Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Phillip Goldstein and Bulldog Investors’ New Target

Phillip Goldstein and Andrew Dakos’ Bulldog Investors is literally a hungry hedge fund trying to create value by taking on corporate executives and closed-end fund managers. There aren’t a lot of hedge funds trying to go after closed-end funds. First, here is how this strategy works.

Closed-end funds occasionally trade at a significant discount to their Net Asset Value (NAV). It isn’t surprising to see discounts of 10-15%. Fund managers don’t have a lot of interest to close this discount. As a result some closed-end funds trade at a discount for an extended time period. Activist hedge funds buy 5-10% positions in these closed-end funds and try to force the funds’ operators to take action. They take larger stakes if they can hedge their NAV risk effectively.

The most important weapon in their arsenal is proxy contests. They can change the funds’ board and take control of the fund. Another action that they can take is to file shareholder proposals for contingent tender-offer plans. If these plans are accepted, the company could do a partial tender offer when the discount reaches a predetermined threshold. The main problem is that funds’ operators want to keep the fee income, so they usually don’t want to take any action that will reduce their assets (and fees). That’s why activist investors’ success ultimately depends on their ability to win a proxy contest.

First Trust Files For Unique Commodity ETF

Last Friday Phillip Goldstein disclosed a 10% stake in First Trust Strategic High Income Fund III (FHO). $FHO currently trades at an 11% discount to its NAV. We expect interest rates to edge up over the next year. So, investors might be better off if they hedge their risks in this case, which might not be easy.

We aren’t aware of any other funds monkeying Bulldog Investors so far. They probably welcome it though. When other activist investors build large positions to win a proxy contest, all activist investors benefit. It happened before, it may happen again.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!