SPMC: Outperformance And Income Growth Catalysts For This 13.7% Yielding CEF

(11min)

Summary

  • SPMC's Q4 results show a net investment income of $0.62 per share, with NAV rising by nearly 5% due to significant realized and unrealized gains.
  • The fund focuses on the primary CLO market for cleaner portfolios and plans to increase leverage to 27%, still low for the sector.
  • Net income should benefit further from incremental leverage and additional CLO resets.
  • SPMC's valuation has risen sharply so that the fund is now the highest-valuation fund in the sector, making us less comfortable with the position.
  • Systematic Income members get exclusive access to our real-world portfolio. See all our investments here »

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In this article, we provide an update on the CLO Equity CEF Sound Point Meridian Capital (NYSE:SPMC) as the fund recently released its Q4 numbers. We also take the opportunity to discuss the broader sector as well as

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This article was written by

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ADS Analytics is a team of analysts with experience in research and trading departments at several industry-leading global investment banks. They focus on generating income ideas from a range of security types including: CEFs, ETFs and mutual funds, BDCs as well as individual preferred stocks and baby bonds.

ADS Analytics runs the investing group Systematic Income which features 3 different portfolios for a range of yield targets as well interactive tools for investors, daily updates and a vibrant community.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SPMC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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