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Gold/Mining/Energy : CANADIAN CLOSED END FUNDS AND INSTALLMENT RECEIPTS
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To: Scott Mc who wrote ()3/13/2000 7:58:00 PM
From: Sturgeon  Read Replies (2) of 37
 
I have sold most of my NVL.UN. The manager is adding more and more tech stocks to the portfolio which I don't feel comfortable with. Also the fund is now being leveraged by 10%. I can't understand the need for this with the market as speculative and volatile as it is right now. The discount stands at 14.5%, but is not high enough to compensate for the problems I see.

I bought some United Corporations (UNC) today at $42. The portfolio is basically the TSE 300 with a much lower weighting in Nortel which suits me just fine. Also, they have a 20% weighting in large, blue chip US stocks, the kind that have been getting pummeled of late.

The MER is only 0.25%. And the discount is about 47%. I've followed this fund for several years and it usually hangs out around 30%. If it were to move back to that level the return would be 32%. The fund pays out 30% of its capital gains and all its dividend income in cash. Given the level of the discount, if the performance of the fund matches the TSE, the stock will perform about 30% better. This IMO is too rich to last.

The fund is controlled by Henry Jackman who's father bought up heavy stakes in the fund after the crash of '29 when it was trading at a huge discount. Jackman is a conservative guy and has resisted any move to buy back shares or take some other action to close the discount. But he's also getting to be an old man. When he retires or dies control will pass to the next generation and changes may occur. But if not its still a great value.
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