RE:Question: why the October 23 dropkurtwalter wrote: I am rather new to split shares, and bought BK around August 2023. In the next two months BK dropped close to 30 percent. My question to mouserman and other experts: what explains this drop? Was there an extreme premium on BK's share price, as compared to the NAV? Thank you.
No it was all to do with the NAV deteriorating and pullback in financials. Premium was quite big back then, and of late no split fund commons share is getting much of a premium. I see FTN, which is another high yielding split fund, which holds the same stocks as BK, plus some others. FTN has over 3 $ of safety for paying to commons, and BK has 5$ . With the bigger yield , i would think FTN would carrry at the minimum a 5% premium. Today its at a 15 cent discount.
BK is trading at a slight premium and at these levels and lower I was a buyer. It is the safest of these splits funds because of the setup, where the last 3 trading days of the preceding month, determine the
amount of the payout.