The Enhanced S&P 500 Covered Call Fund (ticker: BEO) recently announce the completion of a tender offer on October 14. The Fund offered to re-purchase up to 5% of its shares at a price equal to NAV (subject to a repurchase fee of up to 2% of the NAV) as of the close of regular trading on October 28, 2009.
Since BEO is currently trading at a 19% premium above NAV, you would not expect any rational person to tender their BEO shares unless they thought the NAV would appreciate at least 20% in the next two weeks.
But the Fund’s agent indicated that 15,302 shares (approx. 0.17% of the Fund’s outstanding shares) were validly tendered. In May of 2009, BEO was selling at a discount to NAV. It is possible that some investors or their financial advisors made a decision to tender their shares in May and neglected to cancel the tender later. I would appreciate hearing from any blog readers that can explain a rationale behind the tender decision.
Another odd thing about BEO is that the fund is terminating in October 2010, so the 19% premium also seems irrationally high.