My article a few days ago on CFP was inaccurate on a number of points and I would like to set things straight. Some of my readers may assume a conspiracy that does not exist. Ron Olin reads my blog and sent the following clarifications:
1. Ron Olin sold his management firm, Deep Discount Advisors, a number of years ago. The name was then changed by the new owner to Doliver. Ron retains a role as a paid consultant, but doesn’t run the company and is not a principal.
2. Doliver is a registered investment advisory firm, and not a fund. It has no connection with Cornerstone Advisors. It manages accounts for a large number of individuals based on the specific investment needs of its clients. As such, it is required to file 13G forms when the total holdings of its clients exceed certain thresholds on any specific security, like CFP. The associated share numbers change whenever a client leaves, or if a client sells or buys shares on its own initiative. Only a small percentage of the reduced CFP share holdings reported from the 13G filings were the result of sales initiated by Doliver.
3. BPM Partners has no association with Bradshaw. I had a “senior moment”, and confused the name Bracewell with Bradshaw.
4. Because Bradshaw is married to a sister of Ron Olin’s wife, Olin formally recused himself from advising Doliver or any of its clients with regard to participating in the CFP IPO. He did make a large personal investment in CFP, because he thought it was attractively priced, given the history of the other Cornerstones.
5. Ron Olin still owns most of the original shares of CFP that he purchased for his personal account. If and when he reduces these holdings significantly, he will record it in an amendment to his personal federal filing as required by law.
6. Ron Olin believes that intelligent CEF investing can out-perform the S&P500 by 5% to 7% a year, and that CFP may deserve a substantial premium, based on long-term projected returns and because it throws off substantial cash flow shielded from tax due to capital loss carry-forwards generated by the market collapse in 2008.
I still believe CFP is overvalued at these levels and would not buy it now, but Ron Olin is an experienced CEF investor, and may be right that CFP could be reasonably valued here. Based on the history of the Cornerstone sister funds it could even trade at higher premiums at times.