Just reviewed the six month report ...here is the gist of it along with some opinion / commentary:
NAV is up + 6.79% over the past 6 months ending 4/30/14 and + 15.47% on a one year basis ...This can only be construed as GOOD news for those concerned about ROC in the dividend distribution ...as the NAV of the fund continues to improve.
Discount to NAV has DECLINED to -6.19% from the 9-10% level a year ago ...probably reflecting the positive impact of the share buy-back plan that was renewed in 2013 for up to 10% of the funds outstanding shares.
The report also shows that ETY management has significantly SLOWED the share repurchase activity ...dropping to 140,000 shares ' retired ' over the past six months from the 1,385,696 ' retired ' in fiscal 2013. It reveals that the fund was booking an average discount on repurchases of 10.56% over the previous six months and 12.92% in fiscal 2013. ( management must believe that a 10% discount to NAV is compelling but a puny 6% discount NOT so attractive )
Options activity - Roughly a Break-even over the last 6 months ...the fund is writing ( selling ) about 5,000 S&P 500 index calls against its portfolio each MONTH ...with about a 12 day average time to expiration ...they close out about 70% of these contracts ...and let the remaining 30% expire worthless ...( keeping the premium received )
Portfolio turnover has returned to 39% ...from the dramatic 130% in 2013 as the fund made a one time effort to realize gains and wipe out the carryforward losses on its books from 2008 / 2009 ...
Net assets are about $1.8 billion ...up slightly over the fiscal year end in 2013 ...( healthy sign )
Portfolio - 87% in the US ...and the S&P 500 index is now their official comparative index ....
Holdings - Apple - 3.4% and Google Class A and C are 3.7%, Chevron -2% , Merck - 2.4%, Mondelez -2.6%, Gilead -2.3% Corning -2%, Occidental -1.9%, Corning -2% ...Top 10 stocks are 22% of portfolio. 97% of assets in blue chip stocks
The numbers for the first six months are in ...and here is the unvarnished scoop:
YTD - ETY has produced a +14.24% as compared to the S&P 500 index which is up +9.35% YTD.
Annualized ...that puts ETY at +28.71% versus the index at + 18.86%
ETY seems to be sustaining a plus 489 basis point advantage over the S&P index ...and that is significant and substantial.
Holders of ETY earned +28.36 in total return during 2013.
The mid year fiscal report is due out any day now ....so we will get a chance to "look under the hood " and see where the fund has flourished ...and where it floundered.
Hope this proves helpful ...
Good am mblock66 ...
Some good news for you ...In 2013 ETY management took the extraordinary step of re-characterizing the entire calendar year of PREVIOUSLY paid dividend distributions to make them capital gains ...instead of 80% ROC as their previous monthly updates had indicated ....
The fund management adroitly used up 100% of the Capital Loss carryforwards they had on the books from the market crash of 2008/ early 2009 timeframe.
Their rationale was that it still placed the income paid in 2013 as " Tax Advantaged " because the tax rate on capital gains was significantly lower than ordinary income rates ...and that their earlier written estimates of the ROC component in each monthly distribution was exactly that ...an estimate only and they had the right to adjust to their best usage / need.
So ...what does that mean to you ?
1. There should NOT have been ANY cost basis reduction in 2013 ...as there was NO ROC paid out in that calendar year. ( confirm that with your tax statement from the fund ...its true )
2. ETY immediately returned to their previous distribution tactic ...monthly managed distributions with a large ROC component ....ball parking that thus far in 2014 around 75% ROC in the dividends paid ytd.
3. You netted a plus 28.36% in calendar year 2013 ...have a plus 12% return YTD ...which is annualizing around + 25% for 2014 ....That's easily outperforming the S&P 500 index ...in a cheaper / tax efficient way.
4. I have NEVER seen a fund management group move like this ....( am sure there must be some examples ...just don't know any ) ...It's refreshing ...and very clever ....( legal too )
5. Sharebuilder correctly categorized the 2013 distributions as capital gain distributions and some interest ...they had to as ETY reported no ROC or Other Income for 2013. Unfortunately ..most brokerages are now doing cost basis reductions with the ROC component ...but ...in exchange for an average 6% taxation rate for every dollar we receive .its ok.
Good morning alpine_rappr ...
