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NYer1

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  • Riddle Me This On Amazon Prime [View article]
    So.. another "new paradigm", right?
    Jul 20, 2015. 03:59 PM | Likes Like |Link to Comment
  • A Diversified, High-Income, Lower-Risk CEF Portfolio For 2015 [View article]
    Have you been happy with PHK over the past 1,3,5 years?
    Jul 19, 2015. 06:25 PM | Likes Like |Link to Comment
  • Rising Rates Are Good For PHK, Part II [View article]
    Michael
    " Thus determining the sustainability of PHK's dividend payout based on what information we do have will never be fully satisfactory."
    That should be a factor in valuaing PHK at a discount and not a premium.
    The more opaque the portfolio is the higher the risk premium should be so discount to NAV is more appropriate.
    When rates will rise you will see PHK's risk profile rise significantly IMO.
    Jul 7, 2015. 01:52 PM | Likes Like |Link to Comment
  • Rising Rates Are Good For PHK, Part II [View article]
    Goldenbear
    I am not going to argue lengthily as my opinions are well documented for better or worse.
    The fact no one can tell exactly how PHK has been "plugging" the hole between earned income and distribution rate just increases risk.
    If it were so simple they would have done the same for all of their funds and the distribution rates for those funds would be 19% of NAv as well - obviously that is not the case. The reason being IMO, because PHK is the only income fund that has such a big hole and they must resort to these gambles unless they choose to cut the distribution to something reasonable.
    Markets have the tendency to force one's hand to get bACK TO NORMAL (WHETHER IT IS LEVERAGE, TOO MUCH INCOME ETC.) AT THE MOST INOPPORTUNE TIMES..it will happen to PHK as well, just a matter of time.
    In the mean time, PHK owners over the past 1.3.5 have been sentenced to sub-par performance with very heightened risks vs. its peers and I believe that as long as this premium stays so high, that will be the case in the future too.
    Jul 7, 2015. 01:50 PM | Likes Like |Link to Comment
  • Rising Rates Are Good For PHK, Part II [View article]
    Michael
    I beg to differ " which I attribute to their unique ability to access and understand parts of the HY bond market that retail investors cannot access except through this CEF. "
    Pimco is not the only manager with access to special situations within ANY markets.
    Furthermore, the PHK portfolio is and has not been invested heavily in HY credits for quite a few years now.
    PHK has a big hole between earned income and the distribution rate and may have been successful in plugging that hole by gambling on arcane derivatives over the past few years.
    History tells us no one can do so over the long term without a significant downside to the principal and the current managers (rightly so) decided to lower risks and leverage in the portfolio.
    Higher rates aren't coming anytime soon and even with higher rates, PHK won't be able to plug that hole from earned income alone.
    Many other decent Pimco funds are earning their distributions nicely and don't need to resort to gambling strategies to keep their reasonable distribution rates.
    If this were a run of the mill benefit unique to Pimco all their other funds would have used it and increased their distribution rates from 8-9-10% of NAv to 18-19% of NAV..PHK is the only income fund that does that..
    The above descriptions by you do not merit a Premium valuation but a discounted valuation to NAv because of the much higher risks incurred and because the writing is clearly on the wall that the fund can't sustain this inflated yield.
    Your assertion about higher rates being good for PHK is faulty IMO on 2 fronts:
    1. There is no assurance whatsoever higher rates are coming anytime soon.
    Even if rates start to creep higher it will probably take a long time for any income upgrade on this portfolio.
    2. The vast majority of the portfolio will not be redeemed to enjoy the higher rates and employing more leverage to try and capture higher rates will again raise the risks dramatically.You hinge your argument on historically looking at a period of rising rates and assuming the same would happen in the future.In essence this is a "Hope" strategy on two front, you hope rates will go higher and you hope the higher rates would result in out performance like in the past (not entirely true as demonstrated to you in comments to your first article, quite a few funds did at least as well with lower risks) - remember, basing an investment strategy on past performance has been fool hardy according to numerous academic papers (just look at the research pointing out what happens to portfolios who chase best performers in mutual funds).In the face of this hope strategy, logic and facts point to the case of PHK facing more and more difficulties in earning its distributions.25% premium is no bargain with such an earning profile - even if the premium has averaged over 50% over the past few years.A small sentiment shift can wipe out this premium, bring the market price below NAV and in the process wipe away hundreds of millions of dollars of investors money.Caveat Emptor!
