Today we are going to look at some of the new positions added to the two models managed by Dan Plettner. It is interesting to see these two different models at work.
Trading at a small discount to net asset value (NAV), SunAmerica Focused Alpha Growth Fund Inc (FGF) makes for a predictable addition to Dan Plettner’s Core model. In this model, Plettner exploits the inefficiencies that cause many closed-end funds to trade at a discount to NAV. Because a closed-end fund is created by developing a group of underlying assets, the fund has a value based on the closing prices of the underlying assets but because it is closed-end it trades on the market at a value based on investor perception. So while the underlying assets of FGF gave the fund a net asset value of $14.65 as of closing on July 7th, it was only trading for between $13.09 and $13.62 on the 7th and 8th.
In his Long/Short Opportunistic model, Plettner bought shares of Singapore Fund Inc (SGF). Here, Plettner again takes advantage of those same market efficiencies in closed-end funds, but he also considers some of them as short term positions, unlike Core which is a long-term hold model. Like FGF, SGF is trading at a discount to NAV, but it is a more significant discount. Trading on SGF over the past 52 weeks does not seem to have a wider range than FGF trading, but this significant discount could be something Plettner will consider exploiting in the short term.