First ...let me respond that all mathematical data comes from either Dividend Channel or Y-charts ...as nobody wants bad or incorrect performance data to influence their investment decisions. If the numbers were BAD ...I would still report them ...they are just the facts we all need to help make a judgment on the fund.
Second ... I try not to be a booster of anybody's fund ....let alone Alpine ...who has no special love for me and my nagging questions to them.
Third - I do try and "bottom fish" for investments with good potential from time to time believing that things tend to get over-sold , especially in the closed end fund world. AOD happens to be one of them.
Mostly ...I read their annual reports and e-mail questions ...( I do skip or ignore the overall market commentary from Samuel Lieber as its mostly garbage and feel good metaphors ) The new portfolio managers in AOD caught my attention with their blunt commentary and determination to make a series of much needed changes to the fund ...( raising the dividend / share buy back plan / 1:2 reverse split / elimination of the discredited dividend capture scheme / improving the NAV significantly ...all within their first 12 months on the job ) Given their relative youth and tenure in the securities industry ...this was a ' GUTS ' move ....in a mutual fund with quite possibility the very WORST reputation in the industry ...
Lastly ...I post here and on a few other boards to swap information and perspectives ...I found out about Dividend Channel from another contributor here on the AOD board that absolutely despises the fund ...and the subsequent back and forth proved instructional ...at least for me.
I think, as investors, we need to understand how the fund is ( or is not ) making money ....and if I can't explain or defend what the heck they are doing ...then its time to SELL the fund ...
Please don't confuse that with " boosting" or shilling for Alpine ....
Its 30 June so lets follow up on performance tracking on a YTD basis ...
First - raw data including reinvested dividends = YTD return is +11.33% / annualized at +23.63%
S&P 500 index including reinvested dividends = YTD return is +8.04% / annualized at +16.77%
AOD is ( today anyway ) delivering a +329 basis point advantage over the S&P 500 index ytd ....and projecting this thru year end ...that would be a very robust 686 basis points ahead of the index.
After the very rocky start in January and with the highly unpopular 1:2 Reverse stock split ...AOD has caught up and surpassed the benchmark index by a significant percentage.
The long suffering holders of this fund are finally seeing some statistical improvement and positive movement in the market price.
The thesis to own and hold the fund is simple:
1. New management or portfolio managers have been on the job about 18 months thus far ...they have improved the NAV dramatically ...
2. The fund is trading at a significant discount to NAV making it a compelling valuation in the present day market.
3.The fund is implementing an aggressive share buy-back plan ...we should see the actual number of shares purchased in the June mid-year report ...my guess is that its significant.
AOD remains a fund with a sordid history ...a "Scarlett A" so to speak ...but I really like the new management and their aggressive efforts to rehabilitate the performance and reputation of the fund.
So far in 2014 ...we are being rewarded for holding shares of the fund ...
Hope this proves helpful ....
Just reviewed the May Fiscal year to date report and breakdown composition of the dividends paid from Nov - May 2014. Here is the scoop :
74% of the $0.4367 we have received is classified as ROC or Other Capital source
26% or $15.34 is classified as net investment income.
Before we trigger a fresh wave of folks declaring that ROC is " negative " and that the fund is simply handing our principal back to us ...keep in mind that NAV of the fund is actually UP 4.7% over the trailing six months ...so the ROC component has not harmed or diminished the fund ...in point of fact ...the net asset value is up nicely.
Projecting the past six months out to the full 12 months of 2014 ....we should expect to receive $1.01 per share in dividends with $0.747 of that calendar year distribution being free from any taxation ....and $0.262 being taxed at your income rate ...so...on roughly a dollar of 2014 income ; we will owe ( typically 25% tax bracket on average ) $0.065 in Federal taxes ...That's not bad.
We have a ytd return on ETY of + 12.4% ....annualizing at +26% at this writing ..
In 2013 we netted a +28.36% return with dividends reinvested ...
Hope this proves helpful - Mike
purchased a small lot again yesterday ...had to use their land line to customer service ...then get switched to a trader ...confirm identity / passwords ...it took a bit of time ...
This is the fourth consecutive time E-Trade has forced a manual transaction to BUY the shares ...Their customer service guy advises that they have a compliance restriction placed on the on-line trading of TNXP.
