TSX:INC.UN - Post by User
Comment by
yggdrasilllon Oct 20, 2017 4:44pm
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Post# 26838866
RE:This fund is an enigma to me
RE:This fund is an enigma to me The way I see it, stocks rarely trade at 1:1 price to book. So the fact this CEF trades above its NAV is similar. As long as people are confident they can continue to pay the distribution, the stock will trade above its NAV. Right now the NAV is on the rise ($10.29 on aug 31, $10.67 on oct 13), so the price is on the rise, so the distribution is on the rise, so the stock is on the rise... it's a self-feeding loop.
However, I have noticed on other quadravest CEFs that even when the stock is on the verge of cutting off distributions, the SP doesn't seem to be affected. It seems a lot of people are only looking at the distribution without fully understanding the risks.
harbro wrote: I've never really understood why this closed end fund is able to maintain a trading price that is roughtly 75% higher than it's NAV, expecially when the distributions are based on a 3 day average market price, and virtually all of the distribution is ROC. They are essentially returning you money to you, and since that amount is based on trading price rather than NAV, the gap between them continues to widen. I've kept thinking this bubble will burst, but like often said, the market can remain irrational longer than I can remain solvent. I'd appreciate it if anyone could shed light on this. I know of no other CEF out there that consistently trades as such a huge premium to NAV. <br /> <br /> Meanwhile sitting on the sideline wating for reason to kick in.. <br /> <br />
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