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FrankEllis

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  • New York Mortgage Trust: The Best mREIT In America Is Firing On All Cylinders [View article]
    I have doubts every time I see an article written by one who denies themselves ownership, but yours was a well written article that explained in plain English much of what goes on at NYMT. Thank you. I appreciate your work.

    I am a firm believer in NYMT, have a substantial position, and reinvest its dividends. Due to my purchase price and reinvested dividends I currently enjoy an 18.36% yield, not to mention a $2.23 capital gain per share, all of which is in my Roth, so will never be affected by taxes. Each reinvested dividend (which is actually part of the price) increases the yield and capital gain.

    Trusts, REITs, RICs, BDCs, and MLPs are widely misunderstood by the public that mistakenly compares them to taxable corporation stocks. Those who take the time to understand these investments increase their wealth and prosperity in spite of the public ignorance. A RIC that neither pays any taxes, nor retains more than a tiny amount of earnings, cannot be compared to its opposite. RICs are cyclic, dropping the amount of their large distribution on the ex-date, offering enhanced buying opportunities to those who have taken the time to understand. Since the company is unable to reinvest their earnings, the investor must reinvest the earnings in more shares in order to "grow the stock" in value, grow the number of shares rather than through price appreciation expected in the stock of a tax paying, small yield stock. With NYMT we are receiving the best of both, but the price appreciation and premium to book is a bonus, not the primary reason to own trust shares.

    Thanks again for the well written article. If you write future articles, would be nice to include competitors such as AGNC, WMC, RSO, CYS, JMI, MTGE, AI, AMTG, or even MORL. I am passing your article along to friends who own NYMT.
    Mar 19 02:20 PM | 2 Likes Like |Link to Comment
  • Leveraged ETFs: A Seeking Alpha Expert Panel [View article]
    Harv3,
    Thanks. You are right. Will add CURE to my list. Still looking for other 3x if anyone knows of others. Neither Proshares or Direxion make a search for 3X easy.
    The ones I have made a 5+% increase in my portfolio yesterday. I am a confirmed, power of positive thinking long term Bull, seeking to maximize the normal 16 year bull market which started with the breakout above the sideways cycle all time high in May, 2013. Will trade only as the 200 SMA is crossed. Think of the S&P at 19 in 1950, and nearly 1900 now, then better that possibility by trading as the 200SMA is crossed. Happy investing.
    Mar 5 03:58 PM | Likes Like |Link to Comment
  • Prospect Capital: Get Paid 12% Annually To Wait For 15% Upside [View article]
    We seem to be speaking of price and yield as separate happenings, but yield is the direct result of price. Given a Regulated Investment Company (RIC), required to distribute at least 90% of income on a routine basis, and more under normal longer term circumstances, price should only be affected by what buyers are willing to pay for the distribution and associated risk. PSEC varies little in price and yield, thus providing exactly what its investors are looking for, a double in value every six years.
    Buying and selling for 18% gain in price is a way of using PSEC, but is likely a short sighted way of seeing its usefulness. PSEC's ability to double the value of the investors holdings every six years, through reinvesting the monthly portion of its price distribution, actually offers the long term reinvesting share holder about a 16.7% return on investment through compounding. A short term gain of 18% versus a long term gain of 16.7% buy and hold forever strategy may fill the need for drama and excitement, but finding solid performers is often time less of a sure thing when that sale is made. Certainly I would already know what I was going to buy with the proceeds before I would be willing to sell just because the price was up. Profitability for RIC's, BDC's, REIT's, MLP's, and Trusts is not about price appreciation, but reinvested dividends increasing the number of shares at the stabilized price. Price appreciation is about retaining profits to grow price. PSEC's price has been within the same range for five years, and, with the present management and business plan, will likely stay within this range for many years to come. Appreciation is through increasing number of shares, not through price. When a decision is made to begin drawing the dividends, such as an RMD, Required Minimum Distribution, the number of shares will provide the number of dividends asked for by persistent long term reinvestment of dividends. I do not know of any long term investor who wants the price to go up, because subsequent purchases would be more costly. Therefore, consistently buying more shares within a determined price range is the way to certain growth and financial independence. Steady as she goes. . .Reinvesting to buy more shares to receive more dividends to buy more shares to reinvest more dividends is the compounding that increases value from the 12% dividend yield to the 16.7% portfolio growth.
    Mar 3 01:32 PM | 4 Likes Like |Link to Comment
  • Interview With Prospect Capital President And COO, Grier Eliasek [View article]
    Consider the Rule of 72, that is, 72 divided by 12, the yield, equals six years. Reinvesting dividends will double shares owned, or from a different point of view, double the yield on the original investment, in six years. In as much as the dividend is actually part of the price of the stock, it makes sense to reinvest the part of the stock price that is being distributed each month. The company retains little to no profit to reinvest in the company (an IRS requirement which allows the company to not pay corporate taxes, but to pay shareholders what would have been paid to the IRS), so it is up to individual shareholders to reinvest the distributed profits. Reinvestment of dividends has reduced my cost per share to $10.18, and continues to reduce my cost per share every month. Top notch management who owns the same shares I do puts me in a safer position than stocks which are less owned by the decision makers of the company. As management looks out for its own best interest, it also assures my own best interest. PSEC has a standing track record of consistently looking out for my interests, of methodically increasing the monthly dividend, which assures an ever increasing number of shares of the dividends being distributed. Nay sayers can nay to their heart's content, denying themselves prosperity, but I do not see any actual shareholders on this site changing their mind about PSEC because of the negativity of a few misguided comments. The same can be said for PSEC and BDCL, and perhaps OXLC, all long term dividend machines increasing prosperity for those using the power of positive thinking.
    Mar 2 07:21 PM | 4 Likes Like |Link to Comment
  • Leveraged ETFs: A Seeking Alpha Expert Panel [View article]
    Would like to have a complete list of 3X Bull Index ETF's. Info has not been available as I have looked for the symbols for ten months, occasionally stumbling across another. Want the symbol for a 3X bull S&P 600 Small Cap if there is one.

