XLF, Banking and Financial Sector Stocks

Top 36. Dec 13, 1999 7:40 AM

» Kirk - BTO vs FSRBX vs XLF

BTO vs FSRBX vs XLF
<img src=http://iccharts.quicken.com/bin/icenter.... width=470 height=180>

Interesting Thru. Any idea WHY BTO is so heavily discounted? It is WAY off its peak compared to FSRBX which is one of the highest rated funds. Could be a good volatility play here with that pick plus you get the NAV discount.

Are you considering adding here?

-- posted by Kirk

Top 37. Dec 13, 1999 9:30 AM

» Thruhiker - BTO

Larger than normal discount is because sector is out of favor. IF one thinks that the financial sector will rebound next year, as I do, then investing in this closed end fund should prove rewarding as the stocks in the fund increase AND the discount narrows.

Not adding any; increased my holdings a month or so ago to where I want to be.

Not a huge bet, just one of those things we do "on the fringes" as Rande so aptly puts it.

-- posted by Thruhiker

Top 38. Dec 13, 1999 9:38 AM

» dewam - discount/primium

Thruhiker, do you know where online I find the most up to date discount/premium numbers? Den

-- posted by dewam

Top 39. Dec 13, 1999 9:58 AM

» Thruhiker - Den

I think the WSJ interactive updates discount/premium daily for those funds that report daily (some report NAV of portfolio weekly). I'll check tomorrow. Info is there today, but its always there on Mondays since that is when it is in the papaer WSJ and Barons.

In my pre-computer days I was in a Vanguard closed end; they would give me the current NAV and premium/discount via a 1-800 number.

Regarding BTO, I checked their website a few months ago and could not find this info.

-- posted by Thruhiker

Top 40. Dec 13, 1999 11:28 AM

» JenL_2 - Thruhiker....

I have a dumb question. Would you please explain your statement:

Fund currently trades a discount to NAV of nearly 20%.

Are you saying that there is a "20% off sale" on shares in that fund?....Jen

-- posted by JenL_2

Top 41. Dec 13, 1999 11:36 AM

» Kirk - On Sale for a reason?

Jen, yes. IF you add up the shares times share price for all the stocks in the fund, it is selling at a discount to what it would cost you to buy the shares. Berkshire Hathaway, OTOH, usually sells at a premium to the sum of its parts.

The big question is "Do you want to buy these shares?" They may have some thinly traded small banks that would tank if they tried to liquidate their position...

I have one pico cap fund that is sometimes selling at a 40% discount. Many of the shares it owns are private... so even smaller or pre IPO (except the stocks are not in high tech so why bother with an IPO?)

I do not see BTO on this list...
http://biz.yahoo.com/p/tops/sf.html
plus I can not find good information about it.

The don't buy stuff "just because it goes up" also applies to "don't buy stuff because it is on sale"... The sale items may be some meat that is past the expiration date! 8)

-- posted by Kirk

http://www.smartmoney.com/smt/funds/inde...

Top 42. Dec 13, 1999 11:47 AM

» Thruhiker - Jen

Here is a link to an old Smart Money column which discusses closed ends in general, and has a brief comment on BTO in particular.

I'm gone for a while, but if you need more info repost and I'll answer tomorrow in my own words.

-- posted by Thruhiker

Top 43. Dec 13, 1999 12:49 PM

» JenL_2 - Closed End Funds

Thanks Kirk and Thru for the comments and information. Good Smart Money article. I don't own any closed-end funds, and didn't realize that they can be traded in real-time like a stock, and can be sold at a discount to the NAV of the fund. The Smart Money article states that BTO has a good record - sounds like a bargain-hunters delight, if we expect the outlook for the financial sector to be positive in Y2K .....Jen

-- posted by JenL_2

Top 44. Dec 13, 1999 5:37 PM

» Thruhiker - Kirk

Couple quick points re BTO:

Your link may not include closed ends in their data base. The manager of BTO is the same manager as the John Hancock Regional Bank Fund which is ranked number 3 on the 10 year performance chart.

Morningstar 4 star rated.

When the sector was in favor BTO had a 14% PREMIUM in late 1997 early 1998. IF this sector once again becomes in favor - as I think it will - then the existing 20% discount will shrink. The rise in bank stocks AND the lessening of the discount should provide a nice return in 2000.

Mid cap style box. Largest position is Bank of America.

At least thats my take on it.

-- posted by Thruhiker