1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Articles (29) 

July Closed-End-Fund Odd Lot Tender Offers

June 24, 2012 | About:

While the JAKK and CACC tenders haven’t yet completed a bunch of new tender offers with odd lot provisions have already been announced for July. They are for closed-end funds, and instead of a fixed dollar value per share you will get a percentage of NAV. Since they are all trading at a discount this creates an opportunity with positive expected value, but you do have market risk while holding the position. Because of that I’m going to wait till the last moment before buying, since I don’t expect that the discount will significantly change between now and the close of the tender offer.

The following funds have announced a tender offer:

FundTickerNAVLast PriceOfferDeadlineEV ($)
MS Eastern EuropeRNE15.9214.4198.5%July 10126
MS Emerging MarketsMSF14.9013.5898.5%July 10109
MS India InvestmentIIF16.1814.6398.5%July 10129
Turkish InvestmentTKF15.0113.6698.5%July 10111
Latin American DiscoveryLDF15.0813.9598.5%July 1089
China FundCHN23.7721.5199.0%July 23200
Total expected value for the all the closed-end fund tenders is 764 dollars before transaction costs, or an ~8.4% return on a ~$9,000 dollar position that you have to hold for just a few days if you want to play it safe (although I actually think you don’t need to wait before the trade settles before you can tender, so you could buy on the last day).


Not long any of the funds, but will buy between now and the deadlines.

Rating: 2.7/5 (3 votes)


Byslkwd - 5 years ago    Report SPAM
Is it possible for anything to go wrong on this trade? Like what?
BetterCEFThanSorry - 5 years ago    Report SPAM
Yes Byslkwd, it can go wrong: as of 6/29/2012 close, the average discount on these six was about 8.5%, and the tender offer is for 1.5% off NAV, so you have the prospect of making a 7% of NAV spread before trading costs. As AlphaVulture suggests by mentioning market risk, if emerging markets stocks tank 7% during the time you hold these, your profit is gone. So unless you're peeling off some existing emerging markets exposure to play this game, and plan to return the proceeds to that exposure, you may want to put on a hedge to ensure this arb profit.
Sf631 - 5 years ago    Report SPAM
Great summary. Is there a good source of closed-end fund tender offers or do you just keep an eye out for press releases and brokerage bulletins?
Dtdarbo - 2 years ago    Report SPAM

I am following these odd lot special situations on www.specialsituationinvestments.com, works out quite good.

Please leave your comment:

Performances of the stocks mentioned by AlphaVulture

User Generated Screeners

jrpasinskiPasinski Net Net
vvalsecchiMomentum Growth
HOLKLSUNew Small to Mid Cap Late Stag
HOLKLSUNew Trump Late Stage with Infr
herb.singhdrug risers
schwanz.jeremyRule 1 S
maggers78Copper Names
dwilsherRoc greenatt
dwilsherRoc green blatt
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat