United States: Shares of the Guggenheim Strategic Opportunities Fund fell to their lowest level in more than 17 years on Friday after a short-seller raised questions about the fund’s distribution payments and financial position. The shares were last down 3.7% at $9.07, their lowest level since March 2009, following a decline of more than 6% in the previous session.
Short-Seller Raises Questions Over Fund Distributions
The decline followed a Thursday post by The Bear Cave, a short-selling newsletter owned by Hunterbrook Media. The newsletter alleged that the closed-end fund had been funding shareholder distributions by issuing new shares at a premium to net asset value and questioned whether the practice could continue.
The fund, whose major holdings include mortgage-backed securities and other fixed-income assets, was trading at an 8.7% discount to its net asset value at Thursday’s close. Its NAV stood at $10.32, according to Guggenheim’s website.
Guggenheim Faces Wider Regulatory Scrutiny
Guggenheim Partners and Hunterbrook Media did not immediately respond to Reuters requests for comment. Hunterbrook Media’s investment affiliate, Hunterbrook Capital, said it had no positions related to the fund.
The fund’s decline also comes amid separate scrutiny of Guggenheim Partners CEO Mark Walter’s business interests. U.S. federal prosecutors and the Securities and Exchange Commission are examining whether Walter or businesses linked to him concealed financial connections while borrowing billions of dollars from insurers he controls, according to media reports cited by Reuters.
Walter’s holding company, TWG Global, said earlier this week that it had agreed to exchange up to $6.5 billion in related-party investments held by insurer Delaware Life for an equivalent value of assets classified as independent.