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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (25179)	10/31/2006 7:34:25 AM
From: Wallace Rivers	Respond to of 78751

There are a lot of closed ends out there that trade at a significant discount to NAV, and a lot of these are at/near 52 week highs. If you look at historical prices, a lot of these same funds consistently trade at or near the same discount. So, while a discount to NAV is good, it doesn't necessarily mean the gap will be narrowed. Two CE funds I own with these characteristics are RTU and FRA. I am looking to re-enter LUV, which I've had excellent success trading over the years. It is perceived that the legacy carriers are now the place to be, at the expense of the discounters. Not so fast, I would argue. There is also some concern that LUV's fuel hedging program (probably the best in the industry) is winding down, and the company will be forced to pay closer to market prices for jet fuel, thus pressuring margins and putting the company on a more level playing field with other carriers. This is of some concern, but the fact that oil has come down fairly significantly over the past few months doesn't hurt, either.