There has been some talk on the site of how the “put option” works on a couple of the Gabelli CEF issues work.
We own a position in the Gabelli Go Anywhere Fund (GGO-A) which has ‘put’ options in 2019 and 2021.
The company put out the notice to investors last week–we received the notice electronically first and then yesterday we received a snail mail version.
This issue has a floor coupon of 5%–which is where it is now, based on a $40 liquidation value. The issue is trading at $41.49 today (we use this term loosely as there is damned little volume)–so a current yield around 4.8%.
The ‘put’ is can be exercised from now until 9/24/2019 at $40 plus accrued dividends. 1 has to call their broker (in this case Fido) to exercise the ‘put’.
In this case we will not exercise our ‘put’ which would lock in a loss of more than $1/share on our holdings. We then have 2 years to either dispose of the shares or exercise the option that comes around in 2021. Most likely we will dispose of the shares prior to the next put as shares will move down towards $40 as the next put date comes closer, but we have plenty of time to see what happens prior to this time.
After the second ‘put’ date arrives the issue converts to a perpetual preferred stock.