RE:RE:RE:RE:RE:RE:Under the radar income fund...The only explanation i have for a split fund common share to be trading with over a 50% premium to NAV, ( barely above the threshhold for paying to common shares ) , is that there was a big short position that was forced to be covered , either by a shortage of shares out there, or a margin call.
There is no LOGICAL explanation outside of that.
Over exuberant buyers? I know that traders and shortsellers love this action.
I have a system where i dont hold stocks that hold big premiums unless they deserve a huge premium. If they have a 5 $ safety margin above the threshold for paying to commons and have a history of being well-managed , then yes, a 30 to 40% premium to NAV not unreasonable in a bull market.
I noted today that DF, split fund not paying to commons now for some time.... is up a bigger % today than DS, and these 2 hold the same stocks for the most part.
DS will always pay some kind of distribution and those jump in a bull market. Some have the misconception that this will only pay 10% dividends if you buy here.
Fact is the distribution rises with the share price. In a bull market buying DS shares at under 7$ may only yield 10% this month but as the underlying NAV forces the share price up, the yield rises ... those same shares could be yielding 15% in a year.
DF wont pay anything to commons until the unit NAV breaches 15$ .