Current Price –$13.6
Expected pay-off – $14.01 (TBD on the 6 December 2016)
Upside – 3%
Expiration Date – 22 November 2016
Holders of less than 100 shares are not subject to proration
The Fund is making this offer to repurchase up to 10% of its issued and outstanding shares of common stock as of November 22, 2016. The Repurchase Offer is for cash at a price equal to the net asset value of the Fund’s shares, less a repurchase fee of 2% of the value of the shares repurchased,as of the close of regular trading on the New York Stock Exchange on December 6, 2016. Thus exact repurchase price will not be known until the 6th of Dec. NAV at the time of writing is $14.3/share.
The fund invests mostly in long-term (and mid-term) US government bonds and thus NAV is dependent on changing interest rates. If interest rates continue to rise, NAV of the fund might deviate significantly. Better buying opportunities might be available closer to expiration date when NAV determination date is closer – discount to NAV is likely to prevail as has been the case over the last 5 years.
This is a regular tender offer that is carried out once a year and usually heavily oversubscribed. So this one is clearly for odd lots only. For the moment I do not have any position, but might buy closer to expiration date.
More info about the fund, including NAV and market price charts:
I am interested in participating in this one. Two questions:
1. do you know when will be the last day that we can purchase EGF in order to participate (I am with Interactive Brokers) i.e. can we buy on 22 Nov? Or do we have to have settled by 22 Nov?; and
2. it appears we’ll take on some risk that the NAV may change beween 22 November (when tender closes) and 6 December. e.g. if NAV drops during this period, we will receive less than we may have anticipated. Is my understanding correct?
1. There is no notice of guaranteed delivery, so it might be a case that shares need to be settled by the 22nd in order to participate in the tender. The easiest way to find out is probably to check with IB. I will post if get some new info.
2. Yes you are correct. And NAV is sensitive to interest rates which have been rising after Trump’s victory. So it is a bit of a gamble of what might happen in those two weeks.
Tender offer expired yesterday with NAV at $13.97 vs share price at $13.4. The cash-out NAV will be determined on the 6th of Dec. If NAV remains unchained till then, then those who tendered will receive 2.2% return.
I skipped this one due to high uncertainty and small return.
NAV on Dec 6 stood at $13.99, so 1% return (including $0.04 dividend) for those who bought upon announcement and 2% return for those who bought right before tender expiration.
I bought 99 shares in mid-Nov. and tendered and got my $13.671 per share yesterday. After the $1 commission expense I netted $17 on a $1300 investment. While I would have done better just buying the SPY, at least it wasn’t a loss.
Not sure what else did you expect on this. NAV declined during the tender period by 2% and this ate most of the returns. This was a big risk and I explained it in the very beginning.
Buy some flowers for your lady with those $17, I bet she will appreciate the profits you made 😉