Cornerstone Strategic Value Fund(CLM)

Cornerstone Strategic Value Fund

Stock: CLM

Rating: Good

Author: Walled M. Tariq

Summary

  • The diverse Cornerstone Strategic Value Fund portfolio has performed well.
  • Share rights sales have been oversubscribed, demonstrating stockholder confidence.
  • CLM’s investment policy constraints will affect the Fund’s investment decisions in the future.

Bullish

  • Diversified shuttered management investment company CLM has a very good portfolio and has made significant monthly payments in recent years.
  • CLM’s investment, distributions, and rights sales have boosted its share value over the years.
  • Diverse investment portfolios, US economic boom, historically good return on shares, strong market emotions, investor confidence, and CLM’s administration and advisers promote the value of the stock. This means CLM dividend and NAV are high.

Bearish

  • Except if the Fund’s stock portfolio can replicate 2021’s success, CLM stock’s value may not last.
  • CLM’s strategies and policies will soon be reviewed. Otherwise, it will struggle to maintain large distributions.

CLM’s Policies Have Served The Fund Well

  • CLM’s rights, investments, and distribution sales have boosted its share value over the years.
  • LM invests in stock for long-term capital appreciation. CLM’s portfolio spans numerous sectors and is solid.
  • In recent years, CLM shares have traded above NAV.
Date Shares Issued Net Assets Distribution Amount per Share reinvested Net Asset Value (NAV) per share Sales Price per Share on the NYSE Premium to NAV
March 18, 2022 121,018,695 $9.13 $14.01 53.45%
December 31, 2021 1,227.4 million $1.92 $10.23 $14.29 47.04%*
April 9, 2021 $10.02 $13.60 35.73%
December 31, 2020 77,475,671 $769.0 million $2.23 $9.93 $11.73 31.68%*
  • CLM’s per-share value may be plateauing, but market sentiment and share price premium are high.

Cornerstone Strategic Value Fund NAV per share

  • CLM regularly offers discounted rights issues, which are popular with investors.
Year Shares Issued Of which oversubscription Subscription Price per Share Total Offering
2021 26,029,753 Oversubscribed $10.64 $420,000,000
2018 26,784,596 11,930,479 $13.46 $360,520,662
2017 14,454,716 4,787,408 $13.86 $200,342,364
2016 6,783,942 N/A $14.11 $95,721,421
2013 3,158,284 1,579,142 $23.68 $74,788,165
2012 970,072 N/A $23.96 $23,242,931
2011 1,433,722 716,861 $24.36 $34,925,455
2010 358,457 N/A $32.96 $11,812,869

Source: SEC filings Home | Cornerstone Strategic Value Fund, Inc.

  • CLM distributes monthly dividends, which investors can reinvest in more shares or cash under the Fund’s dividend reinvestment plan.

Dividend And Distributions Paid From 2016 Through 2020

Years Total

Dividends and

Distributions $

Earnings Return-of-Capital
Amount

$

Percent

%

Amount

$

Percent

%

2016 77,460,037 21,159,907 27.32 56,300,130 72.68
2017 94,415,301 48,183,699 51.03 46,231,602 48.97
2018 158,625,475 20,320,936 12.81 138,304,539 87.19
2019 181,607,411 45,786,447 25.21 135,820,964 74.79
2020 169,115,831 62,663,445 37.05 106,452,386 62.95

Source: Cornerstone Strategic Value Fund/fp0064414_497.htm

Comparative Performance

  • Lipper ranked diversified equity funds (DEF) 5 out of 30 Closed-end fund classes with a 10.38% average market return. Energy (42.87%), Natural Resource (35.69%), Real Estate (21.58%), and Utility Funds (21.58%) beat DEFs (15.83 percent ).
  • CLM was the 3rd-best Lipper diversified equities fund for the year ending March 31, 2022.

Cornerstone Strategic Value Fund Value Increase in comparison to S&P 500

Conclusion

  • Some of the fund’s initiatives, particularly its distribution and rights offering methods, may be reaching their end. CLM’s strategies and policies will soon be reviewed. Otherwise, it will struggle to maintain massive distributions. Investors should investigate other options.