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  • CEFL Now Yielding 23% - What's Wrong With The Closed-End Funds? [View article]
    Did you mean rate increase, not rate cut?
    Jul 28, 2015. 11:48 PM | Likes Like |Link to Comment
  • Rough quarter for American Capital Agency [View news story]
    Didn't forget the dividend cuts at all. My point was exactly that it's puzzling how they can be continually losing core income and book values, and therefore cutting dividends, when the value of MBS haven't fallen on at all on balance and short rates haven't gone up. Spread did come in a lot in 2013 but regained some from the lows. They reduced leverage and hedged the wrong way just as bonds started a year long rally in 2014, so, I guess that and rising CPR did the damage in 2014. Apparently the T-bond bear in 2015 has somehow added to difficulties even though MBS haven't moved much.
    Jul 28, 2015. 11:37 PM | Likes Like |Link to Comment
  • CEFL Now Yielding 23% - What's Wrong With The Closed-End Funds? [View article]
    Given the emerging need by baby boomers for retirement income, the continuing decline in market prices of mREITs, BDCs, MPLs, CEFs and high yield credit securities is either a wonderful gift for those who are still able to buy, or a warning that there is something severely wrong in the credit markets.

    Repeatedly we hear the explanation of concern about the prospect of rising rates, however, given the fact that even securities that might benefit from rising rates are eroding, the more consistent theme seems to be that anything leveraged is going to continue to go down until there is another cleansing of the system of too much debt, especially margin debt. Is another liquidity or solvency crisis emerging? In absence of actually rising rates, and even rallying T-bonds, the problem seems to be more related to liquidity or solvency rather than rates.

    Too bad CEFL, BDCL and MORL don't have options markets, for that would make it much easier to hold these various diversified leveraged high yielders with the security of put hedges. In the meantime I'll just hold the underlyings with put hedges and enjoy the ride down to lower and lower cost bases and higher yields by rolling down the hedges.
    Jul 28, 2015. 12:50 AM | 2 Likes Like |Link to Comment
  • Prospect Capital's Dividend And NAV Sustainability Analysis (Pre Fiscal Q4 2015 Earnings) - Part 1 [View article]
    Considerable insider buying at prices of 7.xx in June. Holding with 7.5 and 8.0 strike puts. Will be selling August 8 strikes and bumping to Jan 7.5 tomorrow.
    Jul 28, 2015. 12:04 AM | 4 Likes Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    "Charlie Munger's words during a round table discussion 2 years ago: "Oil is absolutely certain to become incredibly short in supply and very high priced.… The oil in the ground that you're not producing is a national treasure ... It's not at all clear that there's any substitute [for hydrocarbons]. When the hydrocarbons are gone, I don't think the chemists are going to be able to just mix up a vat and create more hydrocarbons. It's conceivable that they could, I suppose, but it's not the way to bet.""

    Actually, the chemists long ago figured out many ways to mix a vat and create more hydrocarbons, in fact, high grade oil.

    The Fischer Tropsch reaction in particular was used in Canada during WWII to produce high quality oil. However, oil is not terribly necessary since using natural gas for vehicle fuel and power plant fuel is a no brainer. At some very distant time after CNG is no longer economical for vehicle fuel (100 years??) the Fischer Tropsch reation could be used to make oil. Oh, also, solar electrolysis of water can be used to get the necessary hydrogen.
    Jul 27, 2015. 10:46 PM | 4 Likes Like |Link to Comment
  • Rough quarter for American Capital Agency [View news story]
    It's puzzling; most mREITs just kept losing book value since highs of 2013 even though MBS prices now significantly higher. Discounts through the roof. Guess the hedging costs, trading losses, CPR, management fees and sour market sentiment won't let up. Just keep buying or hedging and let the yields on cost go up. At some point you'd think investors will chase the yields.
    Jul 27, 2015. 05:25 PM | 2 Likes Like |Link to Comment
  • Annaly Capital Management And Inflated MBS Market [View article]
    Thanks for a thought provoking article. "Did I nail the discount to book or am I just full of unsubstantiated claims and conjecture...?" Well, you're off the hook because any theory to explain market discounts to NAVs probably cannot be proven, and, therefore, is inherently speculative and full of conjecture. Your theory is interesting, however, my gut reaction is that the market is the market, and large discounts are common not only with mREITs, but also BDCs and closed end funds. For quite a while now they have all had major discounts, so I don't think the answer can be solely a distorted MBS market. Perhaps the general fear of rising rates factors in and is a legitimate one that justifies the discounts. Could this become a classic example of selling on the rumor, buying on the news?
    Jul 21, 2015. 09:36 AM | 1 Like Like |Link to Comment
  • Annaly Capital Management And Inflated MBS Market [View article]
    Great comment. However, Freddie Mac and Fannie Mae (not Sallie Mae) are basically sellers not buyers. They package the individual loans bought from the originators and package them into RMBS and sell them. My guess is that pension funds, mutual funds, ETFs and insurance companies are the biggest buyers and traders by far.
    Jul 21, 2015. 09:22 AM | Likes Like |Link to Comment
  • All-time high for Netflix during earnings week [View news story]
    Insiders have reduced positions 89% according to finviz.
    Jul 13, 2015. 11:11 PM | Likes Like |Link to Comment
  • Micron: Are We There Yet? [View article]
    dilution avoidance purposes
    Jul 13, 2015. 11:04 PM | 1 Like Like |Link to Comment
  • Weekly Market Update: Stay Focused, China And Greece Are Non-Issues [View article]
    Great long term perspective. It looks like bull momentum is waning, averages are beginning to roll over, and internal technicals have been deteriorating for quite some time, but why? The drop in oil prices should be bullish for earnings of oil consuming companies, while the oily supply related companies might be finding a bottom. The questions are how long must the distribution top last, what is the ultimate top price, and what problems could kill index earnings. One wonders if broad indices will ultimately follow the drastic bear patterns of commodities, commodity-related, and high yield income stocks.

