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4/29/16 - Student loans paid off six months before I planned on them being paid off. Basically every paycheck minus living expenses since last Oct went towards them. Lower end luxury car amount of money at close to 7% interest. Now I will have more disposable income than I can spend each... More
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  • Back At The Funny Farm 6 comments
    May 17, 2014 4:55 PM | about stocks: JDD, DNI, YYY, LTS

    What was I doing? Oh, yes. After taking a shower this morning, I had the unpleasant discovery of the back-up dog having a case of coprophilia. I encourage all not to google this term. I am still in distress and did not eat lunch.

    Anywho.

    Ran my usual cef screen. And then looked at moving averages. Aside from what I already own, not too many are jumping out at me. Two of which I wrote about last time:

    (NYSE:DNI) - "this one has a miserable history since inception. No distribution until the end of June again. New fund manager since 2011. Close to 11% discount and over a 10% distribution. From what I've read, changed to a managed distribution payout. Has blue chip stocks and preferreds and bonds. Website sucks.

    www.barchart.com/chart.php?sym=JDD&s...

    www.barchart.com/chart.php?sym=JDD&s...

    The nav chart has the 50 day sma touching and maybe crossing the 200 sma. The price chart already has the 50 above the 200. Even though the fund has been crap since it started in the 1990's, you're still buying management and that was changed a couple of years ago and it looks like things are turning around."

    Here are updated charts in case the old ones don't come across correctly (market and then nav):

    www.barchart.com/chart.php?sym=DNI&s...

    www.barchart.com/chart.php?sym=XDNIX&...

    What's holding me back at this point is that the market price is moving up faster than the nav value. So, a maybe.

    (NYSE:JDD) - "bought last fall and sold off in the last two months. A small amount was initially invested and had a decent payoff, but I'm thinking about coming back. Kind of like cocaine or whatever your favorite recreational drug is. Nice discount. 8.4% distribution. Broad diworsification. About 50% convertibles. And I've written about it before if you want to search around and other smart folks have as well.

    Here are charts of the market price and nav, respectively (I will use this format for the others I bring up - I also should point out that each time I copy/paste the address for barcharts a huge wall o' text comes up and freaks me out):

    www.barchart.com/chart.php?sym=XJDDX&...

    www.barchart.com/chart.php?sym=JDD&s...

    What should be noted is that the nav has broken out quite nicely but the market price is blah, although has also broken out to the upside. Next distribution won't be til the end of June."

    Again:

    www.barchart.com/chart.php?sym=JDD&s...

    www.barchart.com/chart.php?sym=XJDDX&amp...

    I'm more partial to this one. Nav's going up faster than the market price. Issue for me is that now that I'm buying something new every two weeks, there's no reason to buy it with This paycheck contribution since the ex-date should be in mid-June and I'll get paid before then.

    So, here's a monthly paying etf that's based on an index of thirty cefs:

    (NYSEARCA:YYY)

    and here's a link to their website:

    yieldshares.com/yyyetf.aspx

    My briefly held (NYSEARCA:CEFL) is based on this etf or index or however you want to call it. Some of the funds this etf is based on I would not own. Some I might, but not at current prices. What I like is that it has diversification over a broad spectrum of cefs - bonds, option types, equities, foreign and so on. And it's monthly pay. And has about a 8.5% yield currently.

    Since it's a new fund, my usual ma stuff doesn't work well for it. But, since it's very much diversified by being a fund o' funds, the 300 sma I like to use for my broad index funds in my 401k works:

    www.barchart.com/chart.php?sym=YYY&s...

    Yep, the price is above the sma. So this is very likely my first pick this Friday. JDD as a back up option if YYY goes way up by then.

    A second back up option might be the preferred stock LTS.A - it's another monthly payer and has close to a 9% yield. The eps has been improving yoy, but it doesn't have a positive pe yet or dividend (either or would be nice with a preferred). So to me, it's junk for the moment.

    I believe I mentioned in my last entry that I would write a bit about p2p and what I found out over the last couple of months.

    To keep it brief:

    It's time consuming. You have interest and principle that you are receiving frequently that needs to be reinvested. Along with everyone else that's involved in these things.

    The only two options you have (in the US) are Lending Club and Prosper. Both sites have been infiltrated with individuals/and or "hedge funds" that have a lot of money and automated computer programs that gobble up loans before the site's automated investment programs can act. And then you are left with manually selecting each loan you might find appealing to fund.

    This type of lending has not been around long enough for there to be any strategy of consistently working more than it doesn't. Most people seem to go by what "grade" of loan has had the best return over a certain period of time. And to stay "diversified". Meaning that you put no more than $25 in any given loan. And you need to have over a hundred loans to be "diversified". See the above paragraph to see why that might be a problem.

    You will be lending to individuals. There will be defaults. Some people will pre-pay the loan off when they get a better job. There's a problem when someone is willing to take on a 10% or much more loan for whatever reason. I can see doing it to pay down credit card bills, but it makes you wonder where their priority is/was.

    The rates on these type of loans have fallen and keep falling as our economy improves. If things go south, war/some black swan event, and the jobs market turns to crap again, guess what's going to happen to your portfolio of loans? Yeah. Non-secured loans are going to be the first thing on the backburner of folks to pay.

    And on their rates. Even with preferreds and many types of cefs taking off this year, I can still find bargains with a comparable dividend/distribution to these loans with a much lower risk of not paying than these loans.

    And my main issue. If you go this route, despite all the social-justice-hippy-shit-of-sticking-it-to-the-man hoopla, you are still essentially investing in banks. Except you do all the work and put your money at risk, not theirs. Both of them take a cut from who they make the loan to. Both of them take a cut from their "investors". Prosper is finally expected to be profitable sometime this summer. Lending Club is already profitable and Google has a stake in it. Twould make more sense to me to invest in the actual company themselves when they go public.

