Gabelli Utility Trust Is Overpriced At An 87% Premium To NAV But Hard To Short

seekingalpha02-01

Gabelli Utility Trust trades at an 87% premium to net asset value, despite lagging behind the Vanguard Utilities Index Fund ETF Shares.The GUT closed-end fund's high premium is attributed to its ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2408591227?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1452166359/image_1452166359.jpg","is_english":true,"pubTime":"2024-02-01 05:07","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2408591227","market":"us","top_or_hot":-1,"title":"Gabelli Utility Trust Is Overpriced At An 87% Premium To NAV But Hard To Short","media":"seekingalpha","content":"<div>\n<p>Gabelli Utility Trust trades at an 87% premium to net asset value, despite lagging behind the Vanguard Utilities Index Fund ETF Shares.The GUT closed-end fund's high premium is attributed to its ...</p>\n\n<a href=\"https://seekingalpha.com/article/4666460-gabelli-utility-trust-is-overpriced-at-an-87-percent-premium-to-nav-but-hard-to-short\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Gabelli Utility Trust Is Overpriced At An 87% Premium To NAV But Hard To Short</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGabelli Utility Trust Is Overpriced At An 87% Premium To NAV But Hard To Short\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-01 05:07 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4666460-gabelli-utility-trust-is-overpriced-at-an-87-percent-premium-to-nav-but-hard-to-short><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Gabelli Utility Trust trades at an 87% premium to net asset value, despite lagging behind the Vanguard Utilities Index Fund ETF Shares.The GUT closed-end fund's high premium is attributed to its ...</p>\n\n<a href=\"https://seekingalpha.com/article/4666460-gabelli-utility-trust-is-overpriced-at-an-87-percent-premium-to-nav-but-hard-to-short\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"GUT","symbol_name":"GUT基金","start_time":0,"source_url":"https://seekingalpha.com/article/4666460-gabelli-utility-trust-is-overpriced-at-an-87-percent-premium-to-nav-but-hard-to-short","article_id":"2408591227","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1452166359/image_1452166359.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2408591227","pubTimestamp":1706735276,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Gabelli Utility Trust trades at an 87% premium to net asset value, despite lagging behind the Vanguard Utilities Index Fund ETF Shares.The GUT closed-end fund's high premium is attributed to its attra","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"GUT":"GUT基金","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","LU1978683503.SGD":"Blackrock Sustainable Energy A2 SGD-H","LU1093756168.USD":"FRANKLIN K2 ALTERNATIVE STRATEGIES \"A\" (USD) ACC","IE00BD4GTV84.USD":"LEGG MASON CLEARBRIDGEINFRASTRUCTURE VALUE \"A\" (USDHDG) ACC","BK4581":"高盛持仓","IE00BMG7P587.USD":"LEGG MASON CLEARBRIDGE GLOBAL INFRASTRUCTURE INCOM \"A\" (USD) INC","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","VPU":"Vanguard Utilities ETF","LU0312595415.SGD":"Schroder ISF Global Climate Change Equity A Acc SGD","LU1093756325.SGD":"FTIF - Franklin K2 Alt Strat Fd A (acc) SGD-H1","FDN":"First Trust Dow Jones Internet I","IE00BD4GTT62.SGD":"Legg Mason ClearBridge Infrastructure Value A SGD-H (mdis) plus","BK4144":"石油与天然气的储存和运输","BK4534":"瑞士信贷持仓","NAV":"纳威司达","BK4585":"ETF&股票定投概念","LU0124384867.USD":"贝莱德新能源基金A2","BK4533":"AQR资本管理(全球第二大对冲基金)","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","XEL":"埃克西尔能源","LU1621767737.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"AAZ\" (EUR) ACC","LU2384288077.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"A-INS\" (EUR) ACC","OKE":"欧尼克（万欧卡）","BK4566":"资本集团","IE00BMG7P819.SGD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis SGD-H Plus","LU1621768206.USD":"AZ EQUITY GLOBAL INFRASTRUCTURE \"AAZ\" (USD) ACC","IE00BMG7P926.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Acc USD","LU1621767810.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"A\" (EUR) INC","BK4208":"复合型公用事业","LU0511384066.AUD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (AUDHDG) ACC","LU1621768115.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"B\" (EUR) INC","NEE":"新纪元能源","BK4081":"电力公用事业","IE00BMG7P694.