GUT - Gabelli Utilities Trust

[CleverLongboat]

The GUT is currently trading at a 50% premium to NAV vs a historical average of ~20%. The underlying utilities in the trust have sold off by about 20% in the past 2 months due to the rate move, leading to a wide divergence between NAV of 4.71 and current price of 7.04. I don't know what brings this premium back down but this just seems like an "asleep at the wheel" type situation. Has anyone else heard anything about this?

[gfp]

What am I missing here?  Why does this thing ever trade at a premium when most CEFs trade at discounts to NAV?  I see that the premium is larger than normal, as you mention, but it seems odd that 'normal' is a premium at all

 

 

The GUT is currently trading at a 50% premium to NAV vs a historical average of ~20%. The underlying utilities in the trust have sold off by about 20% in the past 2 months due to the rate move, leading to a wide divergence between NAV of 4.71 and current price of 7.04. I don't know what brings this premium back down but this just seems like an "asleep at the wheel" type situation. Has anyone else heard anything about this?

[CleverLongboat]

It's pretty rare. I think this is now the highest premium in the closed end fund world. Theoretically one would think that a CEF should trade at a discount to its underlying due to capitalized management fees. A few trade at a slight premium, possibly due to 'profitable leverage' in the sense that they can borrow at 2% and invest at 5%. If investors believe they can do this sustainably, maybe they should trade at a few percentage points premium. But 50%?

[tytthus]

If there are shares available, sounds like this would make a good pair trade with long XLU or VPU.  Will have to look closer....