**How Cornerstone Funds Beat The S&P 500 Over 10 Years (High Yield Dividends- CLM & CRF vs. SPY) — Transcript & Summary | SozAI** Source: https://sozai.app/transcript/cornerstone-funds-beat-sp500-dividends/ Learn how Cornerstone Funds (CLM & CRF) outperform the S&P 500 through a strategic buy-sell system around rights offerings and high yield dividends. ## Key Takeaways - Cornerstone Funds use a disciplined buy-sell strategy around rights offerings to outperform the S&P 500. - Maintaining a small position (3 shares) is critical to benefit from the special DRIP and maximize returns. - Despite price volatility, total return charts show Cornerstone’s superior performance over a decade. - Rights offerings and dividend dates cause short-term price distortions but offer trading opportunities. - Investors should monitor premium to NAV and rights offering announcements closely for optimal timing. ## What the video covers - Cornerstone Funds CLM (S&P) and CRF (NASDAQ) contribute significantly to monthly dividends, totaling $114,000 per year. - The strategy involves buying shares before the rights offering, selling at a 30%+ premium to NAV when the rights offering is announced, and buying back after the offering. - Maintaining three shares is essential to keep the special DRIP (dividend reinvestment plan) active, which yields an automatic 18% gain on dividends. - Despite appearing destructive on normal price charts, Cornerstone Funds outperform the S&P 500 over 10 years on total return charts like Morningstar. - Price volatility occurs around rights offerings and dividend dates, causing temporary divergence from the S&P, but the fund generally tracks the market closely otherwise. - The rights offering typically happens once a year, often in spring, triggered when the premium to NAV reaches about 30% or higher. - Investors must call brokers to activate the special DRIP specific to Cornerstone Funds; simply toggling the DRIP function is insufficient. - Cornerstone is one of the largest closed-end funds globally, with a four-star rating and monthly dividends that qualify for bank loans. - The fund’s unique structure and dividend reinvestment mechanism enable it to deliver stellar returns and consistently beat the S&P 500. - The presenter encourages buying pullbacks and staying positive despite market fluctuations, emphasizing the fund’s long-term value. ## Chapters 1. 00:00 Introduction to Cornerstone Funds and Dividend Contributions 2. 00:28 Explanation of CLM and CRF Funds and Performance Overview 3. 01:02 Cornerstone Buy-Sell Strategy Around Rights Offerings 4. 01:33 Rights Offering Timing and Selling Strategy 5. 02:00 Dividend Reinvestment Plan (DRIP) Details 6. 02:30 Why Cornerstone Outperforms the S&P 500 7. 02:58 Long-Term Chart Analysis and Price Volatility 8. 03:39 Trading Around Rights Offerings and Dividend Dates 9. 04:09 Monitoring Premium to NAV and Rights Offering Timing 10. 05:03 Activating the Special DRIP and Maintaining Shares Answers ## Questions about this video What is the basic strategy to trade Cornerstone Funds? The strategy is to buy shares before the rights offering, hold until the share price reaches about a 30% premium to NAV, then sell most shares at the announcement, keeping three shares to maintain the special DRIP, and buy back after the rights offering. Why is it important to keep three shares of Cornerstone Funds? Keeping three shares is necessary to maintain the special dividend reinvestment plan (DRIP) that allows automatic reinvestment of dividends at NAV, which significantly boosts returns. How does Cornerstone Funds’ performance compare to the S&P 500? Although the price chart may look destructive, total return charts like Morningstar show that Cornerstone Funds have outperformed the S&P 500 over the last 10 years, driven by dividends and strategic trading around rights offerings. ## Full Transcript — Download SRT & Markdown 00:01 Speaker A Today's video is going to be on Cornerstone and how it works. I've gotten a lot of comments on the drip and just how it works in general when the chart looks so destructive. So let's go into Cornerstone. It's what contributes to our 00:14 Speaker A 114,000 per year in dividends. 114,000 per year in dividends, and most of it is from Cornerstone. If you see this CLM right here, 3,300 in the month and 35, 3,300 in the month. One's the NASDAQ, one's the 00:28 Speaker A S&P. CLM is the S&P and CRF is the NASDAQ. CRF NASDAQ, CLM S&P. So this is how Cornerstone works. Okay, and one more thing, let me show you the performance and value. We're up 16 dollars at one. S&P is up five, 00:46 Speaker A and the Nasdaq's up 13. So obviously, Cornerstone is doing its job to help me outperform the market even though it looks destructive on its chart. So if we go into a CLM chart, you'll see that this is how you play it. 01:02 Speaker A Okay, you simply buy before the rights offering, take it up to a 30 percent premium to NAV, and then sell. This is the simple system of Cornerstone. You again, you buy before the rights offering, you take it up to a 30 percent premium 01:19 Speaker A to NAV. The share price usually runs at an average of a 30 percent premium to its NAV. So if you know that, then you'll know that that's when the rights offering gets announced. Usually, 01:33 Speaker A when the premium is about 30 percent plus to NAV, if it's about 30 percent plus to NAV, they announce the rights offering. That's when you sell all of your shares. You keep three shares on, by the way, so 01:45 Speaker A you keep your drip on. You want to sell all but three