This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Expert Manager Talks Closed-End Funds

Cracking the closed-end fund market has been tough this year, but one code-breaker-turned-fund-manager has found the key.

Based in Annapolis, Md., Richard Shaker manages $85 million in assets, employing various closed-end fund trading strategies, most notably discount mean reversion. Prior to starting Shaker Financial Services, Dr. Shaker was deciphering enemy codes as chief of mathematical research for the National Security Agency.

Dr. Shaker's composite managed accounts are up 1.7% vs. a decline of 5.6% for the S&P 500 year to date. He finished up 13.7% in 2007, compared to 5.5% for the index.

TheStreet.com asked Dr. Shaker about his favorite CEFs, whether he expects discounts to narrow or widen and what he is hearing on the activist front.

Q: The last year has been hectic in the closed-end fund market due to Fed actions and failed auctions. How have discounts been affected? Where are they now?

A: We generally compare a CEF's current discount to a short-term average of its recent history. However, during the past nine months, this strategy has been complicated by three dramatic widenings of average discount, each of which was followed by a retracement. The first widening, from 4% to 13%, began in mid-April of last year and culminated with the first Fed intervention on August 16.

The average narrowed back to 7% in August, but then, under tax-loss selling pressure, went to 11% near year's end. The CEF version of the "January effect" resulted in a narrowing back to 5% in early February. A third widening took place in late winter during the failure of ARP (Auction Rate Preferreds) auctions, with the average discount going back to double digits briefly on March 17. But as of today (May 23), the average is back to 6%.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs