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Pimco High Income Fund (PHK): Q2 net investment income of $0.24/share, down from $0.27 a...

Pimco High Income Fund (PHK): Q2 net investment income of $0.24/share, down from $0.27 a year ago (current monthly distribution is $0.12, or $0.36/quarter). Net asset value/share of $7.80, down from $9.09 a year ago. The stock (on June 30) trades at a premium to NAV of 73.6%, up from 49.8% a year ago. (PR)
Comments (8)
  • Patrick Farnsley
    , contributor
    Comments (15) | Send Message
     
    the distributable cash flow goes down and the NAV goes down but the premium goes up - way up. besides irrational behavior what explains the market price ?
    29 Aug 2012, 04:39 PM Reply Like
  • erniem
    , contributor
    Comments (548) | Send Message
     
    Honestly, sometimes people are just mindless buyers. There are half a dozen other funds that provide almost as much yield with very little premium to NAV. Right now the distributions are way above the income, which is a one way street.
    29 Aug 2012, 05:54 PM Reply Like
  • bkelley
    , contributor
    Comment (1) | Send Message
     
    Erniem, what would you suggest that are less premium but still offer a strong monthly yield.
    29 Aug 2012, 09:31 PM Reply Like
  • erniem
    , contributor
    Comments (548) | Send Message
     
    bkelley:

     

    PFN is one of my faves
    PTY
    PFL
    AWF ( do some research, premium is growing)
    PKO
    All of these provide 7-8+% interest ( with some leverage) and a premium less than 15%
    30 Aug 2012, 10:30 AM Reply Like
  • busselle
    , contributor
    Comments (2) | Send Message
     
    How does this differ from a Ponzi scheme? The dividend is a return of money that Pimco has not made. There are many good Closed End Funds that are paying a similar dividend with out dipping into unearned income to make it from month to month. The problem is that the clan of Bill Gross don't know that there is a problem brewing.
    29 Aug 2012, 06:44 PM Reply Like
  • drmwsunner
    , contributor
    Comments (115) | Send Message
     
    I sold although I hated doing it....of the $.12 monthly dividend $.088 is income and the rest is return on capital which is investor money. I felt that this was more like a Ponzi scheme than other closed-end funds so I sold all of my shares for a tidy profit. I am tempted to return to the divy trough, but the SP would have to retreat in a significant way toward the NAV for me to feel comfortable. However, it has been a wonderful investment, but it's at a 52-week high, and should have a nice or significant correction at some point.
    29 Aug 2012, 07:49 PM Reply Like
  • busselle
    , contributor
    Comments (2) | Send Message
     
    Only answer for Pimco is to reduce div. there by reducing price and retaining yield. Wells Fargo did it with EAD. Nothing magical about It. Time will also correct the problem, as interest rates go up the price on this fund will go down to more closely align with the NAV.
    30 Aug 2012, 01:29 AM Reply Like
  • erniem
    , contributor
    Comments (548) | Send Message
     
    This fund produces a 10% dividend with a 70% premium. There are many that produce 7.5% dividend with less than 15% premium. I would not touch it with a ten foot pole.
    30 Aug 2012, 10:32 AM Reply Like
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