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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mark Adams who wrote (27918)	5/2/1998 6:10:00 PM
From: Knighty Tin	Respond to of 132070

Mark, There are a lot of what I call "double discount" CEFs out there at the moment. These are the funds where the country or sector is down and the fund sells at a discount. Those are always my favorites. Often, when the country or sector goes into the toilet, the CEF goes to a premium. This was true for Mexico and is currently true for Japan, Thailand, Korea, etc. Double discounts are not rarities, but they are not all that common, either. CEFs are listed on the exchanges, so they have to list insider transactions the same as everyone else. However, unlike insiders at operating cos., the directors and officers don't know any more about what the assets are going to do than anyone else. The one exception would be if they know about an imminent rip-off rights offering, which kills shareholder values. That scares me about APF, as Morgan Stanley has been the worst sort of rip-off rights sleazos in the past. At the last annual meeting, they said they had heard the shareholders loud and clear about this should be but isn't criminal activity, so I am taking them at their word. Oh, no, did I just say I was taking a brokerage house at their word? Lord, gimme shelter. <G> The insider sales makes me sit up and take notice. I have played Argentina and Brazil many times in the past. I consider them more trading CEFs than Chile, which is a buy and hold CEF, IMHO. Chile has already taken the fiscal pain to get their economy straight that Brazil and Argentina have been trying to avoid. One of the reasons I like Chile, and IAF and Southern Africa Fund, for that matter, is that I prefer cheap real assets to inflated financial assets at this point in the market cycle. Chile, South Africa and Australia are mainly commodity, real asset economies. That has worked out great in Africa and longer term in Australia and Chile, but all three are being ignored right now as investors chase those countries that create paper wealth by playing financial games. BTW, do not overlook fixed income CEFs. Many of them sell for deep discounts, also. Why buy a bond that yields 6.5% when you can buy a fund that owns that bond and is selling at a 10% discount? Of course, there is more to it than that, but that is the rationale behind owning fixed-income CEFs. Good luck, MB