shares, and you just rinse and repeat this process. The same goes for CRF. So CLM again, buy it before the rights offering, take it out to a 30 percent premium, 02:00 Speaker A wait for the rights offering announcement, sell as the announcement comes, buy back after the rights offering. So you could just say sell before the rights offering, buy back after the rights offering. Also, there's a drip here, so if you look at the drip on CLM, 02:17 Speaker A which we get on the 7th or 10th of every month, you'll see here that it's dripped in an automatic 18 percent gain each time. So our dividends of 3,300 get dripped in here and give me the extra 500 that you see. 02:30 Speaker A So this is the brilliance of Cornerstone. This is why it outperforms. If you go look at a Morningstar chart, you'll see that it outperformed the S&P over the last 10 years. Again, even though the chart looks destructive on E-Trade on a 02:45 Speaker A normal chart, when you go into its total return chart, you see that it's blowing away the S&P. The index is the maroon line and Cornerstone is the blue line. So it made 50,000 over the last 10 years. 02:58 Speaker A Again, when you go back into the chart of CLM and you look at it over a longer time frame, which we didn't show you yet, I showed you the five-year, but which looks like it's at a perfect low on a 03:08 Speaker A five-year chart. But let's look at it on a max time frame. You see how this is just going into the ground. Most people are, you know, right to point out that this fund is just declining in price. Why 03:19 Speaker A do I put so much money in this? Well, again, because look, if you look at a three-year chart, you'll see that it moves in line with the S&P, like right here. But after the rights offering 03:29 Speaker A occurred, okay, it had some volatility of its own, but then it starts resuming its upward trend back to a 30 percent premium to NAV. But as it does, it mimics the market. So the market probably looks like 03:43 Speaker A this as this was coming up right here. And then every time the rights offering comes, it gets a little funky with the price action, and it doesn't track the S&P as well. Also, on div dates, when the dividends are announced, the stock drops by 03:56 Speaker A the dividend announcement. So that makes the performance look a little off compared to the S&P on a day-to-day basis, but on a six-month basis, it pretty much tracks the S&P one for one. It's just that after the rights offering is 04:09 Speaker A done, then you lose that correlation because the tank comes. So it's like trading the S&P between rights offerings. Obviously, you have to be on the lookout for the rights offering, and it comes about once a year, and it 04:21 Speaker A comes around this time or in springtime. I don't think it's coming yet because the premium to NAV is not enough. I watch the message boards of Seeking Alpha closely. So this is how you play Cornerstone. All right, you simply buy 04:35 Speaker A before the rights offering, take the premium up to 30 percent of NAV, then wait for the rights offering. The rights offering might not come for a couple of months. Sometimes a premium gets up to 40 or 50 percent and 04:49 Speaker A in value over the NAV. So you just simply wait for the rights offering announcement, then you sell it, and you keep all the three shares. So you keep your drip on. The drip, you have to call your broker and ask specifically 05:03 Speaker A for it. You don't just toggle the drip function. You have to literally call your broker, ask for the special drip in Cornerstone. So if you sell everything, you lose your right to that special drip. So keep three shares, sell everything but 05:15 Speaker A three shares, keep your drip on, and just simply wait for the rights offering, and you sell everything. You can actually send your shares in to Cornerstone, and they will buy back for you around the NAV price. So this is, I mean, to me, Cornerstone is 05:32 Speaker A the best vehicle in the world. It's one of the largest closed-end funds in the world, and it has a four-star rating and outperformed the S&P. It pays me monthly dividends that qualify to banks for loans, 05:43 Speaker A and yeah, I know on a chart it looks abysmal, but on a Morningstar chart, it's a different story. So you combine the fact that it tracks the S&P and Nasdaq except for the rights offering and ex-dividend dates. You combine that 05:56 Speaker A performance with the fact that it drips at NAV for you, and that's how you keep getting these stellar returns, and that's how it outperforms the S&P. So, by the way, one more thing, the S&P 06:07 Speaker A we had more earnings today, and the S&P just is making a move lower, but I don't understand why it's moving lower when earnings are so positive from tech last night. This is just all steady ebb 06:19 Speaker A and flow, steady as she goes. This is healthy. So keep staying positive, keep buying the pullbacks, look into Cornerstone more. If you have any questions on Cornerstone, feel free to reach out in the comment section below. Thanks a lot. Topics: Cornerstone Funds CLM CRF S&P 500 high yield dividends closed-end funds rights offering dividend reinvestment plan NAV premium stock trading strategy --- This is the markdown twin of https://sozai.app/transcript/cornerstone-funds-beat-sp500-dividends/ — the same content, without the markup. Published by SozAI (https://sozai.app). Reuse and quotation are allowed with attribution and a link back. Machine-readable index: https://sozai.app/llms.txt · data API: https://sozai.app/api/