SunAmerica Focused Alpha Growth Fund Inc. (NYSE:FGF) is a successful non-diversified, closed-end managment investment company that is starting to catch the attention of hedge funds given its somewhat cheap valuation and growth prospects. The fund has moved up over 23% since mid-2006 and recently declared a dividend in August. 

Karpus Management, which owns 4.34% of the company, disclosed a Schedule 13D filing yesterday indicating that it acquired shares in the company for investment purposes but reserve the right to contact management with regard to concerns they have with the fund - presumably the growing valuation gap. This is especially interesting given Karpus' specialty focus in closed-end funds.

Many activist shareholders have targeted undervalued closed-end funds seeking to convert them to open-ended funds or forcing them to liquidate their undervalued positions and return the proceeds to shareholders via a special dividend or share buyback. Real estate closed-end funds in particular have been pressured to convert to REIT structures in order to unlock value.

In the end, we still do not know whether Karpus intends to do anything with its investment in SunAmerica. However, activist hedge funds have been increasingly looking into this sector, making this a situation that is definitely worth watching!

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