    Have found these if others are looking.
    TNA
    TQQQ
    MIDU
    SPXL
    UPRO
    BIB
    FAS
    UDOW

    Thanks.
    Feb 26 01:23 PM | Likes Like |Link to Comment
  • Prospect Capital's Dividend Sustainability Analysis (Post Fiscal Q1 2014 Earnings) [View article]
    Do we fully understand that PSEC does not pay income tax. Therefore, as a RIC, a passthrough entity, the IRS determines what must be distributed, various percentages of income taxable income, beginning with 90%, then increasing to meet longer term distribution percentages.

    This is our advantage. Taxable income is not spent on paying income tax, but is distributed to us. Instead of paying tax twice on the same dollar, tax is paid once, by us, the partners, the shareholders. Instead of paying 30+% of profit in income tax, we receive this. THIS is what determines the distribution. THIS is the reason that we receive in the neighborhood of 12% distributions instead of after tax distributions of 2-3%. This is also why PSEC has virtually no savings from income (nothing left after all the required taxable income is distributed) and must grow capital with secondary offerings.

    Tax and IRS is the reason that BDC's, Trusts, REITS, and all RIC's have high yields, but also have little stock price growth, and need be understood by investors.
    Jan 6 10:11 AM | 10 Likes Like |Link to Comment
  • Using Market-Maker Intelligence In Your Investments [View article]
    Thanks. Appreciate your effort. Without being specific, it appears as an overall average of both whole charts that upside potential is constant, even if in varying degrees. Everything from sixteen year cycle theory to Dow theory to charts, graphs, and market actions all indicate a Bull quietly moving upward with no eminent end. Granted, the indexes have their bumps, grinds, potholes, and adjustments, but nothing has been near a 200 day average, and the 50 day average has seldom been approached.

    I am long TQQQ, TNA, MIDU, SPXL, and UPRO since May for the growth half of my portfolio, and am very happy with the results. In spite of a few tumbles, mostly thanks to politicians, these keep raising and bouncing along their upper Bollinger bands. Just have faith in the Bull and let the little adjustments (times 3) not cause an emotional decision to sell because of fear. I feel this is just the beginning, and am long accordingly, in spite of so many insisting that these should only be short term traded.

