Archive for the ‘SVVC’ category

Firsthand Tech Fund (SVVC) – Realizing Value

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In Mid-March, I wrote about Firsthand Technology Value Fund (SVVC) and a guaranteed return strategy I call the Hall of Mirrors trade (note here). The only way to get this guaranteed return, however, is to either (1) have a management team that’s intelligent enough to recognize it and do something about it, or (2) get an activist involved that forces the value creation. In the case of SVVC, I noted that renowned activist Phil Goldstein would be that catalyst concluding, “It wouldn’t surprise me if one day soon the valuation gap of SVVC completely disappears.”

It looks like today SVVC is on the road to unlocking value for shareholders via the Hall of Mirrors trade:

The settlement also provides that the Fund’s Board approve a plan for the Fund to repurchase up to $10 million of common stock in open market purchases during 2014, and to conduct a self-tender offer for at least $20 million worth of common stock at 95% of net asset value to be completed no later than January 31, 2015. Further, the Fund has agreed to liquidate its Facebook and Twitter holdings no later than September 30, 2014 and October 31, 2014, respectively, and to distribute any net realized gains from those holdings to shareholders within 60 days of completing those liquidations (source).

So Phil Goldstein and his Bulldog Investors record another win and shareholders get to ride along. Well done, Phil. As for you, fellow investor, some advice: read Phil’s semiannual letters – it’s a no lose trade (find them here).

Firsthand Tech Fund (SVVC) – The Hall of Mirrors Trade

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Imagine standing at the beginning of a very long hall of mirrors. What you’d see as you looked down the hall is your figure repeated over and over again almost to infinity.

This analogy can be applied to investing: a winning trade that you can repeat over and over is what’s known as the Hall of Mirrors trade.

When you find a Hall of Mirrors trade, you’d better not tell anyone because your profits will soon become someone else’s profits. And this business is tough enough without giving away all of your trade secrets.

But in rare cases, it’s worth pointing out a Hall of Mirrors trade to drive your own returns. Let me explain by way of an example.

Meet Firsthand Technology Value Fund (SVVC).