    And I noticed that in my previous copy/paste of charts I didn't do it correctly - I apologize!

    Stocks: JDD, DNI, YYY, LTS
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  • User 7415181
    , contributor
    Comments (1016) | Send Message
     
    Author’s reply » Another one I came across today whilst browsing. (PGZ)

     

    http://bit.ly/1gTBWKY

     

    http://bit.ly/1gTBVH2

     

    9% discount and almost a 9% market yield. I don't like mreits because of the insane leverage they employ, but a fund that invests in similar with 30% leverage (instead of 500% or more) might be doable. They also had the misfortune of starting up at the end of June last year.

     

    The share price got smacked quite nicely with the taper tantrum while the nav held up and is actually higher than the ipo. Indicates good management to me.

     

    I like that the nav is waaay outpacing the market price. And I like that the 50 day sma has crossed the 200 for the upside. At the moment, I think it's tempting. Call this my first pick for tomorrow and YYY my second with lts.a third.
    22 May 2014, 12:49 PM Reply Like
  • User 7415181
    , contributor
    Comments (1016) | Send Message
     
    Author’s reply » YYY it was. PGZ in two weeks, maybe. I also was thinking about getting back into oxlco, but would like it a bit cheaper.
    23 May 2014, 12:20 PM Reply Like
  • User 7415181
    , contributor
    Comments (1016) | Send Message
     
    Author’s reply » And yet another update. I just sold (GEQ), (http://bit.ly/1gXpQ3u), and RAS.A. Proceeds went to OXLCO, again. Why?

     

    I bought (http://bit.ly/1gXpQ3u) in early April at 9.02. I just sold it at 9.4. Got one distribution along the way. What concerned me, when I bothered to look at it today, were these charts:

     

    http://bit.ly/1ibZJAI

     

    http://bit.ly/1ibZJR0

     

    You can see that the market price has outrun the nav of the fund, especially over the last week. And they had just raised their distribution a bit prior to me buying into it, so that might explain why the nav is going down at this point.

     

    Read that again - the nav is going down. I don't want a decreasing nav and a rising market price in a cef I own (especially when recently bought). I like Calamos and their funds, but they may have raised the distribution too much.

     

    (http://bit.ly/1gXpQ3w) I bought near the end of March at for 18.86. Sold today at 19.58. I got one distribution along the way.

     

    http://bit.ly/1ibZGF2

     

    http://bit.ly/1ibZJR4

     

    Again, notice how the market price is jumping much more than the price of the nav. While the trend of the nav is still upwards, I'm still uneasy. An author I happen to think highly of mentioned the fund in an article after I bought into it. Perhaps it's because of the high yield? I don't know the reason why the market price has been jumping. I still think it's a solid cef, just don't like prices jumping higher than the nav goes up.

     

    RAS.A was a preferred I bought last summer at some point. I sold it at 24.7 - I cannot quickly look up the records, but I believe I bought it around 23.5. I recieved two dividends along the way (maybe three? I seem to remember buying it before the dividend last september?). Main reason for selling it is that at the time I bought into it, I was investing much less money per paycheck and I might as well take the profit while I can. And 24.7 is close enough to par. And at the current price, it's yielding less than 8%.

     

    So why all proceeds into oxlco? Especially if it pays a bit less than my minimum overall 8% yield goal?

     

    Because it's the preferred of a cef that pays a much higher distribution. The distributions will have to go to zero on the fund before the preferred's distribution gets cut.

     

    It's a monthly payer.

     

    It gets redeemed in 2013 for par price. I bought at 24.02. So long as the fund doesn't go bust, I'll get a capital gain along with the dividends along the way. The capital gain might mean more if it gets called early.

     

    This was my favorite investment before I looked at my credit card in April. I did not want to sell it, but it's tough to beat credit card interest with just 8% or so. I will set a limit order in for the $25 par price like I do other preferreds.

     

    And I'm unsure of current market action. A week ago, I would have been ready to switch my 401k fund from VTSMX (US total index) to VGTSX (foreign total index) based on the relative strength of the funds. Or I was even considering VBMFX (total bond fund) as it has just passed upwards through its 300 day sma. But by today, VTSMX has regained the best relative strength. I will wait another month to re-evaluate, which is what I've done for close to year now. Even though since the turn of the year, I haven't really gained nor lost with that fund.

     

    Perhaps another reason why CHW has been lagging on its nav but was gaining on the market price? I don't know.

     

    So, I've still got stock exposure. With OXLCO, I've got a fairly - safe - high - yield - monthly - paying - preferred. Again. Which I will drip the dividends as long as it's under par. My main risk would be a recession, which would hurt the fund, or some external event that leads to prolonged inflation above the current market yield.

     

    I'm giving some serious thought to using this as a money-market equivalent if I don't see anything else worth buying when I get paid.

     

    PGZ or JDD for next time. But things change, so those picks may change as well.
    23 May 2014, 03:23 PM Reply Like
  • User 7415181
    , contributor
    Comments (1016) | Send Message
     
    Author’s reply » typo above - oxlco gets redeemed in 2023.
    24 May 2014, 09:37 AM Reply Like
  • Unknown1234
    , contributor
    Comments (245) | Send Message
     
    Very informative. Keep it up.
    25 May 2014, 11:40 PM Reply Like
  • User 7415181
    , contributor
    Comments (1016) | Send Message
     
    Author’s reply » Thank you for dropping by!
    26 May 2014, 12:10 PM Reply Like
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