    My approach is to stay long mREITs, BDCs, a couple MLPs, PFF, and HYLD, all with put hedges, maybe write some calls, for income, and long long term calls on indices with married intermediate term puts, 10% cash. One thing is sure, and that's most mREITs, BDCs, and other high income stocks and commodity related stocks have taken a severe beating in this bull market over the last two years while bonds yields have crept up.
    Jul 12, 2015. 09:45 AM | 1 Like Like |Link to Comment
  • Microsoft 'Mobilizes' The PC [View article]
    I was wondering the same. Hope the author answers your question about AMD. Seems odd that he'd use "Intel" only instead of "x86" without addressing AMD. We know AMD is just about dead, but not that dead. I can't imagine that MSFT would somehow lockout AMD in Windows 10.
    Jul 11, 2015. 07:44 PM | Likes Like |Link to Comment
  • Pound-For-Pound Apollo's 10.5% Yield Is The Best In Town [View article]
    Thanks for another helpful article. I'll add ARI to my watch list. Looks like a good candidate in lieu of residential REITs or preferreds. Holding dry powder on bond substitutes until the bond market looks better on weekly momentum. Just got a death cross on TLT in mid June. Hate to say it but the bond charts look ominously similar to gold and oil charts in the early declines. Could be the start of the next decades long bond bear. All the income securities take serious cues from bonds.
    Jul 11, 2015. 02:47 PM | 1 Like Like |Link to Comment
  • ARMOUR's Thorough Reporting Provides For Clear Analysis [View article]
    Thanks for your work on ARR. "The first big positive factor is that the value of common shares outstanding is declining nicely..." They certainly have been declining "nicely" for three years, much to the discomfort of shareholders. However,in that particular sentence I think you meant the "number" of common shares, not the "value" of common shares, since you were about to discuss share buybacks.

    Your chart proves what I've feared for quite some time, that they hedge and lever up or down at just the wrong times. They began to increase duration and started levering up last April just as the bond market began a major decline. I suppose that when bonds form an intermediate low in the next few weeks and begin to rally they'll lever down and reduce duration. They are a good example of why I almost always hedge mREITs with puts. However, having gotten in at 3.86 a couple years ago, so I took the hedge off when they were at 4.20 to my regret. I'll be hoping for a more advantageous spectrum of strike prices after the reverse split. Right now the 2, 3 and 4 strike prices are comparable to a $28 stock having strikes at only 20, 30 and 40, which makes it more difficult to hedge effectively and inexpensively.

    One wonders what the yields, book values and share prices of mREITs might look like as 30-year MBS head back to 5% some day. It could be a very long and bumpy ride. There might be a lot of reverse splits along the way.
    Jul 11, 2015. 11:54 AM | Likes Like |Link to Comment
  • Despite All Theoretical Assurances, Still Toward Contraction [View article]
    Leading indices notwithstanding. Some recovery. Rate of home ownership has declined continuously throughout in spite of record low mortgage rates. and real median incomes also down.
    Jul 9, 2015. 12:18 AM | Likes Like |Link to Comment