14 BDCs - The Good, The Bad And The Maybe? Part 10: THL Credit [View article]
Buzz,
You say, "Below is an oversimplified table" and "In reality I use different weightings for each criterion." Could you show us what your non-simplified table looks like?
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
"I believe the stock and bond markets will be running into more resistance at this point."
In previous articles or comments, you've suggested in down markets shorting an index or buying an inverse index up to 1/3 of the portfolio. Would this involve selling CEF shares in a declining market and taking the loss to finance the short position? (I assume you're not suggesting keeping 1/3 of the portfolio in cash to be able to short or buy inverse ETFs if necessary?)
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
"I believe the stock and bond markets will be running into more resistance at this point."
In previous articles or comments, you've suggested in down markets shorting an index or buying an inverse index up to 1/3 of the portfolio. Would this involve selling CEF shares in a declining market and taking the loss to finance the short position? (I assume you're not suggesting keeping 1/3 of the portfolio in cash to be able to short or buy inverse ETFs if necessary?)
Business Development Companies: The Good, The Bad, And The Maybe? Part 3 [View article]
BDC,
Thanks for writing these articles--very informative.
FINRA publishes an annual Regulatory and Examination Priorities letter in January. The one last month (http://bit.ly/14TPmw9) says, "BDCs are typically closed-end investment companies. Some BDCs primarily invest in the corporate debt and equity of private companies and may offer attractive yields generated through high credit risk exposures amplified through leverage. As with other high-yield investments, such as floating-rate/leveraged loan funds, private REITs and limited partnerships, investors are exposed to significant market, credit and liquidity risks. In addition, fueled by the availability of low-cost financing, BDCs run the risk of over-leveraging their relatively illiquid portfolios."
Does this concern you, or do you think it's mostly pro forma? (They also caution against some other types of high-yield investments.)
PennantPark: BDCs - The Good, The Bad And The Maybe? Part 4 [View article]
I submitted this for the previous article by mistake--didn't know if you'd see it:
BDC,
Thanks for writing these articles--very informative.
FINRA publishes an annual Regulatory and Examination Priorities letter in January. The one last month (http://bit.ly/14TPmw9) says, "BDCs are typically closed-end investment companies. Some BDCs primarily invest in the corporate debt and equity of private companies and may offer attractive yields generated through high credit risk exposures amplified through leverage. As with other high-yield investments, such as floating-rate/leveraged loan funds, private REITs and limited partnerships, investors are exposed to significant market, credit and liquidity risks. In addition, fueled by the availability of low-cost financing, BDCs run the risk of over-leveraging their relatively illiquid portfolios."
Does this concern you, or do you think it's mostly pro forma? (They also caution against some other types of high-yield investments.)
Equity CEFs: The Most Undervalued And Overvalued Funds [View article]
Doug,
Your articles on CEFs are outstanding--thanks for providing them.
Do you recommend buying funds even if the price is comparatively high (as most are now), as long as they have a substantial discount, or is it better to wait till prices comes down, even if the discount isn't as large? Seems like there's an unexpected plunge every few months (e.g., last Nov. 15), and I can't decide if it's better to wait in cash for that and lose the distribution income or just buy the funds now. If you'd wait, how small a dip would induce you to buy?
Levered Municipal Closed End Funds: A Cautionary Tale [View article]
Although your thesis is reasonable from a theoretical point of view, it turned out to be wrong. With the benefit of hindsight, I clicked the first half dozen tickers above and looked at their 1-year results. All have increased. So much for prognostication.
Levered Municipal Closed End Funds: A Cautionary Tale [View article]
PCEF is a fund of funds (like FOF), and its expense ratio is 1.58 -- so you're paying them a high fee and also, indirectly, the expense ratios of the underlying funds. You could just buy a few of the underlying funds directly and get a higher return.
Retirement Strategy: Replacing Yield With More Yield [View article]
No motives at all, other than trying to reconcile the opinions of two authors that are 180 degrees apart. I didn't say the portfolio was no good--just that I wondered how you made any money, after inflation and taxes, with dividends of 4-5%. Inflation alone is 2-3% (http://bit.ly/TqJYhZ), and taxes would take another 25-35% of what's left. It appears this would leave a real return for dividends of 2-3%. My own calculation is that a dividend of at least 8% would be necessary to overcome that. I myself own a bunch of mREITs, including AGNC and NLY, along with some BDCs and other industries, and don't intend to sell yet. I do subscribe to a service, but it's a small one that most people on SA probably don't know about. The results are middling.
As far as the portfolio making money, a lot of stocks make money when the market is going up, so I'm not sure it's attributable to this portfolio. Not trying to be combative, just wanted to understand the reasoning for your choices.
Retirement Strategy: Replacing Yield With More Yield [View article]
You own these because they're dividend stocks, but the total dividend, aside from the BDCs, is maybe 4-5%? How do you make anything after inflation and taxes? For that kind of return, you could buy bonds (leaving aside capital appreciation and option income, which you could get with non-dividend stocks). Typically the mREITs have hedging strategies in place--it's not a guarantee, of course, but I'm not sure their demise is imminent. One of your fellow authors, Todd Johnson, who's pretty astute, advises against some of the large-cap stocks you recommend: GE, T, VZ, BAC, etc.
