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NYer1

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  • PIMCO High Income Fund: Sell This Overpriced CEF Before It's Too Late [View article]
    Cheap leverage is everywhere these days.
    Other funds have cheap leverage as well, maybe not as cheap as PHK's but the difference is not meaningful enough to merit a 60% premium (not even a 15% premium actually)
    Other Pimco funds use the same leverage source ARPS and are still trading at DISCOUNTS to NAV, so this is not the reason for the Premium.
    No question PHK is a carry trade but so are ALL the fixed income CEF's with leverage.
    The question is, do you believe PHK can earn 19% on NAV even with leverage consistently and what are the risks involved with such a gargantuan task?If they carry less leverage on the books now, it means they have less income producing assets to support the inflated distribution.Even with leverage PHK would barely make 10% in income on NAV, so the other 9% must come from somewhere else - that is where derivatives come into place: Swaps, Futures, Currencies, etc.. - a very dangerous game and one who "kills" heroes in the long termsA disaster waiting to happen..by the time they cut the distribution it would be too late to bail out, this fund will trade at a nice DISCOUNT to NAV and then maybe, it would be a buy.
    Apr 19, 2015. 02:23 AM | Likes Like |Link to Comment
  • Netflix: Street Applauds Disastrous Financial Results [View article]
    Thanks for a great article, looking forward to read part I.
    Would you say NFLX faces a huge risk going forward with infrastructure players jacking up streaming charges as it becomes apparent that NFLX's growth contributes to cable/fios etc. infrastructure players losing paying customers?
    It seems to me NFLX can be caught in a vicious cycle of rising content costs AND rising streaming cost as cable companies seek to monetize their infrastructure and milk it for what it is really worth for streamers who steal their viewers and users.
    Apr 16, 2015. 04:31 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Sell This Overpriced CEF Before It's Too Late [View article]
    Check out JGH, ACP, HYB to start..a combo should do much better than PHK over the next few years
    Apr 14, 2015. 02:59 PM | Likes Like |Link to Comment
  • A Tesla Valuation Using DCF Under 3 Scenarios - Part 2: Detailed Assumptions [View article]
    Nigel
    Good comment
    AMZN was actually cash flow negative when taking into account capital leases but that serves as a very good example for a company burning cash at a high rate and needing liquidity infusions (AMZN's debt has been growing at an alarming rate)
    TSLA is and will be dependent upon raising debt an/or equity to finance its operations for the foreseeable future, which will cause serious dilution issues and/or additional strain on the balance sheet with added interest expenses coming as well.
    Apr 13, 2015. 11:51 AM | 3 Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    mr Lucky
    You have a wise advisor !
    PHK is a blackbox and naive owners believe that if it has been doing well for the past 6-7 years it shall go on doing well..
    Few of those buyers/holders understand the risks involved in this kind of vehicle and the added significant risks of owning a fund that trades at nosebleeding premium to NAV.
    For them, the fact the fund has traded at such premium for a number of years means there is no risks involved.
    There will be a very rude awakening..
    Apr 13, 2015. 11:47 AM | 2 Likes Like |Link to Comment
  • Amazon Is More Than An Internet Retailer [View article]
    Great!
    HAppy you took some profits!
    Apr 12, 2015. 08:03 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    Sooner than you imagine :)
    Best of luck
    Apr 12, 2015. 08:01 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    Why don't we do this: chart present, 3,5,7,9,11,13 years..see a trend?
    Apart from the drastic decline and recovery from the financial crisis..see a trend?
    Apr 11, 2015. 05:52 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    You are an engineer, right?
    Think a bit and you'd get the 200% leverage issue, not that hard.
    Re ROC, I am not stuck in a cube about 4%, 30% or 100%..
    I really don't care what CEF connect says because that number is not meaningful to me in the least.
    What matters to me is the fact this fund can't earn its distribution rate consistently over the next cycle and less leverage means it has less assets to earn income on to pay that distribution.
    Let us assume PHK has been a great investment over the past 6 years..great..now what does it say about the next 5 years? in a word- NOTHING.
    The fund must earn 19% to break even and in order to even just TRY to do that must take undue risks which will cause it to implode at some point.
