Word: dragone
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Dates: during 2000-2009
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...Harvard Management Company (HMC) agreed to divest itself of shares in Templeton Asset Management’s China World and Dragon funds, in which it had invested a combined $115 million of the University’s $18 Billion endowment. In return, HMC will be permitted to sell those shares at a price above the shares’ market value...
...Templeton pointed to the performance of the China and Dragon funds as evidence that the company is protecting shareholder interests. The funds gained 34 and 21 percent respectively last year, according to investment research firm Morningstar...
...structuring of the funds lies at the heart of the dispute. China World and Dragon are both closed-end funds, which trade on an exchange typically at a “discount” to the shares’ actual value. Open-end funds are purchased from and sold to the fund itself, which guarantees that shares are instantly redeemable for their net asset value...
Since HMC began to publicly pressure Templeton, the funds’ discounts have decreased considerably. The China fund, which currently trades at a three percent discount, averaged a 12 percent discount last year, while the Dragon fund, which currently trades at a 12 percent discount, averaged a 14 percent discount last year, according to Morningstar...
...larger Dragon fund will offer to purchase 15% of the fund’s shares at 92.5% of its value by the end of April and may make additional offers. If the fund’s performance holds constant, that price will exceed the Dragon fund’s current price due to its discount. HMC would then liquidate its 14% stake in the fund...