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Today's Morning CEF Note

Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

This is the note we sent to our members.  We've been sending such a note on most weekdays as a means of getting the most amount of information to members with the least amount of time necessary to consume it. 

Our goal with these is to get right to the point and answer the following questions:

  • What is relevant to know for today?
  • What happened yesterday?
  • What did CEF do the day before?
  • Which income securities that we cover look compelling or overvalued?

Good Morning!Futures are rebounding after yesterday’s sell off. The narrative hasn’t shifted all that much in the last 24 hours. Cuomo/DeBlasio’s warning on Monday afternoon about another full NYC lockdown unnerved investors.The US fiscal stimulus process continues to make gradual progress as the piecemeal approach, which should result in ~$750B getting passed during the lame duck, garners more support in Washington (a deal could be struck by the end of this week and get included in the 12/18 budget bill).Despite the general market weakness, discounts for the most part tightened outside of munis. NAV returns were also mostly positive outside of real estate and utilities.In individual preferreds, we have three more calls. Public Storage 5.4% Series B (PSA-B), US Bancorp 5.15% Series H (USB-O), and HSBC Holdings 6.2% Series A ADR (HSBC-A). In baby bonds, MVC Capital 6.25% Notes (MVCD) are being called.RFI issued a special year end distribution of $0.04.NHS announced the final results of their tender offer. 73.3% of your shares will be lifted at $12.03. Shares widened back out yesterday to -6.5% from -3.9% two days ago.IHTA reached a premium yesterday after two large up days and heavy volume. I’m guessing it got recommended somewhere. As I noted on the chat, the first tranche of my sell orders hit at $9.05. I’ll sell more around $9.11 or so. Just note that this is only because I’m a bit overweight this fund. For those that are buy-and-hold, I would just hold pat. The NAV is heading towards its target $9.83.You could rotate to IHIT which liquidates a year sooner and trades at a -4.2% discount. Its also more liquid.Other terms look very compelling here. For cash substitution, JHB continues to be a deal. It liquidates next November and is currently sitting at a -3.5% discount. Plus you get ~3% yield. No leverage left in the fund and a large cash holding. Fairly low risk.In emerging markets, JEMD looks good here with a 2.7% tailwind yield in a compelling sector.I’m also watching JCO, a 2022 high yield fund. At a -2.2% discount, its ok but not great. I’ll keep watching it but it’s a good fund as well.In munis, IIM flipped to a buy yesterday. Trades at a -7.3% discount and yield 4.78% tax-free.But the larger deals are in the state specifics or high yield. OIA and MAV in the low IG (low investment grade) section. NKG, NMY, and MUJ in the single state are attractive here.RIV moved to a sell on the Google Sheets Core Sub Section.PPT looks like the most compelling buy here in the perpetual taxable. Lower risk fund at nearly an -8% discount.Have a great day!

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Analyst's Disclosure: I am/we are long ihta, nkg, iim, nhs, PPT.

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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