A Tech Option Income CEF Puzzler [Seeking Alpha]
Gabelli Utility Trust (The) (GUT)
US:NYSE Investor Relations:
gabelli.com/closed
Company Research
Source: Seeking Alpha
Summary Buying a closed-end fund [CEF] at a high premium is a mistake on several levels, in my opinion. Firstly, it opens up the possibility of devastating effects on share price if the distribution is cut (see Why CEF Distribution Stability Is Overvalued ). Secondly, having a high premium can incentivize management to conduct rights offerings, which also has a deleterious effect on share price (see Gabelli Utility Trust's Rights Offering Oversubscribed for a recent example). Third, each time a CEF at a significant premium makes a distribution, alpha is lost . Now, some investors may ask: who cares about a premium, as long as my income stream remains steady? I'll be the first to say that a purely income-focused, buy-and-hold approach is a perfectly valid way of investing, and it's very easy to execute as well to boot. However, I believe we can do better by avoiding overvalued funds , and investing in undervalued funds instead; basically a buy low sell high app
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Sec Filings
- 4/3/24 - Form DEFR14A
- 3/22/24 - Form DEFA14A
- 3/22/24 - Form DEF
- GUT's page on the SEC website