Jim,

I think there have been a few things going on with TYG which have contributed to the decimation of the share price. Some of the problem has simply been bear market related. Other aspects may be more company specific.

I've owned TYG since 2004 and they have raised their distribution every single quarter since  inception. For a long time TYG traded at a premium to net asset value. There have been a few times where the premium reached double digits. In my opinion, the premium was unwarranted. I don't see a good reason to pay "up" for MLPs when you can buy the top five or ten fund holdings yourself and not pay a premium. The recent sell off has shed the premium.

TYG has also been leveraged to the hilt with auction rate preferreds. The problems with ARPs, especially lack of liquidity, have been well documented, so no need to address that here. TYG has been scrambling to redeem all of their ARPs and a recent press release details the final elimination of the ARPs. Thus, the company will need to find new means of leverage to replace ARPs.

Last month TYG, with Merrill Lynch as the Underwriter, dumped 1.6 million new shares on the market at $31.25. The proceeds of the offering are to be used in retiring their credit facility short-term debt and redeeming senior securities. The remainder of the proceeds, per the press release, is ear marked to acquiring more portfolio securities.

In retrospect, since the share price has dropped over $3,  the offering was ill-timed for shareholders who bought into it via Merrill Lynch brokers. I'm sure the ML brokers pumped all those shares out to their unsuspecting passive clients. The additional shares on the market, along with the current market malaise have put extreme pressure on the share price.

Last year, for the first time, a portion of TYG's distribution was characterized as Qualified Dividend Income, instead of 100% non-taxable return of capital. Since other MLP CEFs continue to pay 100% ROC, there have been some shareholders who have swapped TYG for KYN and FMO to avoid taxation. That too has pressured TYG shares.

I have been neutral on TYG for years, not adding to my position. At the present time though I feel that TYG might actually be the best buy (not a recommendation) in the MLP CEF space. It boasts the highest distribution among its peers: TYY, KYN, FMO, FEN, and SRV. And, it finally trades at a discount to net asset value. The tax characterization of 2008 distributions remains to be determined.

Although the share price could be stressed for the rest of the year, especially if we see end of year tax loss selling, I think TYG will do well with the capital raised by the last offering and the elimination of all of their 28-day auction obligations.

Again, I do not make recommendations other than saying that one needs to research a security as much as possible, but I will say that I am adding to my position ever so slightly now. I have no idea if the market is at or even near a bottom, but I suspect that TYG will emerge a stronger CEF than before. For me it's a long term holding and a cash cow which has paid me $7.54 per share, mostly tax deferred.

Best,

Steve