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I'm short on both the Thai Fund (TTF) and the Thai Capital Fund (TC). As of Friday, these closed end mutual funds were trading at more than 60% of net asset value. Typically closed end funds trade at a slight discount to NAV. The Thai market has been tanking the past couple months and the price of both funds has dropped a lot but still these two funds have the highest premiums of any closed ends. My thinking is that over the next three to six months we'll see a gradual narrowing of the premium while the NAV will be volatile because of variations in the baht and Thai stock market but the NAV probably won't rise much. As investors realize the depth of the Thai economic problems, they will hopefully realize that the premium to NAV is not justified because Thailand will be mired in financial/ economic difficulty for a 18-36 month period. As the premium drops, I'll make more money - this is a great way to short the Thai market (and baht) because you can profit even if it doesn't go down or even if it rises a bit. Anyone care to discuss? Any views on why investors bid these funds to such high premiums? Any contrary opinions on TC and TTF. Any difficulties in finding stock to short? Anyone with previous experience shorting single-country closed end funds? John Rideout | ||||||||||||
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