I should point out that the initial two BUY transactions were done on-line ...but sometime after the secondary offering when the market price dropped from $20 per share to around $9 ...E-Trade made a decision to impede or at least slow down on-line trading.
I read where TNXP was complaining to E-Trade about the restriction ( Joe Springer in Seeking Alpha I think )
Hopefully, as the market price continues its recovery, E-Trade will release the trading restriction on TNXP ...but its a bit of a hindrance in the present format.
Mostly background stuff - No Director or executive officer has any conviction in a criminal proceeding or bankruptcy over the past 10 years ..nor have they been subject to a regulatory order of any kind. - ( for the posters concerned that TNXP could possibly be a " pump & dump ' scheme )
March 18, 2014 - TNXP acquired from Starling Pharmaceuticals ( owned by Dr Lederman ) the US patent rights for radio and chemo-protective agents and intellectual property rights for novel smallpox vaccines for cash of $125,000 and 25,000 shares of TNXP. ( had not seen this before ...and this may be an additional area of expansion for the company in the years ahead )
BESTFIT Study - Phase 2b/3 - randomized , double blind placebo controlled bedtime study with sublingual TNX-102 as FIBROMYALGIA Intervention study. This is a multi center clinical trial where subjects with FM take a 2.8 mg sublingual tablet or strip or a placebo at bedtime ...for 12 weeks. If successful; this will serve as the first of two pivotal studies to support an NDA for TNX-102. Results anticipated by the fourth quarter 2014.
TNX -201 - Episodic Tension -Type Headache program - plan to conduct a Phase 1 comparative pharmacokinetic and safety study in fourth quarter 2014 ....( long way to go for this one is my guess ..but good potential )
TNX -102 Gelcap - March 2014 - company advised that they would NOT be moving forward on this one ...they retain the work product / intellectual rights ... ( they are done with this one in my opinion )
TNX - 301 - a fixed dose combination of two FDA approved drugs, as a treatment for alcohol abuse and dependence. They are planning to start work later in 2014 ...
The initial study using TNX-102 capsules ( Moldofsky Study ) involved ONLY 36 subjects ...whereas the current BESTFIT study has 200 subjects and will be using the sublingual version of TNX-102 SL.
If the BESTFIT study proves successful ; then it will lead to a Phase 3 Study , also 12 weeks, ....
After turning in a lousy 2013 ...AWP is once again outperforming the S&P 500 index on a YTD basis by a significant amount ...so lets try and lend a perspective on the actual performance of AWP over the trailing 2.41 years ...
AWP - + 67.83% VS S&P 500 index - + 58.47%
AWP is averaging a + 23.96% annual rate of return over the 2.41 year trailing duration.
S&P 500 index is averaging a +21.04% annual rate of return over the same timeline.
Here is the calendar year math :
2012 - AWP - +47.31% S&P 500 - +14.25%
2013 - AWP - +3.87% S&P 500 - +29.0%
2014 YTD - AWP - +7.36% S&P 500 - + 5.92%
AWP is essentially involved in high end real estate on a global basis ...Japan / UK / US / Brazil ..12% in Japan,9% in the UK , 35% in the US ...
Their top holdings - ARA Asset Mgt - at 4% of portfolio assets and +28% in 2013, Regus PLC - 3.8% of portfolio and +108% in 2013 ,Kenedix of Japan at 3% and up a whopping +305% in 2013 ...
Brazil slumped badly - down over 24% in 2013 and the US market with over 35% of portfolio assets managed only a +7% return in 2013.
The discount to NAV is right at -10.4% at this writing and the fund is sporting an 8.1% dividend paid out monthly ...which commands attention by providing good yield and a discounted price.
After the lackluster 2013, the fund seems to have found its bearings again ...and may yet move up the 2014 Total return to the + 20% trailing average we have seen in the past.
With equity markets " frothing" and bouncing off all time highs ...AWP is a Real Estate alternative to solid portfolio yield in 2014.
Hope this proves helpful - Thx for reading -
Don't forget that the ROTH IRA is also a good short term savings idea ...you can withdraw every dollar you originally invested without incurring any tax or penalty ... as long as it is just the principal invested ...and interest or gains ..well ...that will be a tax issue.
