SPE Stock Recent News

CCEF: New Addition To The Fund-Of-CEFs Space

Several high-yielding closed-end funds have announced increased monthly distributions for 2024. The funds mentioned have a forward annual yield exceeding 10%, except for one that yields 9.5%.

The Special Opportunities Fund focuses on discounted closed-end funds, undervalued operating companies, and other special distributions to generate absolute returns. Looking forward, with sold performance in 2023, the SPE fund will likely raise its distribution in the new year. This will likely help the fund narrow its discount to NAV. The SPE fund also has ample cash / money market securities on hand to fund a buyback if the discount persists.

Special Opportunities Fund is a closed-end fund managed by Bulldog Investors known for using activist techniques to unlock value in rival funds. SPE currently trades at an 18% discount to NAV, and more action is needed from management to help reduce this discount. The fund aims to pay monthly distributions at a rate of 8% annually, but its small size may pose challenges in sustaining this distribution policy.

Closed-end funds offer opportunities for investors to exploit discounts and premiums, with Bulldog Investors and Saba Capital Management being major activists in this space. Both Bulldog and Saba offer publicly traded CEFs that can pool some of their targets into these funds, providing discounted exposure to discounted investments. Despite the added expenses of investing through a CEF into another pool of CEFs, both funds offer attractive discounts, with Special Opportunities Fund looking particularly attractive.

SPE currently trades at an above average 17.3% discount to NAV. Way above its normal range. SPE has issued a 2.75% convertible preferred for leverage that also currently trades at a significant discount to par value.

Special Opportunities Fund targets special situations like undervalued companies, distressed assets, discounted closed-end funds, SPACs, etc. that are attractively discounted. SPE generated double-digit yield and has been offering monthly pay-outs since 2019. It also generated strong long-term average annual returns.

SPE regularly trades at a discount, but that discount has been widening significantly. The fund suffered in 2022, as did most equities and bonds, but held up relatively better than the market.

The Special Opportunities Fund is a special situations / activist hedge fund in a closed-end fund structure. The CEF has generated respectable long-term average annual returns of 6.8% over 10 years.

SPE comprises a unique blend of investments of other investment companies, SPACs, equity positions and fixed-income holdings. They have recently announced they are suing one of their underlying SPACs.