Boulder Growth &, Inc.me Fund Inc. (AMEX:BIF)

Discount to NAV

Trying a closed end fund (CEF). %16+ discount to NAV at the moment. If they reinstate a dividend, could see a pop.

Normally I stay the heck away from ETFs. I'd usually rather short them than go long, particularly those idiotic commodity-tracking funds that contango gradually eats away at the value of, like UNG, USO, etc... Those things are absolutely terrible.

Having said that, I came across an interesting ETF this afternoon. It was written up as part of Seeking Alpha's "Just One ETF" series of articles. I've found some interesting ideas in SA's "Just One Stock" series in the past so I gave the ETF piece a quick read and I liked what I saw.

Just One ETF: A Deep-Discounted CEF With Cash and Insider Backing

In the article Simon Lack recommends taking a long position in a Closed-End Fund called the Boulder Growth and Income Fund (BIF). Now the "Income" part of this fund's name is somewhat of a misnomer because BIF stopped paying dividends in late 2008. Lack believes that BIF has accumulated enough cash that there is a good chance that the fund will resume making dividend payments to shareholders (or unit-holders I suppose).

Like most closed-end funds, BIF trades at a discount to its net asset value. At an 18% discount, only 14 of the 173 closed-end funds that are listed on U.S. exchanges trade at a larger discount to their NAV than Boulder G & I. If the fund were to reinstate a reasonable dividend payment, not an unsustainable one like it used to pay, it would likely begin to attract more "investors" and its discount to its NAV would theoretically narrow. Heck, at one time back in 2007 the fund traded at a 50% premium to its NAV.

An 18% discount to its net asset value is great, but exactly what sort of assets are we talking about? Here's a list of BIF's top twenty holdings that I just grabbed from its website:

Berkshire Hathaway Inc., Class A 27.01%

United States T-Bill due 3/25/10 13.30%

Wal-Mart Stores Inc 6.28%

Johnson & Johnson     6.10%

Cohen & Steers REIT 4.58%

Ithan Creek Partners, L.P. 3.06%

Becton Dickinson & Co. 2.64%

Advent Claymore CVT W7 VAR% 2.48%

Heineken Holding NV 2.37%

Kiwi Income Property REIT 1.67%

ConocoPhillips 1.51%

New Zealand GOVT 11/15/11 6% 1.29%

Great Plains Energy 1.29%

Gabelli Dividend & Income B T7 VAR%   1.18%

Hang Lung Properties     1.11%

Cheung Kong Holdings     1.09%

Claymore Total Return Fund     1.04%

Berkshire Hathaway Inc., Class B     0.97%

Procter & Gamble Co     0.92%

Wheelock & Co Ltd     0.88%

A number of the fund's large positions are actually reasonably attractive. I can see the logic behind owning Berkshire, Wal-Mart, Johnson & Johnson, Becton Dickinson, Great Plains Energy, and ConocoPhillips right now.

Treasuries are, well Treasuries. I wouldn't buy them...unless I could do so at an 18% discount to their face value :).

I have absolutely no idea what things like Hang Lung Properties and Cheung Kong Holdings are. If I was going to invest real money in this fund, I'd try to find out, but since they only represent 2% of its assets and I'm only picking this stock in CAPS I'm not going to.

One has to wonder about the efficiency of a small fund like this holding 80 positions, nonetheless I am intrigued by its significant discount to NAV and the potential catalyst of a reintroduction of a dividend. I don't have a whole lot of experience with purchasing shares of closed-end funds that are trading at steep discounts in real life, so this will make an excellent experiment for my CAPS portfolio.

Deej

January 21, 2010 at 12:52 PM, jlmjlm77 (99.86) wrote:

I would like to add a new pick: Similar to my prior pick NFJ, I still like the many closed end mutual funds that are selling at discounts to net asset value - the new pick is BIF - don't be fooled by its one-star status:

BIF is currently my favorite long-term investment (I hold shares in my retirement plan).

Seems like a relatively conservative portfolio, selling at a decent discount from NAV in the past sold at a at a premium. Also inside buying last summer. More info at:

http://www.cefconnect.com/Details/Summary.aspx?ticker=BIF

I don't believe the recent move in BRK/B has been fully recognized. This assumes the fund still has near 25% invested with them.

Looks like a conservative portfolio:

Top Holdings
As of 5/31/2009 reported by fund sponsor
Holding Value %Portfolio
Berkshire Hathaway Inc. A $42.68M 24.66%
United States Treasury Bills 0.110% 0.11 $24.99M 14.44%
United States Treasury Bills 0.120% 0.12 $24.99M 14.44%
Wal-Mart Stores, Inc. $11.93M 6.90%
Advent/Claymore Glb Convertible Sec&Inc $5.58M 3.23%
Johnson & Johnson $5.51M 3.19%
Ithan Creek Partners, L.P. $5.18M 2.99%
Heineken N.V. $4.73M 2.73%
Cohen& Steers Reit And Utility Income Fu $3.31M 1.91%
Dreyfus Treasury Cash Management Money M 0.12 $3.14M 1.82%

Solaris, thank you for working on this portfolio:

This is probably one of the best kept secrects out there. This fund holds its value, and yielding a healthy div. It does have wild swings which will apeal to conservative investors

Inside buying

Building a portfolio based on insider cluster buys.

Long standing fund, high dividends. A great long term investment especially if you reinvest monthly dividends!

Hice div.

Great income stock, excellent yield. Accumulate.

Good Closed-End Fund. Dividend over 14%. Good Income Stock

This stock's dividend tax advantage for senior's is not widely known. When you consider that most of the dividend is a return of capital (which effectively is an early non-taxable payment of future long term cap gains) which must be deducted from the cost basis. When the senior passes the stock to his or her heirs, there is no cap gains due. Another example is that in 2009 the Medicare Part B premium will be figured on your AGI plus Tax Exempt interest from 2007. Anything over 200K will get you a Part B premium of $400 a month each. Do the Math! A return of capital is not reportable or taxable. Of course, it also requires that the managers of the fund do a halfway decent job of keeping the NAV up and/or increasing.

Real Estate investment

YEP.

TRADEABLE, MAX YEALD, GLOBAL, GOING AND GROWING.

Great div.

Closed ETF