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Fri, May. 23, 4:14 PM
- Several weeks after Bill Gross purchased more of the Pimco Dynamic Income Fund (PDI) for his own account, its roughly 5% discount to NAV has disappeared.
- The same, however, isn't true for Pimco Dynamic Credit Income (PCI), though it's also managed by well-regarded Dan Ivascyn. One reason for caution might be the relative newness of the fund, writes Brendan Conway.
- In the meantime, two Pimco CEFs which are known for sporting towering premiums to NAV continue to do so, the Pimco Global StockPLUS & Income Fund (PGP) and the Pimco High Income Fund (PHK). Two other Pimco CEFs at discounts: Pimco Income Strategy Fund (PFL) and Pimco Income Strategy Fund II (PFN).
Sat, Apr. 5, 9:10 AM
- The average discount on close-end bond funds is a historically large 6.5%, writes Brendan Conway in Barron's, and the discount on the roughly dozen funds launched in the last year is even higher at 8.6%. Investors are likely correct in being wary of new products - especially at a time when interest rates look to be headed higher - but a couple of funds from the class of 2013 may be worth a look.
- "We like fear, and we like dislocations in the marketplace," says Patrick Galley, CIO of RiverNorth Capital Management. He's a buyer of Pimco Dynamic Credit Income Fund (PCI), managed by rising star Dan Ivascyn. PCI is up 2.6% YTD, but NAV is higher by 4%, and buyers get a discount to NAV of 8% and a distribution rate of greater than 8%.
- Galley isn't alone on this one. Boaz Weinstein's hedge fund has piled in as well, becoming PCI's largest single owner. Weinstein has bought major chunks of other funds as well, and Pine River Capital picked up a big slice of another of the class of 2013 - the DoubleLine Income Solutions Fund (DSL). The entry of hedge funds into the $250B closed-end arena - a market too small for most institutional investors - is another sign of bargains to be had.
- David Tepper of Tepper Capital Management (not that Tepper) has identified the "1,000 x 1,000" club - bond CEFs trading at discounts of 10% or more which have seen NAVs rise by 10% or more over the last year. One of the class of 2013 makes the list - the BlackRock Multi-Sector Income Trust Fund (BIT).
Thu, Feb. 27, 3:29 PM
- Typically dominated by individual investors seeking a yield, closed-end debt funds have become the latest hedge fund playground as they seek to profit from assets trading at their widest discounts to NAV since the financial crisis.
- Behind the discounts was last year's big jump in interest rates which sent the value of fixed-income assets way down. Too far down, say the hedge funds.
- Boaz Weinstein's Saba Fund (known among other things for landing the London Whale), has amassed $847.3M in publicly traded funds since beginning to buy last year. Pine River Capital has loaded up on nearly $160M worth.
- Among Weinstein's purchases are $75.7M of Pimco's Dynamic Credit Income Fund (PCI +1%) - making Saba the largest holder - $78.5M of BlackRock's Corporate High Yield Fund (HYT +0.3%), and $41.5M of BlackRock's Credit Allocation Income Trust (BTZ +0.6%).
- Also a large owner of PCI and HYT, Pine River has 1.4M shares of DoubleLine's Income Solutions Fund (DSL +1.6%).
- The magnitude of these purchases is unprecedented, says Warren Antler who specializes in CEF analysis at AST Fund Solutions.
Dec. 23, 2013, 10:01 AM
- The Pimco Corporate & Income Strategy Fund (PCN +2.3%), $0.95 per share from net long-term capital gain.
- The Pimco Corporate and Income Opportunity Fund (PTY +3.6%), $1.84 per share from net long-term capital gain.
- The Pimco Income Opportunity Fund (PKO +1.1%), $0.60 per share from net income.
- The PCM Fund (PCM +0.3%), $0.135 per share from net income.
- The Pimco Dynamic Income Fund (PDI +1.4%), $1.31 per share - $1.21 from net income, $0.05 from net short-term capital gain, and $0.05 from net long-term capital gain.
- The Pimco Dynamic Credit Income Fund (PCI +0.5%), $0.36 per share - $0.12 from net income and $0.24 from net short-term capital gain.
- The distributions will be payable on January 17 to holders of record on December 30. The ex-dividend date is December 26.
- Press release
Oct. 17, 2013, 12:17 PM
- I see no reason for long-term rates to head higher, says Jeff Gundlach, appearing on CNBC. He doesn't see the taper coming soon - incomes are falling, the labor force participation rate is stuck, and inflation is non-existent. Further, why would Janet Yellen take the Fed helm and immediately begin to reverse a policy she's so supportive of?