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis USD Plus","WEC":"威州能源","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","BK4550":"红杉资本持仓","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","BK4588":"碎股","IE00BD4GTW91.USD":"LEGG MASON CLEARBRIDGEINFRASTRUCTURE VALUE \"A\" (USDHDG) INC"},"translate_title":"加贝利公用事业信托公司定价过高，比资产净值溢价87%，但很难做空","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XEL":1,"GUT":1,"NAV":1,"NEE":1,"VPU":1,"WEC":1,"OKE":1,"FDN":0.63},"content_text":"Gabelli Utility Trust trades at an 87% premium to net asset value, despite lagging behind the Vanguard Utilities Index Fund ETF Shares.The GUT closed-end fund's high premium is attributed to its attractive distribution yield of 11.47% and the option for shareholders to exit through rights offerings.Shorting GUT and going long on VPU is risky due to high borrowing fees, but the premium to net asset value is declining.   tianyu wu The Gabelli Utility Trust (NYSE:GUT) trades at an 87% premium to net asset value. This is a closed-end fund, or CEF, that's invested in utilities. It has an extremely low turnover of around 1%. The shareholder capital adds up to $221 million and the fund leverages this through $100 million of preferred shares on which it pays ~5%+ and a promissory note of around $20 million. The preferred are trading slightly below par. I checked because it seems like a relatively cheap source of leverage, given short-term interest rates are currently 5%+. It is puzzling to me the fund is trading at such a large premium to net asset value, given it significantly lags behind the Vanguard Utilities Index Fund ETF Shares (VPU): Data by YCharts The top holdings are NextEra Energy (NEE), WEC Energy Group (WEC), ONEOK (OKE), and Xcel Energy (XEL), among others. In its fact sheet, the firm, to its credit, calls out its high premium:   Gabelli unit trust factsheet (Gabelli) While net asset value has been declining for nearly ten years, curiously, the price of the units has moved in the opposite direction. Usually, funds that are experiencing a bad stretch trade at discounts to net asset value: Data by YCharts However, the distribution yields have gone in the opposite direction, which could explain why people are bidding this fund up above its net asset value. Getting 11.47% while being invested in \"safe\" utilities could be considered attractive. Data by YCharts What's curious is that assets under management have been increasing. It turns out that the fund is doing rights offerings from time to time. As long as the fund is trading at a premium to net asset value, doing a rights offering at a discount gives shareholders the option to get out without crashing the price, while the fund creates some value by giving out shares at a discount to the prevailing market price. This tends to decrease the premium, but it also increases net asset value because giving out shares above the market price is accretive. Data by YCharts CEF specialist Stanford Chemist covered the latest rights offering, dating back to 2022, here. He also wrote about the one before that, which occurred in 2021 and one in 2018. They all happened between February and May of their respective years. The current premium is relatively low compared to the 100%+ average premium it has traded at in the last 12 months. Data by YCharts However, the premium to net asset value is declining more recently: Data by YCharts I can't be sure the premium will \"normalize\" towards the premium range (~5%-~50%) it traded at between 2000 and 2015. I looked into shorting this fund and coupling it with a long position in the Vanguard Utilities ETF VPU. However, my broker charges 34% to borrow the shares. That's down from a high of ~60% earlier in the year. Other brokers may charge lower fees if the shares are more readily available to them. When investors are long the shares, most brokers pass them on around 50% of this borrow fee. If investors are set up to lend out shares, which is usually not the default option. As more people enable shares to be lent out, it does tend to decrease the borrowing fees and promote price discovery, which may not be the best thing for people who are long here.  In any case, I'm not inclined to own this fund at an 87% premium to go long a utility fund that hardly trades, is quite leveraged, and doesn't seem to keep up with the low-cost unlevered Vanguard option. To top it all off, the fund has a history of executing dilutive rights offerings in Q1 or early in Q2.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.0","shortVersion":"4.24.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2408591227"}