SRH Total Return Fund (STEW) Stock

STEW is attractive due to its 20%+ discount, low-cost fixed leverage, and 4% distribution yield, despite underperforming the S&P 500 recently. The fund's NAV is understated due to accounting rules, with a potential $41.7 million higher NAV if fair market value of senior notes is used. Share repurchases at significant discounts have been accretive to NAV, but the large Horejsi family holdings limit fund activism.

SRH Total Return Fund uses a value-driven, bottom-up investment approach, focusing on long-term attractive returns with a low dividend yield. STEW's top-10 holdings, including a 38% stake in Berkshire Hathaway, account for over 75% of its portfolio. Despite a -22% discount to NAV, STEW has matched the S&P 500's performance, delivering over 20% return in the past year.

SRH Total Return Fund is a concentrated equity fund with heavy bets on Berkshire Hathaway and other value-oriented stocks. The fund has underperformed mightily in recent months, primarily due to a widening discount to NAV, which is currently at a historically wide 22%. This historically wide discount to NAV creates a wide margin of safety for investors. So I am raising STEW to a relative buy.

The SRH Total Return Fund remains heavily invested in Berkshire Hathaway and runs a concentrated portfolio overall.

The SRH Total Return Fund, Inc has a disappointing current yield of 3.97%, lower than most closed-end funds and cash in a money market fund. The STEW closed-end fund's share price has consistently trailed the S&P 500 Index over the past five years. The fund's heavy concentration in a few securities, including Berkshire Hathaway, may be a factor in its underperformance.