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Eaton Vance Tax-Managed Diversi Message Board

mike57dk 8 posts  |  Last Activity: Jan 20, 2015 9:14 PM Member since: Oct 30, 2009
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  • Reply to

    Fiscal 2014 - ETY metrics with opinion added

    by mike57dk Jan 17, 2015 12:39 AM
    mike57dk mike57dk Jan 20, 2015 9:14 PM Flag

    Good point ...as the earlier comment I posted was taken from the audited 2014 ETY annual report for the fiscal year ending 10/31/14.

    The best data available on Total Return from Dividend channel including reinvested dividends from Jan 01, 2014 - Jan 16, 2015 ( call it a little better than one year of duration ) illustrate a Total Return from ETY at +12.43% as compared to the S&P 500 index with a +12.38% Total Return over the same period.

    Most closed end funds got " TRASHED" with December tax loss selling and the uncertain market during those weeks ...causing the market price to slide significantly lower ...

    The hope here is that fairly significant loss per share will be made up quickly as the market seeks to adjust to the suddenly much larger discount to NAV , the new year begins and folks orbit back to the large monthly dividends ....( tax advantaged )

    But the simple truth is that we have + 12.43% MORE money in market value than we had 12 months and two weeks ago ...That makes it worth holding on to ...

    Hope this proves helpful

  • Reply to

    Fiscal 2014 - ETY metrics with opinion added

    by mike57dk Jan 17, 2015 12:39 AM
    mike57dk mike57dk Jan 17, 2015 12:53 AM Flag

    forward capital losses from 2008 / 2009 ...)

    ETY also showed that fund management is continuing its share buy-back plan ...they reported that 140,000 shares of ETY were effectively " retired " in 2014 at an average discount to NAV of 10.56% ...It would seem that when the discount to NAV reaches the +10% level ...fund management will be aggressively buying the shares in the open market ...( current discount to NAV is around -8.7% )

    Summary - This seems to be a smart well run fund coming off two consecutive years of strong market performance ...Their CALL option tactic is more defensive than simply owning the S&P index but in flat to uncertain / down markets ( uh ...like these days ) the fund seems to do very well in terms of market price appreciation while providing a strong monthly income stream.

    Someone once said ..." Its always wise to get paid ...while waiting for market appreciation " ...and ETY seems to fit that description very well.

    Hope this proves helpful - regards

    Sentiment: Buy

  • The print copy of the fiscal 2014 annual report on ETY had a good bit of interesting data and here is my take on the fund thru 10/31/14.
    Overview - Fund has a bit more then $1.8 billion in assets concentrated in only 60 large caliber / blue chip type stocks ...Google is 4.1%, AAPL is 4.1%,Corning is 2.7%,Merck is 2.4%, Amazon is 2.3%, CAT is 2.1% ..you get the idea ..ETY is overwritten with S&P 500 index CALL options about 47% of the portfolio giving them some downside protection in sudden market declines and portfolio income from the options premiums taken in ...they typically SELL the index calls with about 17 days average duration ...and close out the vast majority before expiration ...In fiscal 2014 ..with the market advance thru Oct ...they got clobbered with the options losing approximately $23 million ..BUT...that is ok as the underlying market value of the stocks in the portfolio greatly exceeded the loss in the options area. The fund is showing a net unrealized appreciation in fiscal 2014 of +$173,695,981 and an overall +$222,120,871 in net assets ... both very good numbers and a sign of positive health for the fund.

    For Fiscal 2014 ETY posted a + 19.41% rate of return as compared to the S&P 500 index of +17.27% so a nice year after posting a +25.53% return in 2013 and +15.99% in 2012.

    NAV - The fund improved its year end NAV by a raw +0.47 per share or 3.9% and hopefully muting some of the critics who have complained that the large amount of ROC in the monthly distributions was in effect robbing the NAV of the fund. A quick back of the napkin calculation indicates that approximately 67% of the fiscal 2014 dividend distribution was ROC.

