Nevsun
Resources Ltd. (NSU, NY, 4.39) has been purchased by Zijin Mining of
China, which received over 89% of the total shares outstanding voting in
favor of the acquisition. Our sell on Nevsun would have filled at $4.39, for
a gain of 64%. (Our first tranche was sold for a gain of 1,387%.)
If you tendered your shares, the cash will be delivered to the depository
within three business days (and should be in accounts a day or two later). If
you did not tender and have not sold, Zijin's offer is being extended by 10
days, so you can tender and receive the CA$6 per share price; if you tender
during the extension, the funds will be delivered within three days after the
end of the extension. There is very little difference between the CA$6 and
current $4.39 in New York. So you can sell—Wednesday to push the tax gain
into next year—or tender.
Yields of Almost 10% of Solid Companies
Both of the business development companies on our list—Ares Capital
Corp. (ARCC:NASDAQ) (15.61) and Gladstone
Investment Corp. (GAIN:NASDAQ) (9.30)—saw stocks down sharply on
misplaced concerns about higher interest rates. As discussed previously, the
vast majority of the companies' loans are at floating rates, while their debt
is mostly at fixed rates, meaning rising interest rates actually widen the
spread. It becomes a concern only when higher rates start to affect the
ability of the portfolio companies, to which they have lent, to repay loans.
That is not a significant concern at present.
Ares, selling below NAV and with a current, fully covered yield of 9.99%,
and Gladstone, at a 24% discount to NAV, with a monthly yield of 8.8%, and
supplemental distributions bring it to almost 10%, are both strong buys.
Kingsmen
Creatives Ltd. (KMEN:SI) (0.50) announced a new collaboration with Hasbro
to bring toys—from the Transformers to My Little Ponies—to life with Toybox,
a "multi-brand life carnival" in Asia, commencing in February in
Singapore. The contract is another example of how Kingsmen is the partner of
choice in Asia. With a single-digit p/e, 5% yield and strong balance sheet,
Kingsmen is a buy.
Adrian Day, London-born and a graduate of the London
School of Economics, heads the money management firm Adrian Day Asset
Management, where he manages discretionary accounts in both global and
resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX).
His latest book is "Investing in Resources: How to Profit from the
Outsized Potential and Avoid the Risks."
[NLINSERT]
Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own shares
of the following companies mentioned in this article: Nevsun Resources,
Gladstone Investment and Ares Capital. I personally am, or members of my
immediate household or family are, paid by the following companies mentioned
in this article: None. My company has a financial relationship with the
following companies mentioned in this article: None. Funds controlled by
Adrian Day Asset Management hold shares of the following companies mentioned
in this article: Nevsun Resources, Ares Capital, Gladstone Investment and
Kingsmen Creatives. I determined which companies would be included in this
article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors
of Streetwise Reports: None. Click here
for important disclosures about sponsor fees. The information provided above
is for informational purposes only and is not a recommendation to buy or sell
any security.
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