Shares of the Guggenheim Strategic Opportunities Fund (NYSE: GOF) dropped to a 17-year low on Friday, closing at $9.07, down 3.7% after a report by short-selling newsletter The Bear Cave raised concerns over the fund’s distribution policy.
The fund, which invests primarily in mortgage-backed securities and other fixed-income assets, traded at an 8.7% discount to its net asset value of $10.32 as of Thursday’s close, according to Guggenheim’s filings. The shares had already fallen more than 6% on Thursday, a move that coincided with the publication of The Bear Cave’s report.
The Bear Cave alleged that the fund has been funding shareholder distributions by issuing new shares at a premium to its net asset value, a practice the newsletter described as potentially unsustainable. The report also noted that Hunterbrook Capital, the investment affiliate of Hunterbrook Media—which owns The Bear Cave—does not hold any positions in the fund. Trading volume on Thursday reached record levels, reflecting heightened investor scrutiny.
Guggenheim Partners and Hunterbrook did not respond to requests for comment regarding the allegations or the fund’s share price decline. The last time the fund’s shares traded at comparable levels was in March 2009, underscoring the severity of the recent selloff.
