- 11 -
percent. ATI considered several factors in making this
determination, including: KLLP is smaller in size than a
publicly traded fund; closed-end funds generally have a staff of
analysts and professional managers devoted to the full-time
management of the fund investments which reduces risk whereas
KLLP is not managed in the same manner; closed-end funds offer
diversification of the portfolio of investments while KLLP is not
diversified; and KLLP does not have a performance history whereas
most closed-end funds have a performance history of 5 to 10
years.
Once ATI determined an appropriate discount range of 21.8
percent to 25.5 percent, ATI then further adjusted the discount
based on several factors and restrictions inherent in KLLP and
using other partnership studies. One such study, published by
Partnership Profiles, Inc. (PPI), found that the average discount
for 18 publicly registered but nontraded miscellaneous
partnerships, when the NAV of such partnerships was compared to
the prices at which investors acquired units in them in the
secondary market, was 29 percent. ATI also discussed another
study published by PPI which compared the NAV of approximately
100 publicly registered but nontraded real estate partnerships
with the prices at which investors acquired units in these
partnerships in the secondary market. The average discount to
NAV was 27 percent for the transactions studied. Therefore, ATI
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