The commenter cited below is making a suggestion regarding Tug8Boat's old fav cefs the Cstones. In his day CFP was also in the mix but that got comboed with CLM because of poor performance due to its concentration on closed end funds rather than the S&P 500 supplanted with swing trading of cefs. U can visit the post yourself if desired as the address is included.
I will add that I am surprised that CLM seems to have altered its extremely friendly original plan of buying shares in the OM if mp is below NAV but the language cited causes me to infer that new issue shares would be done. That is sobering and could make for a vicious circle of accelerating share issuance rather than a sobering virtuous circle of reduced supply in a crisis. I'm not sure I'm correct in the interpretation though so anyone interested must decide for themselves.
28 Sep. 2022, 8:38 PM
Reinvest Reinvest Reinvest
Almost half of the Cornerstone Strategic Value Fund Inc., investors are unaware of the unspoken benefit gained by the unique Dividend Reinvestment feature provided by CLM and CRF. Currently a new investor unaware of the ability to purchase stock at the Net Asset Value, NAV, as opposed to the current market price, and is automatically paid dividends in cash. This reduces the return and penalizes the stockholder.
It is my opinion that the Brokerage Firms should DEFAULT to the reinvestment of distributions, as opposed to the current DEFAULT to cash. The dual advantage is in addition to an increased ROI, the higher % re-investing should support a higher premium for the fund, that increases the profit for us all.
I believe the major reason for an investor missing this significant benefit is a lack of knowledge that could and should be provided by the brokerage firms.
In response, I am asking all Cornerstone investors to draft a letter to the brokerages to DEFAULT to Re-investment at the time of purchase, as this would provide the MOST BENEFICIAL choice for ALL investors.
In order to meet this goal, I am suggesting we write a letter to the brokerage firms describing this oversite. I have attached a sample letter below.
Individually written Letters to each of our major brokerage firms attach a significant weight to this action. There are two choices as to the level of written communication,
• Recommend or Complaint is a serious choice with different ramifications.
• Each response will vary between everyone’s own experience.
• If you feel you have been harmed because of the brokerages inaction it may fall in line of a COMPLAINT. This might create issues and are subject in SEC reviews.
• Recommendations do NOT rise to the seriousness of a complaint.
• Please share your own experiences and copy and paste the balance of issues listed.
• Links to mailing addresses are provided below.
A letter is a much stronger response than an E-mail.
The more letters and responses we can garner will highlight the desired GOAL…
Reinvest Reinvest Reinvest.
Imagine all the Non-Re-investors picking up an additional 24% in their monthly statements.
Attention: Corporate Actions and Dividend Departments
Re: Cornerstones (CRF and CLM) Complaint or Recommendation:
The DEFAULT to REINVEST DISTRIBUTIONS into shares for the company sponsored NAV reinvestment program.
“TYPE in YOUR OWN NEGATIVE experience.” WHY must we wrestle with your firm to accomplish an obvious oversite with our investment. Case in point:
A quote from the most recent semi-annual report: www.sec.gov
/... ncsrs.htm Page 18:
“In the case of stockholders, such as banks, brokers or nominees, that hold shares for others who are beneficial owners participating in the Plan, the Agent will administer the Plan on the basis of the number of shares certified from time to time by the record stockholder as representing the total amount of shares registered in the stockholder’s name and held for the account of beneficial owners participating in the Plan.”
The statement above ASSUMES REINVESTMENT on your part!
Letter From the Funds President (concluded) page iv “Distribution Reinvestment Considerations The Fund’s distribution reinvestment plan may at times provide significant benefits to plan participants; therefore, stockholders should evaluate the advantages of reinvesting their distribution payments through the plan. Under the plan, the method for determining the number of newly issued shares received when distributions are reinvested is determined by dividing the amount of the distribution either by the Fund’s last reported NAV or by a price equal to the average closing price of the Fund over the five trading days preceding the payment date of the distribution, whichever is lower. When the Fund trades at a premium to its NAV, as it has in recent history, stockholders may find that reinvestments through the plan provide potential advantages worth considering.”
As the INITIAL shareholder HAS YOUR FIRM evaluated the “SIGNIFICANT BENEFIT” for your clients?
LOGIC to DEFAULT : for the reinvest at NAV:
1) These funds pay a SUBSTANTIAL % Return of Capital (ROC) + Long Term Capital Gains.
Your firm defaulting to Cash Dividends is siding with the concept of SPENDING your capital, and your agents continue to represent that they can NOT recommend investments regarding the NAV reinvest.
Your firm has already made the decision that I should SPEND MY capital. Your failure to inform becomes a recommendation!
2) “Significant Benefit”- Over the last few years the average premium has been rising significantly, from a 52- week average of 15% premium to nearly 35% average.
3) The premium is Currently near 24%.
4) The August 9, 2022 distribution REINVESTED in CLM at 7.81 versus a market price of $10.22 on August 9, 2022. This difference is a direct cost to the stockholders and investors of the Cornerstone Funds.
Your firm holding the cash distribution by defaulting to this option is NOT in your client’s best interest, the benefit of 30.85% more stock value versus a cash dividend is significant.
Is NOT it to your clients BEST INTEREST to reinvest at NAV and participate in this benefit. Again, your firm is defaulting to NOT reinvest, is a recommendation, and NOT evaluating this “SIGNIFICANT BENEFIT” is certainly a failure of BEST INTEREST.
Investors are currently being forced to choose for your firm. The percentage of re-investors is climbing at an accelerated pace. Just a few years ago the div-reinvestment participation was only 10%, last month the percentage has increased to 47%.
The process of getting the fund to re-invest in the “company sponsored” NAV program is an arduous task at your firm with so many representatives at your firm NOT familiar with the process and this process usually takes several phone calls to accomplish the growing knowledge of this significant benefit.
In just a few months the percentage of re-investors will exceed 50% and the reinvestment will grow to a majority in confirmation of what investors choosing to accomplish, regardless on the difficulty at your firm to accomplish this feat. Defaulting to 100% reinvestment is the BEST and should be the ONLY choice.
It is time to get in front of this TREND.
UN-informed shareholders could be disappointed in NOT getting their CASH DISTRIBUTION. For example, “Where is my $1000.00 in cash”, your response, “ sorry sir, it is $1300.00 in stock. “This is a situation any investment firm should WELCOME.
END of Sample Letter.
Go to: If you need to send a letter www.schwab.com
PO Box 484
Jersey City, NJ