MFV - MFV: CEF Liquidation Arbitrage Opportunity

2024-02-14 15:19:24 ET

Summary

• MFS Special Value Trust, a closed-end management investment company, has announced its liquidation, providing a rare arbitrage opportunity for retail investors.
• The closed-end fund is currently trading at a discount to net asset value (-6.4%), which is expected to close as the market prices in the liquidation.
• Investors can monetize the difference between the fund's NAV and market value, but should be aware of the market risk associated with the equity and fixed income holdings in the fund.

Thesis

You do not see liquidations in the closed-end fund ((CEF)) space very often, but they do occur from time to time. Liquidations are ideal arbitrage opportunities, especially when a CEF trades at a discount to net asset value. It is the case here for MFS Special Value Trust ( MFV ), which we have covered before here. In our original coverage piece, we did not find anything particularly attractive about this CEF. The fund is very small (roughly $31 million per Seeking Alpha) and has had a tenuous historic performance which failed to impress....

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