ECAT: 20% Yield, Significant Changes May Be On The Way

seekingalpha06-07

primeimages Looking for high yield discounted? Closed end funds, CEFs, often sell discounted to their daily NAV/share, which can be to your advantage when deciding when to buy. This article looks at ...

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Closed end funds, CEFs, often sell discounted to their daily NAV/share, which can be to your advantage when deciding when to buy. This article looks at ...</p>\n\n<a href=\"https://seekingalpha.com/article/4697880-ecat-20-percent-yield-significant-changes-may-be-on-the-way\">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":"IE00BKVL7J92.USD","symbol_name":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","start_time":0,"source_url":"https://seekingalpha.com/article/4697880-ecat-20-percent-yield-significant-changes-may-be-on-the-way","article_id":"2441061363","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2067207185/image_2067207185.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2441061363","pubTimestamp":1717766100,"columns":[],"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"primeimages Looking for high yield discounted?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","BLK.AU":"Blackham Resources Ltd","LU1599440770.SGD":"FIDELITY GLOBAL DIVIDEND \"A\" (SGDHDG) INC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0238689110.USD":"贝莱德环球动力股票基金","NVDA":"英伟达","BK4585":"ETF&股票定投概念","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","BK4576":"AR","LU0072462426.USD":"贝莱德全球配置 A2","BLK":"贝莱德","LU1670628061.USD":"M&G (LUX) NORTH AMERICAN DIVIDEND \"A\" (USD) INC","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","BK4566":"资本集团","BK4587":"ChatGPT概念","LU0056508442.USD":"贝莱德世界科技基金A2","BCAT":"BLACKROCK CAPITAL ALLOCATION TERM TRUST","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","LU0308772762.SGD":"Blackrock Global Allocation A2 SGD-H","BK4543":"AI","BK4577":"网络游戏","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","BK4579":"人工智能","BK4588":"碎股","ECAT":"BLACKROCK ESG CAPITAL ALLOC TERM TR","BK4141":"半导体产品","QQMG":"INVESCO ESG NASDAQ 100 ETF","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4581":"高盛持仓","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","BK4549":"软银资本持仓","MSFT":"微软","MUI":"黑石中级期债券基金"},"translate_title":"ECAT：20%收益率，重大变化可能即将到来","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"US7Y.BOND":1,"BCAT":1,"ECAT":1,"BLK.AU":1,"BLK":1,"MUI":1,"NVDA":1,"QQMG":1,"US12M.BOND":1,"US2Y.BOND":1,"US30Y.BOND":1,"US3Y.BOND":1,"US5Y.BOND":1,"US6M.BOND":1,"US10Y.BOND":1,"MSFT":0.73},"content_text":"primeimages Looking for high yield discounted? Closed end funds, CEFs, often sell discounted to their daily NAV/share, which can be to your advantage when deciding when to buy. This article looks at BlackRock ESG Capital Allocation Term Trust (NYSE:ECAT), and compares it to some peer funds. Fund Profile: \"The Trust’s investment objectives are to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust will invest in a portfolio of equity and debt securities. The Trust will invest at least 80% of its total assets in securities that, in the investment adviser’s assessment, meet certain environmental, social and governance (“ESG”) criteria.\" (ECAT site.) While ECAT's fund name includes the phrase ESG, that slant is more reflected in avoiding certain types of companies. It avoids holdings which are involved in the following categories:   ECAT site ECAT is a term trust which IPO'd on 9/27/21- it has a 12-year limited term, expiring in 2033, subject to extension, with a contingent feature to convert to perpetual. As of 3/29/24, ECAT had 9.12% of its $1.93B in assets overwritten with covered calls, with 354 holdings. Gross expenses are 1.38%, and average daily volume is 238K:   Hidden Dividend Stocks Plus A key issue for ECAT is that Saba Capital Management has been in a long battle to take over management of ECAT and some other BlackRock funds. Saba has aggressively bought shares, and owned ~28.55M shares, as of 4/3/24, which represents ~28% of ECAT's outstanding shares. Saba won a lawsuit in December 2023 against asset manager BlackRock (BLK) over the control of a group of closed-end funds, a special type of mutual fund that’s at the core of Weinstein’s investment strategy. \"The court ruled that 11 closed-end funds adopted control share provisions in violation of the ICA. The list includes two funds BlackRock manages: the BlackRock Municipal Income Fund (MUI) and the BlackRock ESG Capital Allocation Term Trust (ECAT).