CEF Weekly Update

Morningstar

Issuances and Repurchases
Two Kayne Anderson funds, Kayne Anderson Midstream/Energy (KMF) and Kayne Anderson MLP (KYN), announced private placements to raise $70 million and $190 million for leverage financing, respectively. Kayne Anderson Midstream/Energy's capital raise includes $30 million of unsecured notes and $40 million of mandatory redeemable preferred shares (MRPS), while Kayne Anderson MLP will raise $140 million in unsecured notes and $50 million in MRPS. Both private placements are expected to close on April 30, 2014, and proceeds will be used to make new investments and refinance existing debt. Kayne Anderson Midstream/Energy also announced a new repurchase program to buy back up to $20 million of the fund's shares, presumably to boost the fund's net asset value and narrow the current discount.

While we like to see the fund proactively work to boost shareholder value, and we do expect the buyback to be accretive to NAV, the repurchase may not narrow the shares' discount. As a matter of fact, the fund's discount actually widened slightly since the announcement, from 9.7% to 10.2%.

General American Investors (GAM) also announced a new repurchase program to buy back an additional 1 million shares if the stock is trading at a discount of at least 8.0%. Through the first quarter of 2014, the fund has already repurchased 319,137 shares at an average discount of 14.5%.

Bancroft Fund (BCV) announced that it has completed a program to repurchase 3% of its outstanding shares since the end of October 2013 at an average cost of $19.14 per share, compared with a current NAV of $23.04.

Policy Change
Nuveen Energy MLP Total Return (JMF) announced a change to its investment policy, increasing its issuer policy limit to 15% from 10% to reflect the issuer weights of its benchmark, the Alerian MLP Index.

Spin-Off
Gabelli Dividend & Income's (GDV) shareholders approved the spin-off and contribution of $100 million in assets to a newly created closed-end fund, Gabelli Global Small and Mid Cap Value. As the firm had previously announced, Gabelli Dividend & Income will distribute shares of Global Small and Mid Cap Value to its shareholders on a pro rata basis, while the new fund will seek to list its shares on the New York Stock Exchange. As its name suggests, the newly created fund will focus on long-term growth by investing at least 80% of assets in small- or mid-cap companies and at least 40% of assets in firms located outside of the United States.

Investors should note that this newly created fund's strategy is quite different from the original parent fund, which focused mainly on large-cap firms based in the U.S.

Click here for data and commentary on individual closed-end funds.

Sumit Desai, CFA, does not own shares in any of the securities mentioned above.

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