Model Manager Dan Plettner Reopens AOD Short (AOD)

Author: Dan Plettner

Disclaimer: Dan shorts ( AOD ) in his Covestor Long/Short Opportunistic Model.

The below text is licensed to Covestor Ltd. (“Covestor”), by Dan Plettner. Such text may be disseminated only by Covestor. Dan Plettner invests and receives income for securities research, including “buy-side” research. Dan licenses his own real time trading data to Covestor Ltd. (“Covestor”). Covestor is a Registered Investment Advisor that uses Dan Plettner’s data to create the Core, Long Short Opportunistic, Tax Advantaged Income, and Taxable Income models for its clients. Dan’s words should not be misconstrued as investment advice.

On August 19th at 2:16 EST, I reopened a short position in Alpine Total Dynamic Dividend Fund (AOD) at 5.44. There are more than 220 million shares outstanding. I do not believe there will be nearly sufficient market demand for AOD’s strategy of buying dividends to maintain a market value near Net Asset Value (“NAV”). I think demand for AOD shares could be exacerbated if the Bush Tax Cuts expire at year end.

I believe AOD’s yield continues to be demonstrative of its financial engineering.

AOD recently cut its distribution, but even to meet the lower distribution rate it seems Alpine must buy dividends at such a pace for AOD that I think requires sacrificing any growth objective. In effect, I think AOD looks to be slowly liquidating itself in a manner that distributes the tax liability associated with buying dividends to shareholders.

I continue to observe Alpine Trustees’ Governance Tendencies when studying the Governance interests. If insufficient demand for Alpine’s strategy of buying dividends adversely affects the market valuation, I believe the AOD shares would trade at a discount larger than 20% without Alpine taking action.