One thing we love about closed-end funds (beyond the dividends: many CEFs yield 7%+ today) is the big discounts to net asset value, or NAV, that these funds hand us. These discounts only exist with CEFs. Here’s why: CEFs typically can’t issue new shares to new investors after their IPOs, so their shares get bid up and down on the market, independent of how much their portfolios are actually worth. These discounts can get quite wide—sometimes 20% and higher. At that kind of a discount, we’re essentially paying 78 cents for every dollar of assets the fund holds! Our plan, then, is simple: buy when we get an unusual discount like that and then ride along as it vanishes.… Read more