    I appreciate your effort and research!
    Dec 23 04:35 PM | 1 Like Like |Link to Comment
  • Prospect Capital Moves Deeper Into Rental Properties [View article]
    Multi-family residential rental is an entirely different business from home mortgage loans typical of REIT's. NYMT is a prime example of stock price and dividend distributions being very stable when based on investments in multi-family residential rentals. The rentals are valuable assets that will have capital gains as the real estate market improves, as well as because individual ownership has been diverted into rental by all things wrong with the home mortgage industry, unemployment, and things which are problematic for home owners. Rents will continue to climb according to increasing demand. As jobs and the economy grow, all those stay at home Children who could not get a job after graduation, or could not afford to rent their own place, will add to demand. Getting in now is like getting in on the ground floor of a vastly expanding business opportunity. As PSEC develops the residential rental businesses, based on the in depth due diligence for which PSEC is known, I see management seeking opportunities and being flexible enough to not be limited by perceptions of rental real estate being outside of their possibilities.
    Long PSEC & NYMT with no reservations or complaints. NYMT is my only REIT since I got out of the mortgage backed REITS in April. Both have had relatively stable price and distributions for several years, and are positioned well for future stability and profitability. Both are worthy of me reinvesting the distributions to grow my number of shares and distributions while reducing my average cost per share and increasing my yield on original investment in these two. Neither are dramatic or the talk of the hot traders, but both are simply hard working money machines turning out regular distributions while maintaining a stable share price. Safe and high yielding because of the choice of tax structure, RIC's passing through all tax able income, these are in my "greatly appreciated" category with each being a full position in my portfolio.

    Nor do I see any absolute need to grow its loan originations, since more originations requires more shares which results in horizontal movement, i.e., same share price and same distribution per share, no matter how many shares and how many originations. More loan originations do not benefit individual shares unless it is a turn over of assets, closing one to reinvest the proceeds in a new loan origination. So new loan originations, have no monetary benefit for the individual stock holder, are not a criteria on which I would base a decision. Different, more profitable originations are beneficial, but not merely expanding a base that has virtually no affect per share.
    Dec 17 08:12 PM | 1 Like Like |Link to Comment
  • New York Mortgage Trust maintains dividend [View news story]
    Like you, I sold at the peak before ex date, aiming to buy back at 6. But this Bull market is stong, and money flowing out of bonds into stocks is not allowing price drops like the past. So I loaded up at 6.11 with all the proceeds of my sell, thus increasing my number of shares by 9.7% instead of receiving the dividend and waiting for the pay date to reinvest the 4% dividend.

    Doesn't always work. Did the same with OXLC and in the ex date it regained all but a few cents of the distribution drop, whereas both of these had been dropping 2 to 2.5 times the amount of distribution to make a good re-buy opportunity.

    Either way, within a few days after ex is a good purchase opportunity.
    Dec 13 03:13 PM | Likes Like |Link to Comment
  • New York Mortgage Trust maintains dividend [View news story]
    About .40 to .45 drop to a low on about ex plus six days? Low was on Dec 28 last year, so 27th this year?

    This is the only REIT I held after April. Went half to BDC's and MLP's for yield, half to 3X Index ETFs for growth.

    NYMT is a keeper, and reinvesting the dividends continues to reduce the cost per share, increase the yield per share on more and more shares. Remember that the dividend is part of the share price until ex-date, so reinvesting the dividend is the way to increase the value of the holding. Not reinvesting the dividend, taking it as income, essentially maintains the status quo. By reinvesting the dividend in more shares, I've increased my real yield on original investment to 17.68%, and anticipate increasing it to 100+% when I accumulate additional shares. Reinvested, at the present Yield of 14.81% will double your money in about 4 years and ten months, and again in another 4.86 years, and so on. Keep plowing it back in, and reach financial independence.

    Steady as she goes. This $.27 has been constant since it was increased from .25 in Jun, 2012. Seven in a row.

    Or, one can sell all shares the day before ex-date, and using all of the sales proceeds, buy on about the ex plus six days, and increase number of shares that way. Its a win-win. Its a good, well managed company in a market somewhat different from the other REITS. Mortgages on multi-family, apartment type complexes are a steady stream of rental income resulting in our dividend.

    Happy investing.
    Dec 10 08:13 PM | 1 Like Like |Link to Comment
  • Prospect Capital: Sustainable High-Yields? Part 1 [View article]
    <<Many BDCs have the ability to issue shares below NAV but rarely do and PSEC has stated they have no intention of doing so.>>

    Think about this as a good thing. If occasion for a very profitable and credit worthy investment surfaced at a time when the market/indexes/stock price was down (for example when the politicians would rather fight than agree), should the investment, very good for the long term, be bypassed due to inadequate funds available?

