Closed-end funds often trade below their net asset value (NAV). This market inefficiency can offer a competitive advantage for both buy and hold investors and short sales because it allows the investor to buy the fund at a discount. Dan Plettner’s model, Long/Short Opportunistic, exploits these inefficiencies and holds or sells as the market dictates. This portfolio is not limited to closed-end funds, however. The Plettner Opps portfolio also takes advantage of under-followed ETFs.
DWS Enhanced Commodity Strategy Fund Inc (GCS) Trading at a slight discount from net asset value (NAV), this fund could be facing some hard times ahead. With top holdings that consist of Exxon Mobile, Chevron and BP, the market value of this fund may be exposed to many bumps in the road as BP continues to attempt to slow down the rampant oil spill and control its reputation.
Alpine Total Dynamic Dividend (AOD) This week, AOD is trading at a premium—which means its market price is above the net asset value for the fund. With holdings like Microsoft, Avon Products and Halliburton, this is a well diversified fund with holdings spread fairly evenly throughout the financial services, industrial materials, consumer goods and energy sectors. Its price has been steadily above NAV since 2009.
Alpine Global Premier Properties (AWP) The second Alpine fund in Plettner Opp’s top holdings is trading at a discount and has a tremendous focus on the financial services sector. The fund’s top holding, Annaly Capital Management Inc (NYSE:NLY) is an attractive real estate investment trust (REIT) in its own right with a low price to earnings ratio and high earnings per share and dividends. While the fund has yet to get back to its 2007 highs, it has experienced a surge in popularity during the past year and has been consistently priced below NAV.