    Portfolio Turnover decreased to 83% from 130% in 2013 as the fund reduced it overall number of stock positions while taking significant profits ...( 2013 was an unusual year in that the fund sold off virtually its entire portfolio ...took a huge capital gain ...and cleverly washed those long term gains against carry ---

  • After reading a number of posts here about weather or not Afrezza had been approved for insurance reimbursement from a number of the large carriers such as Kaiser , MediCal and BCBS; I wanted to get confirmation and just the basic facts. A couple of days ago I sent an e-mail to my insurance company, BCBS Texas asking for their response and they replied earlier this am ...Here is the scoop:

    Afrezza is definitely on their " Covered " list for the 4 unit & 8 unit powder -90 each per month as a " Non Preferred brand Tier 4 ...

    The cost data indicated that " Plan Limitation Exceeded " / generic equivalent not available. A further note indicated that my health plan may require quantity limits and that the physician may have to submit an exception request form for approval along with a form link ...

    The Reimbursement section - Total cost / plan cost / Your cost tab was BLANK with the check mark indicating that all medicines in this specific request were " covered " ....

    OPINION - AFREZZA is officially covered by BCBS TX ...but the earlier posts claiming a " zero co-pay " may be in error or at least premature.
    I asked the CVS pharmacist about the co-pay data ...and he advised that he, at this time at least, had no cost sharing information. He was well aware of Afrezza and stated that he had received several inquiries about it.

    The importance of being approved for prescription reimbursement cannot be understated and is a huge success / victory for SNY / MNKD ...but the missing piece of the puzzle still seems to be pricing information.

    Where exactly they price and reimburse for prescriptions for Afrezza may well dictate the penetration the new insulin delivery system can have in the market or its popularity / usage among the diabetic audience it was designed for.

    As Jack Webb used to say ... " Just the facts ..sir " ...and I hope this basic research effort proves helpful.

    Sentiment: Buy

  • Reply to

    2014 performance - giving up on AOD

    by mike57dk Jan 2, 2015 11:52 AM
    mike57dk mike57dk Jan 10, 2015 10:12 AM Flag

    Thanks for the reply on my earlier comment on AOD.

    To address your question about the performance metrics ; I use Dividend Channel website which has a very useful performance tool that shows the hypothetical value of $10,000 invested on a specific date and the impact of reinvested dividends to compute the Total return of the fund.

    AOD produced a + 10.68% Total Return in calendar 2014 as compared to a + 14.56% return for the S&P 500 index with dividends reinvested,

    Since March 9, 2009, when I initially invested in AOD ...the fund has a cumulative +107.68% Total Return as compared to the S&P 500 which has a cumulative +240.34% Total Return. That works out to about +13.39% per year for AOD versus + 23.44% for the index.

    Its not perfect , but the disparity of performance comparison between the unmanaged index and AOD is frankly damming ...It should also put to rest your contention that the " past few years have been exceptionally difficult because of low interest rate environment."

    Alpine brought in two new portfolio managers a couple of years ago ...and in their respective letter to shareholders promised to make significant changes to their investment tactics. Initially they did just that ...increasing the monthly dividend , launching a share buy back plan, reverse splitting the stock 1:2 , reducing the 650% annual portfolio turnover ....increasing the NAV by over +13% in their first year on the job. I was encouraged ...

    Then, the latest annual report illustrated that they had completely STOPPED buying back shares ...were once again using a super-heated portfolio turnover in the 112% turnover area ..and incredibly ...were now using leverage or borrowed money to in effect pay the dividend.

    This seemed like a radical departure from the April 30, 2014 semi-annual report letter to shareholders and reflected the management decision to essentially not worry about the jumbo level discount to NAV ...and even take on ADDITIONAL RISK .

    Enough is enough ...I am OUT.

    Sentiment: Sell

  • The hard numbers are in for 2014 and the results show that AOD did poorly as compared to the S&P 500 index with dividends reinvested.
    Specifically - AOD produced a + 10.68% Total return whereas the S&P index returned +14.56% for the calendar year.
    That is a 388 basis point difference over a trailing 12 month basis ...and an aggregate -10.05% PER YEAR below the S&P 500 index over the past SIX YEARS of the holding period.
    Shareholders like me have given Alpine management many years and lots of second chances to get the story straight and start to compete with the unmanaged index.
    The new portfolio managers have FAILED to even come close to the index by way of comparison ...after two years of tenure and their upbeat 2013 letter to shareholders promising effective changes ....what a disappointment is the nicest thing I can think to say about them.
    Most disturbing was the recent use of LEVERAGE to pay the monthly dividends ...and the complete abandonment of the 10% share repurchase program after only six months of buying back shares.
    That sent a message to me that the new managers were NOT that committed to reducing the outrageous discount to NAV as many other closed end funds have done.
    This fund seems to be marginally ok in a good market ...and disastrously in a flat to weak market. There seems to be no upside to continue to hold the fund, not even the hope of a good market as they just missed 2014 by 388 basis points ....yet again and similar to 2013, 2012 2011 ..you get the idea.