Was skimming thru the Shareholder meeting / agenda booklet ...and picked up some tidbits of interest that might be worth sharing :
Audited number of shares outstanding as of May1,2014 = 9,929,206
Seth Lederman has beneficial ownership / control over 534,284 shares or 5.30% of the total - this includes underlying options and warrants.
Officers and Directors of the company own / control 12.32% of the company
Technologies Partners Fund VIII LP - owns 1,025,913 shares or 9.86% of TNXP and according to the footnote ..that does NOT include 133,334 shares purchased in the Jan 2014 offering ( $15 per share )
Shiela Mutter and Roger Quy in Mill Valley California are the managing partners of Technology Partners VIII and have voting and investment power over the shares ....
Seth Lederman has 18,471 option shares he can exercise and another 16,529 option shares essentially not vested - both lots are struck at $30.00 per share ..but which extend out in time until 2022
Dr Lederman has another lot of 67,500 option shares struck at $10.20 per share that expire in 2023
Essentially - Any change of control to the company would have to include the immediate vesting and cash out of all unvested options / restricted stock / warrants ....( page A-8 ) with a cash award equal to the amount that could have been obtained if the shares / options / warrants were un-restricted.
OPINION - Nothing nefarious ..truth is that I believe its a good thing when the officers and insiders are well entrenched with ownership of shares ...Dr Lederman has 35,000 option shares at $30.00 per share ..with a 2022/ 2023 expiration ...which are essentially valueless TODAY ...but obviously he believes that sometime in the future ...having the ability to pay $30 per share for TNXP will be a BIG BENEFIT is a BULLISH sign and indicative of his belief in the company ...
Have more stuff ...but will post later - hope this proves helpful for some folks - Thx for reading
Good am alpine_rappr ....
Your mathematical references are ABSOLUTELY CORRECT. In fact, Dividend Channel has an illustration that shows that thru yesterday an investor who purchased AOD on the offering and reinvested all dividends subsequently would have lost about 42% of their total investment ...whereas an investor who simply purchased the S&P index would have about +44% more money today than originally invested ..It does NOT get much clearer than that ...
However, many of the original investors in AOD have long since sold out their positions ...and the fund has a bit more than a billion dollars left ....down from the $3.5 raised in the IPO.
The concept of investing in AOD comes from the idea that Sell Offs and corrections are often overdone ...and can sometimes create a decent value from an otherwise ROTTEN investment. My return since purchasing AOD in early 2009 has been + 102% ...versus the S&P 500 return of +214% over the same exact time line.
The math indicates an average annual return of +14.4% for AOD since early 2009.
My contention is this : Things are changing for the better at AOD and we are FINALLY getting some early indication of positive, market beating, returns from the fund.
1. New Portfolio managers with about 17 months on the job - they are giving the fund what is in effect a total investment makeover ...that dividend capture nonsense tactic has been abandoned ...portfolio turnover is way down from the wild and crazy days ...
2. The discount to NAV is somewhere around -14-15% making AOD attractive in a market hitting all time highs.
3.The NAV is increasing / improving ...up +19% in 2013 ...
4. Next month we will see the extent of the share buy-back plan ...my guess is that the new managers are BUYING aggressively every month ...even booking a nice profit on the retired shares they are buying at a discount to NAV.
5.They even RAISED the dividend +4% in January ...and executed a controversial 1:2 Reverse split ...
YTD - fund is up +8.02%
Nice ' little ' run up by the stock ...the NAV is being quoted around $10.07 per share at this writing ...imputing a -14.49% discount to NAV ...That's still a significant discount ..perhaps even compelling with the Dow and S&P 500 hitting historical highs.
To me it seems like there is sustained buying when the discount to NAV starts bouncing off the -15% level ...perhaps the steadily improving NAV price is literally ' dragging ' the market price upward as that -15% discount sure looks like a tactical undervaluation ....perhaps its the share re-purchase program creating a floor for the market price .....as the two new portfolio managers continue their VERY AGGRESSIVE campaign to make AOD a relevant name in the fund industry again ...
When AOD was launched ...I think it was one of the largest closed end funds of all time ...raising around $3.5 billion in assets ..They are DOWN to a tad more than $1 billion today ....and as alpine_rappr correctly points out ...they have $3 billion in carry forward capital losses ...a truly HORRIBLE performance since inception.
