Markets parties pretty hard yesterday giving us some nice green to the portfolios—very nice given the number of red days we have seen lately as interest rates raced higher. It seems investors are a little giddy over a CPI number which represents 1 data point–in a sea of data points.
So now with bouncing prices it is a good time to review portfolios and determine if you are well positioned–at least well positioned according to where you think interest rates (longer duration rates) are heading. Do you have too many perpetual (if you think rates are going higher)? Or too few perpetuals ,which could see decent capital gains, if rates move lower.
I am well positioned, for now, with my personal thoughts that rates are going to trend pretty much sideways through the next few months. My primary thoughts are driven by what I believe will be the difficulty in reducing government spending thus keeping rates elevated.
I see that I got paid today for my Trinity Capital 7% baby bonds (TRINL) which reached its maturity date. It is likely that I may add to my Eagle Point Income 7.75% term preferred (EICB) or buy the 8% term preferred (EICC) with part of the proceeds–we’ll see. Eagle Point Income is the CLO debt focused closed end funds which makes it relatively safer than the other CLO closed end funds.
Just a quick FYI for everyone. Southern Company is now trading in high gear. Symbol is “SOJF” & as I type this its at $25.51 with volume well over 861,000 shares traded. I got in at $25.07 on Tuesday morning first thing. Its a 6.5%.
“investors are a little giddy over a CPI number which represents 1 data point–in a sea of data points.”
Let’s see where rates go with the new administration and “tariffs”…! If promised what is stated rates will be higher 6-9 months out…Raising cash reserves to 15-20% and waiting for the big dump to come!
As with all my holdings that get called or mature, I sold all of my TRINL at about $25.38 on Nov. 24, 2024, which was about 6 days before the maturity date. I missed out on about $0.05 of divs, but I received the $25.38 immediately. It took TRIN over 6 weeks to pay everyone that held to maturity, which is way too long to collect.
Got some more AGM-D. Almost 6.5% yield and eligible for the 15% tax rate so for me it has a taxable equivalent between 7.2 and 7.3%.
Thanks for the recommendation on AGM-D.
I highly doubt the new administration is going to tolerate higher rates or higher inflation. How do they thread that needle you might ask? With continued QT.
How is QT employed by the administration? By what method?
Indirectly via the same pressure the outgoing administration applied for the embarrassing rate cut just before the election. If you look at a chart, long term rates started rising that very same day. Gaslighting and double speak to start a narrative that rates are rising because the incoming administration is going to cause a bunch of inflation — no that was the last administration and was also very clearly suicidal politically.
Good move Tacitus. I own a boatload of the AGM+E.
trinl not paid yet on schwab
they always seem to pay later then others
Not only has Schwab not paid, they are still accepting orders. I successfully placed a buy order for 1 share at $25. It did not fill and I immediately cancelled, but the order was accepted.
Similar situation with MBINO a couple weeks ago. Lots more trading on that one on the redemption date. In that scenario I placed a bid at $24.75 for a single share and it filled immediately. Someone on here (Azure?) said that the trading was to allow brokerages / qualified investors the ability to “settle their books” or something to that effect. I tried the trade just to see if I could. Had I known I would get a fill, I would have bought a couple hundred. The 1 share took 2 extra days to settle, but I got the full $25.
It seems the brokerages are getting worse, not better. 🙁
OK, here’s another good one. I just sold my 125 TRINL on Schwab for $25.1874. Bid was $25.03. Hope I didn’t screw myself somehow….. If not, then I just scored an additional $22.50 over the redemption amount.
Mark,
Another funny thing with TRINL at Schwab.
Got my payment yesterday (after hours, presumably because they wanted to hold it overnight), and I got an email notification in the wee hours this morning that my security is maturing, referencing TRINL
better late than never?
Have looked at EICC, maybe buy a little. What gives me pause is its average credit rating is B. With less than 2% of its holdings BBB, about 70% B and the remainder even rated lower. But fat yield, nice distribution hx and seems to be earning its distribution.
https://cefdata.com/funds/eic/
Tacitus, interesting to see the fields they are invested in and the countries. Also showing invested in P.E. like KKR and other CLO’s of other BDC’s
Charles–with the CLO CEFs you re seeing a listing of the CLO Managers–KKR is on of the largest. To see the CLOs holdings you have to dig deeper into the CLO itself.
Tacitus–by their nature CLO closed end funds only hold BB or lower debt. You can plan that they will incur losses–again the nature of the beast. But EIC holds the debt tranches of CLO which makes it pretty darned safe–in particular their senior securities (term preferreds) on the other hand they are not for everyone.
trini and trinz both ytc roughly 7.5%, ytm slightly higher fyi if you want a direct replacement