- Without the taper, he notes, QE is actually expanding on a relative basis thanks to a smaller budget deficit and less Treasury issuance needing to be mopped up by the central bank.
- The best opportunity in fixed income continues to be closed-end funds trading at discounts to net asset value (his DBL being one of them). You can put together a basket of these, he says, yielding 8-9% and with a discount to NAV of 10%. Others possibilities (though we haven't checked their prices vs. NAV): PDI, PTY, PCI, PHK, PKO, PCN, PCI, PFN, PFL.
- Treasurys continue their big rally, the yield on the 10-year now all the way down to 2.60%. TLT +0.8%, TBT -1.6%.
- Turning to stocks: I don't like $300B market cap companies trading at 20x forward earnings, he says, suggesting GOOG be "harvested" for gains.
- On TSLA: There's something wrong with this picture, he says, noting the company's $23B valuation while GM and Ford are hitting new highs. These massive Tesla sales being priced into the stock have to come from somewhere.
Sep. 13, 2013, 3:45 AM
- Pimco and BlackRock (BLK) reportedly scooped up over 25% of Verizon's (VZ) mammoth $49B bond sale on Wednesday, helping the telecom carrier to raise all the money it wanted to at once rather than in chunks, as it had originally intended.
- Bill Gross' firm bought $8B in bonds and BlackRock $5B, with the two companies also influential in persuading Verizon to price the debt at an above-market rate.
- Pimco funds: PCI, PTY, PDI, PHK, BOND, PKO, PCN, PCI, PFN
Sep. 12, 2013, 11:21 AM
- That bond funds - specifically Pimco bond funds - have tumbled in value as rates flew higher this summer isn't news. Instead, it's the vanishing "Pimco premium" in the firm's closed-end offerings.
- The Dynamic Credit Income Fund (PCI +0.9%) is off nearly 18% since its launch earlier this year as an initial premium of 9% is now a 9% discount. Others include PDI now at a 8.2% discount vs. a previous average of -2.4%.
- Others still trade at premiums, but of vastly smaller size. PTY is at 6.6% premium vs. a 3-year average of 17.8%. PHK remains at a whopping 50.7% premium, but down from 75% last year.
- "Was (it) the epoch that made the man as opposed to the man that made the epoch," wrote Bill Gross (BOND), wondering if his success was the result of being in the right place at the right time (the 30-year bond bull market).
- Others of note: PKO, PCN, PCI, PFN.
Aug. 13, 2013, 12:44 PM
- Tumbling Treasury prices - with TLT carving out a new 52-week low today - are again hitting income favorites.
- Leading mREITs (REM -1.4%) lower are Invesco (IVR -3.3%), Annaly (NLY -2.3%), American Capital (AGNC -2%), and Western Asset (WMC -1.6%).
- A number of income CEFs not long ago were so much in favor they commanded large premiums to NAV. They're now at seemingly growing-by-the-day discounts. Among the movers today is the Pimco Dynamic Income Fund (PDI -1.4%) selling for $27.45 against yesterday's closing NAV of $30.23. Others include: PCI, PFN, and PFL.
- Still trading at premiums to NAV are the Pimco High Income Fund (PHK -0.9%) and the Pimco Corporate & Income Fund (PTY -1.1%).
- Municipals (MUB -0.6%) slip as well, hitting Muni CEFs: NXZ -0.9%, IIM -1.2%, VKQ -0.7%.
- Related ETFs: MORT, MORL, SUB, MUNI, PVI, PZA, SHM, TFI, VRD, HYD, ITM, MLN, PRB, SMB, GMMB, SMMU, RVNU, NY .
Aug. 6, 2013, 12:30 PM
- With equity guys greedy and fixed income fans fearful, maybe it's time to go the other way.
- Portfolio manager David Tepper (not that David Tepper), finds 10 closed-end bond funds who have negative YTD and Y/Y returns even as their net asset values have risen over the same periods: TAI, HIX, HHY, HIO, FTF, HAV, HIH, PIM, PPT, FMY.
- Several other closed-end funds run by high-profile names used to command hefty premiums, but now trade at discounts to net asset value. Among them are Jeff Gundlach's DBL and DSL and Pimco's PCI, PDI, PFN, and PFL.
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The Fund seeks current income with capital appreciation through investing in multiple fixed-income sectors in the global credit markets, including corporate debt, mortgage-related and other asset-backed securities. The Fund will normally invest at least 50
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