The Secrets of a Savvy Closed-End Fund Bargain Hunter

Money manager Erik Herzfeld specializes in closed-end funds and takes advantage of irrational pricing by buying when fund shares trade at a low percentage of liquidating value and selling at a high percentage. While retail investors often overlook closed-end funds, Herzfeld's clients have entrusted $750 million to his firm, which owns shares of Central Securities Corporation, a fund trading at a 19% discount to net assets. Herzfeld explains that Wall Street's heavyweights find the closed-end universe too small to accommodate their bets, allowing him to profit from retail investors' lack of expertise. Herzfeld recommends buying closed-end funds that trade at double-digit discounts and have low expense ratios or large payouts.