    Jul 6, 2015. 04:45 PM | 2 Likes Like |Link to Comment
  • Rising Rates Are Good For PHK, Part II [View article]
    Umass
    very easy not to love it..the dividends tell one story while the total return tells another.
    Because of the huge premium PHK has traded at over the past few years, the total return on your investment over the past 1,3, and 5 years has LAGGED peers all the while incurring risks that are some 50% higher than those peers.
    So , yes, you got a lot of dividends but NO, the value of your investment including those dividends has lagged AND you incurred much higher risks while holding that lagging investments.
    PHK is not a bad fund, however, it is hugely over priced for what it is and the risks it undertakes in trying to keep that inflated distribution rate intact.
    Jul 6, 2015. 04:16 PM | Likes Like |Link to Comment
  • Rising Rates Are Good For PHK, Part II [View article]
    Thanks for your article, it seems more balanced than part I.
    regarding the ROC issue and PHK's ability to keep the current distribution unchanged:
    Have you examined PHK's Section 19 notices this year?.
    Can you spot a deviation in frequency from previous years and also a change in magnitude of "other sources" of income in those notices?
    What would you ascribe those notices to and do you believe they may be related to the fund's inability to meet its distribution rate from earned income vs. previous years?
    Jul 6, 2015. 03:26 PM | Likes Like |Link to Comment
  • Macau VIP Refugees' No-Show At Melco Crown's New City Of Dreams In Manila [View article]
    Howard
    I read with interest MS report about the sector and here is a brief summary of what the analyst perceives as the 3 risks going forward for the next year:

    The first is revenue risk; VIP, which is still 52% of gross gaming revenue, will decline further in 2H15 due to junkets closing down, while the full smoking ban will take 2016 revenue down further in his view. Second is earnings risk; apart from negative operating leverage, fixed and rising staff cost, and rising promotional allowance, he thinks the additional cost of Phase 2 will push the overall margin/ROIC down. The last is multiple contraction risk – Macau stocks are trading at 13-15x EV/EBITDA on 2015/16 and thus in the event of slower future growth, no support from dividend, and negative earnings revisions, he sees multiples declining further.

    Seems reasonable to me..your take?
    Jul 2, 2015. 10:01 AM | Likes Like |Link to Comment
  • Is Yield All That Matters? [View instapost]
    pet
    I just re-read this comment of yours:
    "consider high coupon bonds which trade above par to give roughly equivalent yield to similar maturity bonds e.g., the Boeing 8.75% 08/15/21 trade at >$130 but there's not a real case to be made that the premium price of the bond is "unsustainable"..."
    Are you serious?
    How much capital losses you will incur if you bought those Boeings today at 130 when they mature in 2021 at par?
    ANyone buying those bonds today (or owning them today) can't expect more than their Yield to Maturity which will take into account the high coupon but also the principle erosion to par (assuming they don't default).
    Regardless if you bought them way back at 50, your total return from today will be their YTM!
    I hope you agree with that basic notion and see their premium is indeed unsustainable.
    If PHK owns that bond and keeps paying the 8.75% coupon, it will have its NAV shrink when BA bond goes slowly but surely from 130 to Par.
    Jul 1, 2015. 02:36 PM | Likes Like |Link to Comment
  • Rising Rates Are Good For PHK [View article]
    Thanks for your response and admitting the FUND's performance (as evidenced by its NAV) was not really special during the examined period (there are many other funds that did better, with less risk).
    ANy chance you will respond to the questions posed above? I will post them again here hoping to hear your take on them:
    So I ask these questions:
    Does PHK merits a buy recommendation (or even a Hold recommendation) when:
    1. It's Premium is 25% over NAV when virtually all other alternatives are trading at attractive Discounts to their NAV?
    2. How can anyone make 19% consistently to pay for the inflated distribution rate which was set some 12 years ago when NAV was around 100% higher than when it is now? when HY rates of B rated bonds are around 7% and CCC rated bonds (susceptible to very high default rates) are at around 11%
    3.Does a fund sporting 50% HIGHER RISK merit a Discount or a Premium valuation?
    4.How come NAV declined by 9% over the past 2 years?
    5. Do you feel the lower leverage that the fund is employing now makes it easier or harder to achieve that 19% benchmark target to satisfy that inflated distribution rate?
    6. Have you examined PHK's portfolio and looked at its major positions? If so, do you see a significant percentage yielding over 8-9%
    Thanks for your consideration and hopefully responses to the above questions.
    7. Have you examined PHK's Section 19 notices this year.
    Can you spot a deviation in frequency from previous years and also a change in magnitude of "other sources" of income in those notices?
