FUND - GAM: Very Attractive 18% Discount Variable Income And Solid Past Performance

2024-06-02 09:00:00 ET

Summary

• General American Investors Co. Inc. is a closed-end fund that invests in a diversified pool of equities of mostly large-cap U.S. listed stocks.
• The GAM CEF uses nearly 12% leverage in the form of preferred shares, for which it pays 5.95% in distributions quarterly.
• GAM's past performance is solid, especially the long-term performance. In some ways, this fund is a proxy for the S&P 500 Index in terms of capital appreciation with the benefit of significant income, though variable from year to year.

Introduction:

General American Investors Co. Inc. ( GAM ) is one of the nation's oldest closed-end funds ("CEFs"), incepted in 1927. For over 95 years, the fund has managed a global portfolio of investments, consisting principally of common stocks of U. S. companies but also includes some international and private securities. The fund is internally managed by General American Investors Company, Inc. The management focuses on the long-term appreciation of the NAV (net asset value) of the fund, and income is only a second consideration. In that sense, income from this fund is not very consistent. Even then, if you look at the past several years, income from the fund has been significant, even if it was irregular. The average yield over 10 years has been in the range of 7.5%.

The only other fund that is very similar and also as old as GAM is Adams Diversified Equity Fund (ADX), which was founded in 1929. We reviewed that fund last week, and you can read that report here ....

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