All of that being said ...I am intrigued by the actions of the two new portfolio managers over the past 16 months ....The fund is annualizing to outperform the S&P 500 index by over 100 basis points at this time ...after getting badly ' spanked ' in January after the 1:2 reverse split ... frankly ....it looked like yet another Crying Towel year for AOD and more excuses to dramatically underperform ...but...they have turned it around in just a few months ...( at least so far )
Lets see what the six month report tells us when it comes out in early June ....should prove interesting.
Thru April end or the first " third " of 2014 the fund has posted some impressive numbers ...especially when compared to the S&P 500 Total return index ... Here is the raw data:
YTD - ETY - + 7.91% versus the S&P index - + 3.41%
Annualized - ETY - +24.47% versus the S&P index - +10.56%
ETY has managed to extend its lead over the index to a robust +450 basis points which improved from the first quarter update of +374 basis points ...
In Calendar year 2013; holders of ETY received a Total Return of + 28.36%
Summary - Our fund is off to a very healthy and " good start " for 2014 ....while the S&P index has suffered some "fits & starts" thus far in the new year ...
Opinion - was looking at some very speculative / aggressive growth stocks in the " pharma " sector the other day ...and I realized that most of the investors there were hunting for a 40-60% return on their money within a one to two year period ...while accepting the uncertainty and extreme risk that inherently comes with aggressive small cap stocks ...My point is that we have a very good chance at netting out that same 40-60% return over the trailing two year period by buying and holding ETY which I believe is much less risky and volatile ...perhaps some of that " aggressive / speculative " cash resource might be better deployed in a " BORING " mutual fund like ETY ...
Hope this update proves helpful ...the next report will try and analyze the coming six month update from Eaton Vance ...lets see what's under-the-hood ...
The Calendar year is officially 1/3 over ...so lets post the raw performance data of AOD versus the S&P 500 Total return and see what's what ...
( all data taken from dividend channel )
YTD - AOD - + 4.60% S&P 500 - + 3.40%
Annualized - AOD -+14.35% - S&P - + 10.60%
Those are the metrics of the YTD and annualized performance ...( just the facts ..as Jack Webb used to say )
As a long term holder / defender of AOD ...its actually refreshing to see a measurable time period where the fund outperformed ...er....any index ....but none the less ...they are a full 120 basis points ahead of the best and most often quoted index ...the S&P 500...at least for now ...
Here are some thoughts on how they have managed this turn around ....
1. New portfolio managers - on the job over the past 16 months ...AOD clearly needed a DNA replacement at the helm of the fund and the two guys running the fund today bring a new approach and seemingly understand that investors have had it with the #$%$ returns over the past few years ...
2. The fund showed a plus 19% NAV increase in 2013 ...and has posted a small increase in 2014 ...that's a good sign of health in the fund.
3.The fund actually RAISED the monthly dividend in Jan ...4% ish and that is good news ...
4. The fund executed a widely distained 1:2 Reverse stock split in Jan 2014 ...taking considerable heat from investors in the process and " #$%$ slapping " the fund performance down significantly in Jan 2014 ...this was simply a ' GUTS ' move by the fund management to get out of the penny stock land ...and it seems to have worked.
5. AOD is continuing to buy back shares in the open market ...the six month report we expect to see in June 2014 will detail how aggressive they have been ...My guess is that they have been " hammering " it ...the same guys who executed a 1:2 reverse split in Jan would NOT be bashful about accelerating the share buy-back.
6. The Discount to NAV is a ROBUST -14.17%
Changing to BUY
AOD continues to hold up in this " twitchy " market ...
YTD - + 1.33% Vs 0.45% for the S&P index
Annualized = +4.82% Vs +1.64% for the index ...
Wow ...The Alpine guys are finally making a " run " .... after the near disastrous1:2 Reverse split in January ..the fund seems to have regained its footing ...and is performing very well as compared to the S&P index ...
Lots of things can and WILL go wrong with this bunch ...if history is any predictor of the future ...but with the first third of the calendar year almost on the books ...they have made a decent start ...
Holding and reinvesting the dividends at the cheap / cheap market price ...and the discount to NAV it provides.
Cashless exercise of stock warrants or rights - am guessing that the four employees who exercised their right to acquire shares from the company used the so-called " cash less " exercise option ...where shares are sold to pay for the cost of the exercise and any capital gains taxation resultant from that ...