Expect Mellanox Technologies' 3rd Quarter Earnings To Shine [View article]
Todd,
Could you talk about how you hedged this and how it affected your losses (or gains)? It would be a good real-world example of hedging strategies. When I consider hedging, it doesn't seem practical to spend the time on it for a couple of dozen stocks every month or two, especially since some don't have puts available, or else they're so expensive that the downside for an affordable one is large enough to make it seem hardly worth buying and isn't much offset by a collar.
14 BDCs - The Good, The Bad And The Maybe? Part 10: THL Credit [View article]
You say, "Below is an oversimplified table" and "In reality I use different weightings for each criterion." Could you show us what your non-simplified table looks like?
Thanks--great articles.
13 BDCs - The Good, The Bad And The Maybe? Part 9: Golub Capital [View article]
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
In previous articles or comments, you've suggested in down markets shorting an index or buying an inverse index up to 1/3 of the portfolio. Would this involve selling CEF shares in a declining market and taking the loss to finance the short position? (I assume you're not suggesting keeping 1/3 of the portfolio in cash to be able to short or buy inverse ETFs if necessary?)
Equity CEFs: The Insanity Of CEF Investors Revisited [View article]
In previous articles or comments, you've suggested in down markets shorting an index or buying an inverse index up to 1/3 of the portfolio. Would this involve selling CEF shares in a declining market and taking the loss to finance the short position? (I assume you're not suggesting keeping 1/3 of the portfolio in cash to be able to short or buy inverse ETFs if necessary?)
Business Development Companies: The Good, The Bad, And The Maybe? Part 3 [View article]
Thanks for writing these articles--very informative.
FINRA publishes an annual Regulatory and Examination Priorities letter in January. The one last month (http://bit.ly/14TPmw9) says, "BDCs are typically closed-end investment companies. Some BDCs primarily invest in the corporate debt and equity of private companies and may offer attractive yields generated through high credit risk exposures amplified through leverage. As with other high-yield investments, such as floating-rate/leveraged loan funds, private REITs and limited partnerships, investors are exposed to significant market, credit and liquidity risks. In addition, fueled by the availability of low-cost financing, BDCs run the risk of over-leveraging their relatively illiquid portfolios."
Does this concern you, or do you think it's mostly pro forma? (They also caution against some other types of high-yield investments.)
PennantPark: BDCs - The Good, The Bad And The Maybe? Part 4 [View article]
BDC,
Thanks for writing these articles--very informative.
FINRA publishes an annual Regulatory and Examination Priorities letter in January. The one last month (http://bit.ly/14TPmw9) says, "BDCs are typically closed-end investment companies. Some BDCs primarily invest in the corporate debt and equity of private companies and may offer attractive yields generated through high credit risk exposures amplified through leverage. As with other high-yield investments, such as floating-rate/leveraged loan funds, private REITs and limited partnerships, investors are exposed to significant market, credit and liquidity risks. In addition, fueled by the availability of low-cost financing, BDCs run the risk of over-leveraging their relatively illiquid portfolios."
Does this concern you, or do you think it's mostly pro forma? (They also caution against some other types of high-yield investments.)
Equity CEFs: The Most Undervalued And Overvalued Funds [View article]
Your articles on CEFs are outstanding--thanks for providing them.
Do you recommend buying funds even if the price is comparatively high (as most are now), as long as they have a substantial discount, or is it better to wait till prices comes down, even if the discount isn't as large? Seems like there's an unexpected plunge every few months (e.g., last Nov. 15), and I can't decide if it's better to wait in cash for that and lose the distribution income or just buy the funds now. If you'd wait, how small a dip would induce you to buy?
Thanks,
JC
Levered Municipal Closed End Funds: A Cautionary Tale [View article]
4 Strategies For Increasing Yield And 11 CEFs That Will Help You Profit [View article]
Levered Municipal Closed End Funds: A Cautionary Tale [View article]
Levered Municipal Closed End Funds: A Cautionary Tale [View article]
Retirement Strategy: Replacing Yield With More Yield [View article]
As far as the portfolio making money, a lot of stocks make money when the market is going up, so I'm not sure it's attributable to this portfolio. Not trying to be combative, just wanted to understand the reasoning for your choices.
Jim Comar
Retirement Strategy: Replacing Yield With More Yield [View article]
Expect Mellanox Technologies' 3rd Quarter Earnings To Shine [View article]
Could you talk about how you hedged this and how it affected your losses (or gains)? It would be a good real-world example of hedging strategies. When I consider hedging, it doesn't seem practical to spend the time on it for a couple of dozen stocks every month or two, especially since some don't have puts available, or else they're so expensive that the downside for an affordable one is large enough to make it seem hardly worth buying and isn't much offset by a collar.
Thanks,
Jim Comar