100% premium with high teen % yields, and it must have had a big fan club, like you beach,saying "this time is different" and "expensive but worth it" and it was a big loser for the long investors over time. I am not advocating for pci or pdi, but just saying that between the three phk, pci, and pdi, phk and pgp will perform worse over time.
Since barrons article in 2012, the shorters have beaten the casino (longs) handily. The shorters have also beaten the cornerstone casino in the past which yielded above 15%!!! Will this history repeat itself, or is this time DIFFERENT????
As far as casino, it WAS possible to beat in blackjack, and I did, until casino changed rules to multi-deck, compressed max-min bets, no entry in mid-deck, no surrender option, dealer hit on soft (with ace at 11) sixteen, etc.