Rumble, CVT is having a rights offering, or, what some call a rip-off rights offering. They do this to increase assets so they can collect more fees. However, the cost of the rights offering is borne by the current shareholders. The cost can range from 2%, what the Royce funds usually do it for, to 7%, a Morgan Stanley favorite number. I don't know the cost on CVT, but the rights offering is why the shares are down.
If you can locate a copy somewhere, read Manny Schiffres Kiplinger's "Funds For Sale-Cheap" article of May, 1995, in which I also make an appearance. In that article, there is a inset called "What's wrong with rights" which tell why closed end fund shareholders hate them. |
