Post by
Obscure1 on Jan 28, 2022 1:02pm
Middlefield nearly covered the cost of owning ENS in 2021
The following may or may not be of interest to you depending upon how nerdy you are.
The cost of owning ENS shares isn't cheap.
In 2022, if Middlefield doesn't raise any money, the cost of ownership will be about $0.56 per share.
The total is made of:
* $0.34 overpayment to Class A shares (what is paid out over what is received)
* $0.18 MER
* $0.04 fees (trading)
In 2021, Middlefield raised money 5 times. They are not allowed to raise funds that will dilute the NAV.
Three of the raises were set to close a couple of days before ENB went Ex-dividend. When Middlefield raises funds just before ENB's ex-dividend, the fund buys ENB shares and picks up an extra dividend. Middlefield uses the $0.05 win on top of the premium to NAV to cover the costs of the Raise. The net effect to the NAV is zero.
Middlefield also raised funds twice when the premium to the NAV reached a trigger point. I didn't do the math on the first raise in April, but the raise in November raised the NAV by $0.22.
If the raise in April provided the same lift as the raise in December, the two raises would have increased the NAV by $0.44
While the $0.44 increase in the NAV doesn't quite offset the $0.56 cost to the NAV, my numbers don't account for the lower MER cost in 2021 than the company will charge in 2022. The reason for that is that Middlefield raised about $262 million in ENS in 2021 of which $127mm was in the last 40 days. As such, the MER cost in 2021 was probably (I didn't crunch the math as it is historical info which no longer applies) about $0.08.
Removing $0.08 from the MER for 2021 reduces the overall cost from $0.56 to $0.48. That is pretty close to the $0.44 win from the two Premium based raises.
I haven't confirmed the above with the management at Middlefield, but the math is going to be real close.
Going forward, I would rather see Middlefield raise money 3 times per year when the Premium builds up because each "Premium" raise helps the NAV which offsets the costs of owning ENS. That way, we just have to duck 3 times per year.