Gabelli Healthcare and Wellness to Redeem Preferred

I had missed the press release on the call, but 2WR, noted it in a comment.

Gabelli Healthcare and Wellness (GRX) announced a call on their 5.76% (GRX-A) issue for 4/9/2020.

The release is here.

So when you are ‘shopping’ for CEF preferred you should look for ‘call protection” (the 1st redemption date is a year or 3 in the future) OR pay no more than $25 plus accrued dividends.

I just noticed also that the Bancroft Fund (BCV), which is also a Gabelli Fund, is doing a rights offering to sell more shares of their common. While the Bancroft Fund is in good shape relative to their leverage (554% asset coverage as of last November). This is the type of move that various Gabelli Funds will take if Mario Gabelli begins to worry about potential asset coverage ratios.

For those not familiar with how this works – if a CEF falls to a point where they have less than 200% coverage on their leverage they will have to suspend common stock dividends. They will sell common stock like crazy to avoid this potential. They can either sell common shares or redeem senior securities (preferreds or debt) to reduce leverage.

From the history in the 2009 period we KNOW Gabelli funds will sell massive amounts of common shares if necessary.

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