Another SEC filing showed Ron Olin, chief trader for Doliver Capital, held a 5.7% stake of that fund's shares.
wasn't available for comment.
Now some of these activists are bringing the battle straight to the boardroom, taking away seats from directors and rattling these funds as never before. 'It's our belief that directors at some of these funds take actions that are best only for the fund's advisors, not for the majority of shareholders,' says Ron Olin, who as a portfolio manager with Deep Discount Advisors in Asheville, N.C., has rallied other discontented shareholders to vote him onto the boards of Austria Fund and Clemente Strategic Value Fund."
"Disgusted by lackluster returns and a dismayingly large discount at which their shares traded on the New York Stock Exchange
, they voted out longstanding directors and in October turned the board over to a dissident plank headed by Ron G. Olin
radically changed the fund and boosted returns without laying a hand on its investment portfolio.
, 54, spent a earlier career with IBM
working on NASA's
The three contests are being led by Ronald Olin, 53, a one-time IBM middle manager who founded Deep Discount Advisors in Asheville, N.C. a dozen years ago."
and Mr. Goldstein, 54, have become the leading lights in an increasingly rancorous movement to push to bring the closed-end funds' price in line with the net asset value of their underlying securities.
Both are considered professional dissidents with more than a touch of arbitrageur: They buy funds trading at steep discounts, then seek to make profits by pressing for changes to narrow the discount."
"'Boards simple concluded that the proposals weren't in the best interest of shareholders,' says an exasperated Mr. Olin
Last summer, the Securities and Exchange Commission
armed Mr. Olin
, Mr. Goldstein and other dissidents with a powerful club, saying that boards must honor successful shareholder proposals to boot managers, rather than view them as merely advisory."
"For the measly $19,000 dissident shareholder Ron Olin
plans to spend on an upcoming proxy fight, you might suspect he's
not worth a second thought.
, operating from his
tiny and specialized investment firm in Asheville, N.C., is proving to be a royal pain to top executives of giant asset management firms.
He's embarrassing them before prestigious former government officials and business executives they had recruited as directors of publicly traded closed-end international stock funds .... Olin, a former IBM middle manager, started his Deep Discount Advisors 12 years ago and devoted it to closed-end funds as a way to buy $1 worth of stock for 80 cents or so.
But to get value out of his
has resorted to using proxy fights to prod management firms to take steps to close the discount, steps that often reduce their fees."
Ronald Olin, president of Deep Discount Advisors, an Asheville, N.C., money management firm, asserts that short-term performance drives discounts and premiums.
"'There are two ways to profit from the discounts,' says Ron Olin, president of Deep Discount Advisors, Inc, an Asheville, North Carolina, investment management firm specializing in closed-end funds. 'One way is to find a fund selling at a big discount, because its normal payouts of dividends and capital gains will be proportionately higher.
If the investments have a market value of 10$ per share and you're able to buy them though a closed-end fund selling for $8 a share, then a $1 dividend is going to mean a return of 12.5 percent instead of 10 percent.' In addition, Olin
says, 'If the discount narrows, there's another source of extra returns.'"
says, 'The statistical analyses we have done suggest slightly better asset performance for closed-end funds in the aggregate than open end.
It's relatively close, but slightly better.
Add this to the discount profits, and you have a big difference.'"
"More important, Olin says, 'A closed-end fund is a pool of capital that is not subject to money coming in and redemptions going out, so the manager can more actively apply his
strategy without concern about capital flows.
And as a consequence, he
can invest in somewhat less liquid assets than he
would in an open-end fund.' By contrast, mutual fund managers following the same strategy must keep some of their resources in cash or liquid investments in case some investors want to redeem their shares."
"You can get extra returns on top of whatever the market does by capitalizing on changing discounts and premiums,' Olin
says, and he
adds that you don't have to be a genius. 'There are bona fide inefficiencies in this market because there are people who don't know what's going on.' Major institutional investors with big staffs scouring the market for opportunities don't invest in closed-end funds because their clients aren't paying them a fee to find other managers.
So it's a market with a lot of amateurs.'"
"Finding a closed-end fund where the discount narrows can produce big returns. 'If one were able to find enough of those situations,' Olin says, 'you'd have the best performance of any investor in the world.'"
That's why Houston money manager Ronald Olin tries to find closed-ends whose discounts are almost certain to shrink.
How do you find such funds?
likes buying some of the newer closed-ends that have provisions for reducing the discount or converting into open-end funds.
That way, investors can get out of the fund at, or close to, net asset value.
'I like the idea of applying mathematics to beat the system,' says Olin
college days at Houston's Rice University
, Olin used mathematics to win at poker.
says, while working at IBM
on ground-based computer systems for the Apollo space program, he
made tens of thousands of dollars playing blackjack in Las Vegas on weekends.
, 'The casinos aren't designed to lose money, so it becomes more a matter of deception, making sure they don't realize you're a card counter.'
For the benefit of the initiated, card-counting is a method for raising your bet when you see that the house's unplayed cards are running in your favor.
In this spirit, Olin
has been applying notions like probability and optimization to closed-ends.