5/5/2024
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Priority Income Fund (untraded) has posted their semi-annual report through 12/31/2019.
Priority Income Fund is a holder of CLOs (collateralized loan obligations).
The company has 6 outstanding term preferred which can be seen here.
The filing by the company can be seen here. Of specific note is the company has upped their allocation to CLO debt tranches to around 17-18%–of course this leaves them at 82-83% equity tranches which are typically higher risk.
For those not watching the news the FED has just cut the Fed Funds rate by 1/2%.
‘Talking our book’–I hate this–there goes our money market 1.50%. Of course I thought this would happen Sunday night and everyone this morning thought it would wait until the March meeting mid month–surprise.
Just a short note that we are in the process–a slow process–of adding fundamental data to the website for the ‘parent’ company of the issuers of preferreds and baby bonds.
You may have noticed a box that looks like this on each page of the income issue (only 100 issues are done so far).
The above is for Federal Agricultural Mortgage (AGM) and they have 3 preferred issues outstanding. So by looking at any of the 3 preferred issues you will see data on the ‘parent‘.
We have to do around 800 issues–so this will take until the end of March to complete.
After that is complete we will add another piece on the parent company–the latest income statement and balance sheet. This will go lower on the security page. Again we will have to go through all 800 pages to enter the widget.
After this we may add a news stream for each parent on the page–but this is not determined yet.
The intent is to bring all the company data together on to 1 page so one can do a little due diligence instantly.
It is great to have a market bounce this morning–just wish it was a bit more restrained (can’t please me I guess).
I have 4 buy orders in now, but am not going to chase hard–all of the stuff I identified over the weekend moved higher quickly–so I will just adjust orders as necessary and hopefully pick up a few sock drawer utilities baby bonds.
I also have an order in for one CEF preferred (GGZ-A) 5.45% Gabelli Small and Midcap Value preferred.
I note that some folks did some buying last Friday and in some cases have already sold. I did sell one issue just now for a tidy $1/share profit, but it was the common shares of BGS Foods (BGS) which I bought last week–purely speculative, and since I don’t often hold common shares I was out with my $1.
As we look ahead this afternoon and tomorrow I suspect we could see some giveback in these markets–but who knows for sure. Some up and down seesaw action would actually please me–maybe would allow me to execute some buys.
The futures markets in stocks were way up and way down overnight–but now are up by over 1/2%. A guessing person would say we will be seeing some pretty wide swings today.
Last week cost us personally around 2%–almost all of the losses on Thursday and Friday and they were biggest in perpetual preferreds–that should be no surprise.
Here is what we are doing today.
1st off we are doing nothing–we are going watch and see if stocks and bonds hold steady in here. I don’t care if stocks fall again–but I hope these moves are kept to the 1% area.
2ndly we are shopping in the short maturity issues-those maturing in the next 10 years.
We are also shopping in all utility and CEF preferreds and baby bonds.
The last area we are watching is the mREIT preferreds. Theses issues are offering plenty of value, but being perpetual they may have more volatility.
So our theme is quality and/or short duration with a sprinkling of perpetual preferreds. Some folks may remember that I have always tended toward the shorter maturity issues–baby bonds and term preferreds–this serves one well with wild markets, but you give up some coupon.
Everyone should note that many of the quality issues are still expensive–but they have a lot less call risk in them–so if they were a good buy at say $27 they are a bunch better at $25.50 (or whatever the number is).
The shorter maturity issues can be seen here (slow loading page). How about the Gladstone Investment 6.375% issue now at $25.35 and not callable until 8/2020 with maturity in 2025?
The utility baby bonds and preferreds are here. How about the Entergy New Orleans 5.50% (ENO) baby bond issue trading at $25.13. First callable in 4/2021 and rated ‘A’ by S&P? This is a first mortgage bond.
As far as selling–I don’t see anything that I plan to sell right now. I have plenty of dry powder and while I hold the Golar LNG Partners 8.75% (GMLPP) which got hammered, I bought only 200 shares. I also have an overweight in UMH-D–I plan to hold the issue. In spite of UMH being ‘hated’ I see little fundamental risk in the issue (although I ‘mark to market’ in my mind everyday–none of this ‘you don’t lose money until you sell–I have lost money on this position).
Wow–here we go!!
The S&P 500 opened last Monday at 3258, after closing the Friday before at 3338 and fell as low as 2856 on Friday before launching a fairly furious rally the last 30 minutes of Friday to close the week at 2954–a weekly loss of 385 points.
The 10 year treasury closed the week 1.12%, this is easily a record low.
Amazingly the Fed Balance Sheet fell by $13 Billion as no additional liquidity was added via repo operations or via QE (quantative easing) purchases.
Last week we had just 1 new income issue sold.
mREIT MFA Financial (MFA) sold a new issue of fixed-to-floating rate perpetual preferred with an intial fixed rate coupon of 6.50%. The issue is trading on the OTC Grey market now and closed Friday at $24.22.
The average $25/shares issue lost 79 cents for the entire week. Investment grade preferred were off 66 cents. The chart below is truly ugly–most of the losses were incurred on Thursday and Friday.
After a rocky start to global stock trading tonight, China, Japan and U.S. stock futures have all turned nicely higher.
The S&P500 and DJIA futures are both up near 1%–not a giant move higher, but maybe one which is signaling that the world isn’t going to end (of course we all knew that–but are waiting for the markets–to get a bit rational).
Gold is higher, crude oil has turned higher as well.
Thus far we have seen no publicly announced central bank action, but all are thought to be at the ready if necessary. No doubt the ‘crash protection teams’ are at the ready.