    What would you ascribe those notices to and do you believe they may be related to the fund's inability to meet its distribution rate from earned income vs. previous years?
    Jul 1, 2015. 01:57 PM | 1 Like Like |Link to Comment
  • Rising Rates Are Good For PHK [View article]
    papa
    As a retiree who must preserve principal using the Vanguard fund vs. PHK is a no brainer. I think you are doing the right thing even if you give up some income in the process..
    There are other options in the leveraged CEF arena apart from PHK who provide decent income and trade at very nice discounts to their NAVs.
    They pay much higher than the Vanguard fund but of course are more volatile.
    However, check out EVV, BLW, DSU..they are LESS volatile than the Vanguard fund and provide more income, they also have portfolios with shorter average durations that can mitigate interest rate risks.
    A combination of the 3 will further reduce risks through diversification and exposure to different management styles.
    Jul 1, 2015. 01:31 PM | 1 Like Like |Link to Comment
  • Rising Rates Are Good For PHK [View article]
    He would have still told me to short it bulls.
    Sentiments and emotions make people pay 25-30-40-50 and 60% premium to nav, not logic and fact checking.

    I am short, have a lot of skin in the game, you are with no position whatsoever..who is the obssesive one?
    If you feel PHK is a buy here, just buy it..
    I feel it is a sell here and I sold more of it a few days ago between 10.10 to 10.18
    Because my rationale tells me it will trade below NAV this year..that means a further 30%+ decline in market price.
    Meanwhile bulls, perhaps you care to educate us all and comment on my 7 questions posed to the author (who choses to stay mute on them) at the begining of the comment section?
    Make your case that this is just an emotional sell off and nothing more, mabye I am wrong and you are right but so far you haven't presented anything to support your position on the matter that can hold water.
    Jul 1, 2015. 12:50 PM | Likes Like |Link to Comment
  • Is Yield All That Matters? [View instapost]
    pet
    Appreciate the feedback.
    My mind is open, but I need to see facts and figures to be convinced, not vague ideas.
    The facts and figures point to an unsustainable distribution rate from earned anything.
    Best of luck and I truly hope you're not long this disaster waiting to happen.
    Jul 1, 2015. 10:26 AM | Likes Like |Link to Comment
  • Rising Rates Are Good For PHK [View article]
    Nelson
    The distributions are considered dividends unless classified otherwise.
    They can be dividends, return of capital or capital gains (long or short term).
    The discussion about PHK's performance from about 10 years ago is quite laughable.
    We are talking about a different management team, different market circumstances, different portfolio composition , different leverage, different Asset base - and Probably a different distribution rate by the time Fed Funds rise significantly (and possibly way sooner) IMO.
    To think that one can base a projection of such fund on its performance of 10 years ago..There is not much in PHK's portfolio to suggest a rise in the Fed Funds rate would help its performance - yes PHK can change the portfolio but change it to what? More Bank Loans? That would probably lower earned income even more!
    Didn't NAV actually go DOWN by about 4.5% for those 2 years the author alludes to (2004-2006), but he neglects to mention this fact to us and only shows the price chart - so basically he looks at a premium creation period some 10 years ago.
    The author also neglects to show us what other alternatives had done with respect to performance for that period and what were the risk differences undertaken by investors.
    Just one quick example, DSU was up as much as PHK for that period, price wise, but look at the difference in NAv performance : UP 2.7% vs. DOWN around 4.5% on PHK.
    PHK had been a very mediocre fund up until the super charged days after the financial crisis vs. its peer group, the author wants us to believe PHK is a good buy as a hedge against rising rates and there are 2 problems with that proposition to start with:
    1. Past performance is no guarantee of future results
    2. Even if we ignore item 1, PHK was a very middle of the road fund back then and to think a high premium valuation is merited for such fund is not logical.
    The over inflated distribution at 19% of NAV will assure NAV erosion going forward and the more they delay the cut the more people get hurt and the larger the losses may be.
    Jul 1, 2015. 09:00 AM | 2 Likes Like |Link to Comment
  • Rising Rates Are Good For PHK [View article]
    "dont fight the tape. "
    Go back to MArty Zweig and ask his opinion about PHK, he would tell you to short it.
    If you've beem watching the tape , do you notice a certain under performance by PHK over the past year, 3 years, 5 years?
    Do you notice this under performance achieved at 50%+ risk vs. peers?
    Bulls, for someone who admits to have no skin in the game you sound pretty emotional to me!
    Jul 1, 2015. 01:05 AM | Likes Like |Link to Comment
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