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.
- 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.
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.