They get fewer shares as a net result ...but taxes are paid ...cost basis established ...clock started for the more favorable Long term capital gains rate ...in 365 days ...the difference between 20% and 40% taxation plus of course Ms Pelosi's NIIT tax if applicable ...
This makes the sale of the 13,700 shares a very BULLISH sign ...as the four employees are expecting that STXS will be trading well above current levels in a year ...and where they can reduce the taxable event by thousands of dollars should they choose to sell then
Summary - ...smart planning ....acting on their belief in the future of the stock ...effective tax strategy ... no cash out-of-pocket and fully paid and taxed shares in their account ...clock now ticking on long term gains rate ...
What's NOT to like ? This was a Bullish event ...NOT a Bearish sign of employees abandoning the ship .
Hey there alpine_rappr - good to see you here again ...
With respect ..Total Return is the best and most basic metric to use in the evaluation of performance ..a simple and basic way to look at your account value ...is it more or less than when you started ?
One account started with $11,119.86 invested in AOD ( 3/09/09) and is worth ( with dividends reinvested ) $20,752.91 according to the March end statement ...call it a + 84% gain over the past five years ...YES ..the S&P 500 index clobbered AOD during that same timeline ...but ...I had placed money with AOD and not the index so I missed out ( ouch ) But the Total return is the best measure of account performance ...and its a REAL number ..I can sell or cash in and get that $20,752 ...
Where do they get the money for the share buy-back ?
Answer - with an estimated 190% portfolio turnover ...AOD is essentially selling $1.9 billion worth of stock every year ...they are taking a portion of the proceeds from these transactions and retiring shares ...the annual report listed 3,544,829 shares re-purchased between Feb 2013 and Oct 1013 or about 393,869 shares per month ...split adjusted for 2014 to around 196,934 per month ...They were authorized a maximum of 10% of total shares outstanding ...so call it 22,031,000 million shares eligible to retire ...split adjusted to 11,000,000 ...
The goal is to reduce the huge discount to NAV from the 15% land ...to below 10% ...This tactic has worked for their competitors in the past ..( ETY comes to mind ) ...
Is the NAV report accurate ?
Answer - YES ...they use Deloitte as their auditor and they attest to the accuracy in the annual report ..Its easy to check and confirm simply by dividing the overall stock value by the number of shares outstanding ...should equal the NAV price ...( am giving them that much )
PUMPING the stock ? - Uh ...No ...I am HOLDING and reinvesting with a very specific game plan ..they need to pay the 8% dividend ...perform with the S&P ...
With the frothy market action and the sudden sell off with the S&P 500 index; I ASSUMED that AOD would be getting " whacked " in the market and was hesitant to even check the box score on a YTD basis ...
Therefore, I was a bit surprised to see that AOD has been actually holding up surprisingly well given the market ...( all data from dividend channel and on a Total return basis )
AOD - YTD = +2.31% - S&P 500 YTD = +1.22%
Annualizing the .26 years of ytd investment duration projects AOD to deliver a +8.97% return in 2014 as compared to + 4.75% for the S&P index.
Opinion - This is hard to explain, especially given the past ( miserable ) performance of AOD versus the index ...we all seem accustomed to AOD market price swings that significantly exceed the index on the down side, while underperforming on the positive market upward swings ....Hmmmmm
We still have a -14.46% discount to NAV ...so perhaps the huge discount to actual market value is acting like a buffer of some sort ...?
The stock repurchase plan is in full gear by now ...but AOD has not published a monthly update on the volume and scope of shares actually ' retired ' thus far ...we should see something with the April six month report that is published in early June ...perhaps the new portfolio managers are using their discretion to aggressively BUY shares in the open market and thus support the market price ?
This is all guess work and supposition ....but the guys who would dare impose a 1:2 reverse split in January probably would not hesitate to jump on the stock buy-back plan much more rapidly than expected ...
These new managers have been on the job about 15 months ...and seem determined to make their mark in turning this fund around ...increased the dividend / share buy-back / reverse split / increasing the NAV by +19% in 2013 ...greatly reduced portfolio turnover ...basically a total investment makeover ...lol...
Its way to early to declare AOD a winner ...but it is interesting ..
wow ...have been slowly building a strong position ...betting on the scheduled Oct results of their test group ...hoping the market price moves up dramatically on the news of good results ...