Adding Cowen 7.35% Senior Notes to High Yield Portfolio

We have searched high and low for the perfect security (which never really exists) to add to the Enhanced High Yield Portfolio and have settled on adding the Cowen Inc. 7.35% Senior Notes due 2027 (COWNZ)

Cowen had recently (last month) sold a 7.75% baby bond issue, but it doesn’t mature until 2033.  Honestly even the 2027 issue which we purchased is further out in maturity than we really care for, but on the higher yielding baby bonds it maybe is the best of the group.

The Cowen issue has an optional redemption period starting in 2020 and the way things look now there is little chance it will be redeemed then.

This portfolio had jumped up to 30% cash after we sold our Whitestone REIT 3 weeks ago and this is far too high.  With the above purchase we move to about a 20% cash position.

We are still looking to add 1 singular REIT or MLP and readers have given us plenty of ideas, but we simply haven’t had time to do our due diligence.

 

10 thoughts on “Adding Cowen 7.35% Senior Notes to High Yield Portfolio”

  1. Same here Tim. I took a small position in this one last month when the price dipped a little below par. Income of 7.35% paid quarterly is just fine with me.

    1. Gary–I guess great minds think alike. I pondered more B Riley and then the Ladenburg Thalmann issues, but Ladenburg is kind of out of my favor–financials are dicey. B Riley I have and don’t want more.

    2. I did as well, brother Gary. I’m not over loaded in COWNZ…but I have a nice chunk at a small discount. Used to own COWNL before as well.

        1. lol…Tim, thanks, but I’m so old and decrepit I should be carbon dated. My mind is like a steel trap…all rusted out. I did manage to luck out and pick up the REIT, TIER, at $19 a while back. I’m currently debating whether to sell it or not.

        2. Tim, curious to see if you have heard of this before. After watching, I decided I wanted a 100 share lot of CBKPP. It is an OTC issue and although illiquid as all get go actually has a bid and ask price on level 2. I was willing to pay the above par price for the future 4.5% plus Libor on this Baa1 rated Ag bank. Well two of my brokerages said I couldnt buy it because I had to be a special rated investor and they dont rate investors to buy so they cannot sell it to me
          (Or anyone for that matter). Have you ever heard of this especially with standing ask prices available?

  2. The last I checked I think Cowen had negative cash flow. That violates one of my investing rules for preferreds and baby bonds. I would be interested to know if that situation were turning around though.

    1. Scott, I am a no go on Cowen also (my higher risk pot is full enough). But I wouldnt totally discount preferreds on negative cash flow alone. Many such as utilities are cash flow negative for years on end and remain highly profitable. Some of my most safest preferreds are cash flow negative. See in the old crusty days where Charles Vine resides (and me too) preferreds were issued and paid from “profits and retained income”. These high quality moat like issues can snap their fingers for low cost debt if they need cash.

        1. I like old school Charlie. My GF says I talk like I am 80 years old (Im 54) when I use old sayings that she has never heard of even though she is no teenager at 50 herself, lol. And I keep a very large share of my income preferreds in utility companies that are old enough to make you look like a spring chicken, lol.

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