    Forward looking management would prefer to not sell shares when the market is down, but also prefer not to have money sitting in cash on the chance that the market may be down at just the instant funding is required.

    The annual approval is therefore an insurance policy. Just as you have no intention of using your life, car, or house insurance, PSEC has no intention of issuing below NAV. BUT, in dire circumstance, better to be able to and not use it than to require it and not be able.
    It is a safety valve for the balancing act of not having unused cash versus not having cash to use. Management controls the cash, when and how much, but not the stock price or stock market. We do not intend to use safety valves, but they are a good thing to have is the norm changes to an unpredictable abnormal.
    Dec 4 12:45 PM | 5 Likes Like |Link to Comment
  • Oxford Lane Capital's Holiday Surprise: 9% Dividend Increase Plus Bonus Payment [View article]
    What is NAV? Net Asset Value. What is the current value of assets, the balance sheet, when adding up everything owned and subtracting everything owed? This is an over simplification, but the NAV changes daily as assets change value and debt changes. If the IPO had buried the proceeds of the Initial sale of stock in jars in the back yard, and only taken out the distributions, returning the jars to their hiding place, then the current NAV might equate to the figure you used, assuming that management did not take out any cash for their cost of managing the assets.

    I have not researched your figures. Distributions since inception have been $5.60. Realize that distributions come out of NAV, come out of assets, are paid out of the assets of the company, therefore come out of the price of the stock. By looking at the closing price of the stock on the day before the ex-date, and the opening price on the ex-date, the price has generally dropped by the amount of the dividend taken out of assets, because on the ex-date it no longer is part of the company's assets, but in part of the stockholders assets. This sometimes causes panic among the uneducated stockholders, when, in fact, they have not lost anything, but merely have in two places what had before been in one place. It becomes invisible until the pay date, but it is a liability on the company books, and an unrealized gained on the stockholder's book.

    Now, if one assumes normal business practices, capital is used, invested in something the company was created to buy, produce, and work on to make a profit. Management is paid, along with rent, utilities, and other uses of assets. So NAV is constantly changing as income is received, AND as bills, debt, and liabilities are paid out of assets, and as distributions are paid to shareholders.

    If one realizes that investors in high yield investments are buying a steam of income, something like an annuity is you please, then price movement is irrelevant so long as the stream of distributions is maintained, which OXLC has done.

    Starting with the first distribution of $.25, increasing to $.50, and increasing to a steady stream of $.55 per quarter since Mar, 2012, the shareholder is getting the stream of income that was purchased. If the stockholder can sell the shares for the purchase price, the distributions are profit. If the distributions equal the original cost of the shares, one can perceive the sale price of the shares as profit. By the Rule of 72, that is, 72 divided by the yield, in this case based on today's closing cost of $17.09 and the present annualized distribution of $2.20 (2.20/19.09 = 12.87%), then 72 divided by 12.87 equals 5.59 years for distributions to equal the cost of buying a share today, or in effect doubling the shareholders value/assets.

    So, the question is, would you be willing to at least double your portfolio of OXLC in 5.59 years? Would you be willing to buy an investment instrument that would double your investment in 5.59 years? If so, buy OXLC. If not, don't buy OXLC.

    Reinvesting the distributions will double the number of shares owned 5.59 years from now. At that point you will have twice as many shares worth whatever the price is on that day, plus you will be receiving twice the number of dividends, and you will not have added another dollar out of your own pocket. Again, the decision is would you like to be in the position of owning twice as many shares and receiving twice the dividends in 5.59 years without it costing you another dollar out of your own pocket.

    Now, admittedly, this is a simplification. Distributions may well change, price of a share of stock will change, and taxes will be paid on distributions, effectively meaning you would owe no taxes on a sale of shares 5.59 years from now.

    Or, if you did not sell, your yield on your original investment would then be double, a yield of about 25.74%. Is the risk of buying the OXLC stock worth the potential yield of 25.74% annual rate of return?

    In your example you would have paid $18.60 per share, received $5.60 in distributions, and be able to sell the share for $17.09 today. Proceeds would be $17.09 + 5.60 = $22.69. Cost would be $18.60. Profit would be 22.69 - 18.60 = $3.89, a gain of 3.89/18.60 = 20.9%. Certainly beats interest rates in savings accounts and bonds, but not as good as some other places, and not running the potential of a 60% loss like the S&P experienced in 2002 and again in 2009.

