Stock Analysis & Valuation Calamos Long/Short Equity & Dynamic Income Term Trust (CPZ)

• Previous Close: $14.78
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	45.68	209
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Calamos Long/Short Equity & Dynamic Income Term Trust (NASDAQ: CPZ) is a diversified closed-end management investment company specializing in risk-managed capital appreciation and current income generation. Headquartered in Naperville, IL, CPZ employs a global long/short equity strategy to provide hedged market exposure while targeting consistent returns. Founded in 2017, the trust operates in the Financial Services sector, specifically within Asset Management, catering to investors seeking balanced exposure to equities with downside protection. With a market cap of ~$308M, CPZ differentiates itself through its dynamic income approach, combining traditional equity investments with tactical short positions. The fund’s strategy appeals to income-focused investors, evidenced by its $1.88 annual dividend per share. Its closed-end structure allows for flexible capital allocation without shareholder redemption pressures, making it a unique vehicle in the alternatives space.

Investment Summary

CPZ offers investors a hybrid strategy blending income generation and capital appreciation with managed risk, supported by its long/short equity approach. The trust’s low beta (0.81) suggests relative resilience to market volatility, while its $52.4M net income (FY 2024) reflects effective strategy execution. However, its ~$120M debt load and lack of cash reserves introduce leverage risk. The 7.2% dividend yield (based on current price) is attractive but requires monitoring given reliance on investment performance. With no capital expenditures and strong operating cash flow ($60.4M), CPZ demonstrates efficient capital deployment. Investors should weigh its niche strategy against peers’ liquidity and broader market alternatives.

Competitive Analysis

CPZ competes in the alternatives-focused closed-end fund segment, differentiating itself through its dual mandate of income and hedged equity exposure. Its competitive edge lies in Calamos’ established expertise in long/short strategies, allowing active risk management uncommon in traditional income funds. However, its small scale (~$308M AUM) limits economies of scale versus larger multi-strategy trusts. The fund’s 0% cash position contrasts with peers maintaining liquidity buffers, potentially amplifying downside risk. Its dynamic income approach fills a niche between high-yield bonds and pure equity funds, but faces competition from ETFs offering similar strategies with lower fees. CPZ’s closed-end structure avoids redemption pressures but trades at wider spreads than open-end counterparts. Performance hinges on manager skill in equity selection and hedging—factors not easily replicated by passive alternatives.

Major Competitors

• John Hancock Premium Dividend Fund (PDT): PDT focuses on high-dividend equities and preferred securities, offering a higher yield (~8.5%) but with less hedging than CPZ. Its larger AUM ($730M) provides cost advantages, though it lacks CPZ’s shorting capability for downside protection.
• Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund (ETW): ETW employs options strategies for income, contrasting with CPZ’s long/short approach. Its global equity focus overlaps with CPZ, but ETW’s tax efficiency and $1.4B AUM attract a different investor base. Lower volatility but capped upside via call writing.
• BlackRock Health Sciences Trust (BME): BME targets healthcare equities, a sector CPZ may allocate to but without sector specialization. BME’s $1.1B AUM and sector focus reduce diversification benefits compared to CPZ’s broader mandate.
• Cohen & Steers Quality Income Realty Fund (RQI): RQI specializes in REITs, offering pure real estate exposure versus CPZ’s diversified strategy. Higher income (9% yield) but correlated to property markets, whereas CPZ’s hedged approach may perform better in downturns.