\" (Observer.) Saba has submitted proposals to (i.) elect new, independent directors to each of the Funds’ Boards of Trustees, and (ii.) terminate the management agreement between BlackRock and six of the Funds at the upcoming 2024 Annual Meetings of Shareholders. Saba has a plan to improve performance at several BlackRock funds, which could include offering a liquidity event giving shareholders a chance to exit at NAV; either a restructuring of the fund or a tender offer. After that event, Saba lists several options for narrowing the funds' discount to NAV:   Saba site If you own ECAT or any of the other BlackRock funds in play, you've probably received multiple proxy vote forms from both sides. Dividends: Take a look at the big recent jump in yield for ECAT - the monthly nearly doubled, from $.15 to $.2969, bringing the forward yield to over 20%. ECAT goes ex-dividend next on 6/14/24, with a 6/28/24 pay date.   Hidden Dividend Stocks Plus ECAT has a sister CEF, BlackRock Capital Allocation Term Trust (BCAT), with some similar characteristics - its top 10 also contains several of the Magnificent 7 stocks, such as Microsoft and Nvidia. 2022: Both funds had a rough year in 2022, with ECAT losing $113M, and BCAT losing ~$80M. ECAT's distributions were derived from ~52% Return of Capital, while BCAT's had ~21% ROC. 2023: ECAT's realized loss improved to $15M, and BCAT's loss improved to $59M. However, 76% of ECAT's 2023 distributions came from ROC; while BCAT's included 61% ROC. BCAT is also in play  - Saba owned ~15% of BCAT's outstanding shares as of 3/12/24.   ECAT site Taxes: For the year ending 12/31/23, BlackRock listed different % tax characterizations on its annual report. ECAT's 2023 distributions of $1.475 were characterized as 87% ROC, and 13% Net Income; while BCAT's were characterized as 74% ROC, and 26% Net Income:   ECAT site ROC offers you a tax deferral advantage, but it lowers your tax basis, so, when and if you sell, your tax basis will be lowered, and the taxes owed will be higher. Ask your accountant for more details. Holdings: As of 4/30/24, 82% of ECAT's holdings had market caps larger than $10B, and 1% had $5-$10B market caps. 68.5% of its holdings were in equity positions, and ~28% were in Fixed Income. As of 4/30/24, ECAT's 4 biggest geographical exposures were: North American equities, at ~49%, N. American fixed income, at ~25%, European equities, at 13%, and Japanese Equities, at 4%:   ECAT site As of 4/30/24, ECAT's 5 biggest sector exposures were: Tech, at 21%, followed by Healthcare, at ~12%, Financials, at 9.4%, Industrials, at 7.4%, and Consumer Discretionary, at ~7%:   ECAT site ECAT's top 10 equity positions accounted for ~23% of its portfolio, as of 4/30/24. Its largest position was in NASDAQ 100 E-Mini futures, at ~5%, with 3.3% in Microsoft, 2.3% in high-flying Nvidia, and ~2% in Lilly being its top Healthcare position, and Mastercard as its top Financials position.   ECAT site  Performance: ECAT outperformed BCAT over the past year, with a ~23% total return, vs. 17.4% for BCAT. ECAT came close to matching the S&P's 1-year total return of 26%, but trailed the 33% return of the NASDAQ 100 ETF, (QQMG). So far in 2024, ECAT is up 9.8% in price, vs. 10.5% for BCAT, 12.4% for QQMG, and 12.4% for the S&P 500. Of course, the age-old problem for income investors is that, even though QQMG outperforms, it has a very low yield of less than 1%, whereas ECAT's trailing yield was 9.89%, and BCAT's was 8.28%:  Hidden Dividend Stocks Plus  Hidden Dividend Stocks Plus Looking at ECAT's top 10 equity positions' performance shows you some big winners over the past year, and in 2024. Unsurprisingly, AI darling Nvidia (NVDA) leads by a long shot, with a 211% 1-year total return, and a 143% year to date return. 3 top 10 holdings, Marsh & McLennan, Mastercard, and Salesforce, had positive returns over the past year, but they trail the S&P 500, and they also trail it so far in 2024.   Hidden Dividend Stocks Plus Looking back further, over a ~3-year period, (ECAT IPO'd in September 2021), shows ECAT and BCAT with very similar ~22% total returns, while QQMG had a 32% return:   ycharts  Valuations: A useful strategy when buying CEF's is to try to buy them at deeper discounts or lower premiums than their historical averages, due to mean reversion. NAV is measured after the market close. As of the 6/5/24 close, ECAT was selling at a 6.5% discount to NAV/Share, which was a shallower discount than its 6-month average 9.2% discount, and its 1-year 10.75% discount. BCAT had a 6.77% discount to NAV/Share, which was also not as deep a discount as its 6-month and 1-year average prices to NAV/Share. BCAT's 3-year average price to NAV/Share is -11.23%.   Hidden Dividend Stocks Plus  Parting Thoughts: Normally, we'd advise you to wait for a deeper than historic discount to NAV before buying, but, in this case, there's a committed party, with deep pockets, who seems determined to improve and ultimately lower ECAT's discounts. We've stuck our toe in the water, and bought a small, speculative position in ECAT. Hopefully, it won't get bitten off by a shark.  All tables furnished by Hidden Dividend Stocks Plus, unless otherwise noted.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","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":"4.29.3","shortVersion":"4.29.3","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/2441061363"}