    Had you bought the S&P at 1276.34 on the IPO date of OXLC, today you could have sold it at 1805.81 for a gain of 41%. Had you purchased SPXL or UPRO on the date of the OXLC IPO and sold today, the 3X funds would have gained you three times that, or 123%. It is all about choices and balances and the emotional roller coaster and sticking to an investment when the world seems to be crashing. Had you purchased the S&P in 1950 at 19, and held it long term, you would have multiplied your investment 95 times in spite of gut wrenching ups and downs.

    Hope this helps.
    Nov 29 09:37 PM | 3 Likes Like |Link to Comment
  • Navios Maritime Partners: Full Speed Ahead [View article]
    Distribution decrease? NMM has been methodically increasing distributions from its $.35 rate in 2008, to $.40 in '09, to $.41+ in '10, to $.43+ in '11, to $.44 plus since Aug '12.

    It might have been nice to be the ultimate contarian and buy NMM @ $3.20 in November of 2008, followed by a price run up to $22, but reinvesting the dividends will do the same thing over time. Each reinvested dividend reduces the out of pocket cost per share. Even at today's closing price of $16.81, which gives a current yield of 10.53%, one will more than double shares owned in 6.8 years, or effectively cut out of pocket cost per share to approximately $8.40, making yield on cost over 21%. Steady persistence wins the long term.

    Understanding that this is not a stock, but ownership of part of a partnership, an MLP distributing partnership income, hold on to the part of ownership, adding to it each distribution in order to increase the share of ownership. It may not be as dramatic as buying and selling shares to try and time the market, but it is a steady way of growing a portfolio to become wealthy.

    And if one has additional cash to invest, one should look to buy the low price just about one day after the ex-date. Since the distribution comes out of the value of a share, and since dividend buyers like to buy high yielders before the ex-date and sell on or after the ex-date, a low price is pretty much guaranteed. With a little luck, one can purchase shares at a price approximately two distributions ($.89) below the high price on the day before ex-date.

    The November 5 high of $17.10 dropped to $15.95 on November 7, the day after ex-date. By forgoing the $.44 distribution, one can purchase the share for $1.15 less per share, nearly three times the distribution. This also increased the yield forever after that from 10.35% to 11.1%, a 0.75% improvement. All of these factors increase wealth, allow buying more shares at lower cost while increasing yield and increasing the number of distributions that will be received in the future.

    Some times it is good to back far enough away to look at the big picture, what patience and perseverance will put in the portfolio over a long term. So long as the company is well run, ignore the gyrations of public sentiment that thinks the shipping that produces the world economy will cease to provide goods to places in the world that don't react to news articles and hype of news media, nay sayers, and other chicken littles who are ever predicting doom and gloom. It is easy to watch news and daily price fluctuations, and get short sighted. An investor must think years into the future and see that world population and demand is perpetually growing, and position one self to benefit from future desires and demands.
    Nov 29 07:21 PM | 5 Likes Like |Link to Comment
  • Oxford Lane Capital's Holiday Surprise: 9% Dividend Increase Plus Bonus Payment [View article]
    <<here are two other retail funds that invest mainly in CLO's, Volta Finance (listed in Amsterdam) and Carador Income Fund (listed in London) and I own all three of them. Of the three, I like Volta most.>>

    Appreciate the info. Would have been nice to give stock symbols.
    Nov 29 05:10 PM | Likes Like |Link to Comment
  • Oxford Lane Capital's Holiday Surprise: 9% Dividend Increase Plus Bonus Payment [View article]
    Is OXLC a BDC? And is it therefore a RIC? And does a choice to be a flow through entity which does not pay income tax, therefore must distribute at least 90% of its taxable income, have a bearing on the high yield? Does the special distribution indicate that it is making too much taxable income profit for 90% to equate to $.50 in 2011, $.55 in 2012 and 2013, and so must distribute more to maintain its IRS status? The mere fact that we are receiving distributions which have not already been reduced by the corporate income tax rate should explain to most the why of the high yield rate. The fact that, in order to maintain its tax free status OXLC must distribute larger quarterly amounts plus a special to meet the 90% level indicates good health and good management growing company income.
    Nov 29 05:07 PM | Likes Like |Link to Comment
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