E Split Corp T.ENS.PR.A

The leverage factor

[Obscure1]

The IR person at Middlefield called me back this afternoon and answered a few questions.

The fund was designed to have a leverage factor of 1.8.  That means if ENB shares go up (or down) 1%, then the NAV of ENS should go up (or down) 1.8% plus or minus, depending upon variables such as the size of their cash position and options outstanding.

BTW, the ENS fund is their fastest growing and now their biggest fund which is held primarily by retail holders. 

Oh boy, this is going to be fun.

[Obscure1]

Update: Applying the 1.8 leverage factor to Thursday's close for ENB and ENS for Thursday, would have predicted today's NAV of $13.149 instead what we actually got which is $13.13.  That put the premium of the ENS shares over the NAV at 3.6%. To account for the difference, I had to adjust the factor down to 1.7 as opposed to 1.8.  That makes sense as ENS has a carry extra cash

[pjn0987654321]

I'd be interested to see the calculation.  How do you go from leverage 1.8 to $13.149?  

[Obscure1]

Assumed Factor 1.8 ENS closing price on Thursday $12.97 ENB was up $0.37 (0.77%) on Thursday Apply the 1.8 factor to the daily % increase in ENB: 1.8 x.0077=0.01309 Add one to the factored increase = 1 + 0.01386 = 1.01386 Multiply the factored number (1.01386) x the closing ENS NAV on Thursday ($12.97) 1.01386 x $12.97 = $13.1497 which gets rounded to $13.15 There is always going to be

[pjn0987654321]

Interesting.  Thanks!

[PileOfShit]

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[Obscure1]

PoS:  Please check your Inbox

[Experienced]

So who cares what the NAV is or how it is calculated since we are trading the SP of ENS not the NAV?

[PileOfShit]

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[Obscure1]

Splits offer a unique opportunity to investors that pay attention.  One can take advantage of the time lag between the real time value of the NAV and the reported value of the NAV because very few investors don't bother with the minutiae.  Splits provide a second opportunity for investors that pay attention in that the range in the premium of the share price to the NAV can be

[Obscure1]

Correction: I mentioned that ENS takes in about $0.10 more per month than it outlays.  I made a mistake.  For the latest raise, ENS actually pays out about $0.075 more per month than it will take in from the the shares of ENB that it purchased with the proceeds. That means ENS needs ENB to increase in value by about $0.04 per month or $0.50 over the next year to cover the decrease in

[Experienced]

Thanks So the takeaway is that when there is a small premium to NAV, historically, this is a good time to buy.