    You may think: well, I will ride it, disregard the huge premium, hope for the best and try to bail before it all collapses
    Good luck
    Apr 11, 2015. 05:48 PM | 1 Like Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    Great, I am sure you are not sure about the right thing.
    Apr 11, 2015. 05:43 PM | Likes Like |Link to Comment
  • A Tesla Valuation Using DCF Under 3 Scenarios - Part 2: Detailed Assumptions [View article]
    Andre
    I believe you err , greatly, on the risk assessment side of the equation.
    You mention Buffet assigning a 9% discount rate to valuations.
    Buffet will not touch TSLA with a 100 yard pole at this stage.
    If you force him to take a position in TSLA he will assign a 25% discount rate to it (if not higher) given TSLA's stage of development, financial condition, business conditions opaqueness and the history of financial performance.
    When Buffet buys into companies they are well established cash flow generators with a long history of profitability and dividend payments (think KO, AXP etc.) with very defined and well understood business models , clear paths to profitability and cash generation..TSLA currently is very far away from that status and frankly may never get there!
    Also, you need to assign different risk levels for different scenarios: the higher your reward assumption (say, in assuming greater sales, for example) the lower the probability it would be achieved and the greater risks the company will need to bear in order to achieve it.
    TSLA is at the most a speculative traders' stock right now (often known as a "hot potato") - and risks of bankruptcy should not be dismissed off hand for a company whose product is priced out of the markets and whose footprint is almost not existent with a very weak balance sheet which needs to be replenished with debt and/or equity infusions on a regular basis.
    The above are clear signs of a development stage company (think start up biotech as an example) and the risk that should be (and is) assigned to those is much higher than 10% discount rate.
    Apr 11, 2015. 05:02 AM | 5 Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    I said: "When you have 12 dollars in NAV some 7 years ago and now is down to only 7.50 or so today" - do you find that not accurate (it is 7.60 today)
    Do you fail to see a declining trend in NAV over the life of the fund?
    At times it slows down and other times it accelerates but over time, NAV falls and than makes it harder and harder for the fund to keep its distribution intact.
    Do you realize that if NAV falls by another $ from here over the next 2 years (conservative in my opinion, it will fall more than that I believe) the fund would need to earn some 22.15% just to finance its inflated distribution?
    What asset class earns 22.15% consistently year in and year out?
    Stocks may do that, over the long term, but only with about 140% leverage!
    This fund will not go to 140% leverage (50 would be stretching it from hereon) and is not a stock fund..
    Sure, derivatives could do that , at times, but they can also wipe NAV very quickly if you stand on the wrong side of the trade (see Gross' ill advised bet against US treasuries some 3 years ago).
    A disaster waiting to happen !!
    Good luck
    Apr 10, 2015. 09:08 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    sjfaris
    The fund pays 1.46 a year in distributions, right?
    The NAV is 7.60, right?
    1.46/7.60 is just over 19%
    That means that the assets need to earn 19.25% a year to be able to cover the distribution rate.
    Those top 10 positions have not changed dramatically and we have a list of the fund's positions in full released by Pimco in their regulatory filings.
    Sure it can change and some do change but the reality is, 19% a year CAN NOT be achieved these days with HY bonds,
    You'd need to leverage the fund by 200% to get there, what is the current leverage? less than 40%
    Re the ROC issue, try to get out of the box you locked yourself into..
    Re read my previous comment and then the article again..
    Or not actually, you may want to stay with your opinion and that is perfectly fine with me
    Good luck
    Apr 10, 2015. 08:58 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    Check and let us all know..are you sure they don't outperform?
    Apr 10, 2015. 08:46 PM | Likes Like |Link to Comment
  • PIMCO High Income Fund: Change In Leverage To Effect Dividend Cut And Collapse Of NAV Premium [View article]
    GVI
    Lots of people bought oil frantically at 150 and Gold around 2000 too, doesn't mean it makes sense.
    Buying ahead of ex div is called a dividend capture strategy and if you search for a few funds that have been doing that you'd find out how it has worked out for them (hint, not good)
    Buying div. doesn't make sense economically and mathematically, especially with a fund that trades at astronomically high premiums to NAV.
    Apr 10, 2015. 09:18 AM | Likes Like |Link to Comment
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