Wednesday, February 14, 2007

Value Line's CEF -- Discussion of Mark Hulbert's Marketwatch Article

Value Line's closed-end fund, the First Trust Value Line Fund, FVL, has been trading at a discount to its NAV, its net asset value, per Mr. Hulbert, who writes for MarketWatch, mostly on newsletters. If there is a more tireless student of investing newsletters, I don't know who it could be. FVL is being converted to an exchange-traded fund.

Some points from the article: The CEF was trading at a 7.8% discount to NAV on February 5. Last year, per Mr. Hulbert's calculations, "a portfolio of Value Line's top-ranked stocks lagged the Dow Jones Wilshire 5000 index by some thirteen percentage points." Ooh, man, that hurts to think about. There you have the basis for the discount, I guess. He points out that Value Line's stock rankings have struggled for the last five years. Mr. Hulbert's research does indicate that over 26.5 years tracked, Value Line's picks have beaten the Wilshire 5000 by an average of 2.6 percentage points, so it has done well over time. In fact, that is a record worthy of respect.

It could do well again. It's a proprietary, undisclosed system, so it is pretty much impossible to formally research. One man I know even refers to it as the "Value Line anomaly." It's rather like a black box, research-wise. And it is difficult for me to endorse someone's black box investing approach. Sorry, I'm just funny that way.

Here's the article:

Conversion of Value Line fund presents unique opportunity - MarketWatch

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