    Used the share lots purchased at a higher price to wash the capital losses incurred against some nice 2014 capital gains earned ...that might be the best thing AOD and Alpine management has done for me ...providing capital losses to offset taxation on most other investments with a gain.

    Gee ...Thanks

  • mike57dk mike57dk Dec 5, 2014 12:13 PM Flag

    This was ALWAYS a " Run & Gun " dividend capture fund ...essentially the fund bought stocks a day or two before the dividend x date ...captured the monthly or quarterly dividend or special dividend ...then dumped the shares a few days later ....portfolio turnover was north of 650% per year ...they racked up over $3 billion in realized capital losses in 2009 ...on a fund with about $1.1 billion in assets today ...
    Your Edwards broker could NOT have executed this trading strategy in any account ...as there is a circa 1929 era SEC / FINRA rule against " Selling Dividends " ...its illegal and the broker would lose their securities license for doing what is also considered " excessive trading / churning " ....
    For some reason; its totally OK for a mutual fund to engage in this tactic ...and Alpine's AOD fund was one of the largest initial public offerings in the closed end world when it originated ...during a super hot time in the equity market I seem to recall.
    There is little to no investment thesis ...just trade dividends ...and in good markets where there can be plenty of special dividends ...it works after a fashion. In poor to flat markets ...they get absolutely killed ...on a biblical level ...
    A little over two years ago; AOD replaced the fund manager and brought in two relatively young guys ...to restore / rescue the fund ...They have had a good equity market to support them and they have built up the NAV of the fund by more than 20% , increased the monthly dividend and are pacing the S&P 500 index within a 100 basis points in 2014 ...they also reverse split the stock 50% ...
    AOD may be worth holding on ...if you still own it at this point from the IPO price ( split adjusted $20) to see what 2015 brings ...but ...it is NOT an investment fund ...just a bull market trading tool with high current income.

    Sentiment: Hold

  • Reply to

    A little help here..

    by weblvr Oct 23, 2014 2:22 PM
    mike57dk mike57dk Nov 2, 2014 12:16 PM Flag

    Reply to weblvr - The cost basis adjustment caused by " Other Capital " or ROC is a very complicated issue with conflicting applications literally from brokerage firm to firm. My two brokerage firms have NEVER reduced the cost basis for ROC on shares of ETY. From this chat board I have learned that other firms DO IN FACT reduce the cost basis ...
    Lets take fiscal 2013 for example ...ETY management decided during the last month of the fiscal year to " re-characterize" the previous 11 months of distributions to 100% capital gains from the previous estimate of about 72% ROC ....They can do this in time for the annual report and the major league audit / accounting firm agreed ...then using the hundreds of millions of dollars in 2008 carry forward capital losses to wash against the impressive gains earned during the 2013 fiscal year ....resulting in a NET ZERO capital gains to the ETY shareholder ...
    How and when would the brokerage firms have reduced the cost basis of the ETY shares ? at fiscal year end ? , monthly ? ...what an accounting nightmare that would have been ...What if individual investors " manually " adjusted the cost basis data to report to the IRS ? ....well that info would be demonstrably different than the data provided by the brokerage firm ....triggering an automatic review from the IRS audit program ....( Oh Geez )
    Eaton Vance has a good website that includes a two page " white paper" on Negative ROC Versus Positive ROC ...ETY produces Positive ROC where the NAV has actually increased about +12% over the last 24 months ...compared to a typical CMO bond that will in fact reduce its value by the ROC delivered each month ...very possible to see $25,000 face value of CMO paper with a current value of $3,600 ...as individual homeowners in the CMO pool re-finance or simply sell the home, closing out the loan.
    That is NOT what is happening with shares of ETY. One of the best reasons to own any mutual fund is to let them do the math and accounting.
    regards

ETY
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