Category: Portfolio

I made a couple additions to the ‘hiding spots‘ list this morning and I moved 1 issue into a category of higher volatility.

I added the Gladstone Land 5% term preferred (LANDM) issue as it matures on 1/31/2026 and also the Newtek 5.50% baby bond (NEWTZ) which matures on 2/1/2026.

I also executed small buys on both of these issues just a few minutes ago. LANDM @ $24.60 and NEWTZ at $24.75. Both of these issues were ones I already owned. Both of these present a pretty good yield to maturity.

So once again what am I trying to accomplish? I am simply trying to move my income higher since I have a heavy load of money markets and CDs that are now in the 4.20% area. I am trying to do this in a manner that presents less risk to my capital. I do have many issues in the 7-8% area already–so my target for the year is 6%, BUT I would gladly take more if I can do it in a somewhat safe manner.

Equity markets are down sharply–not a giant surprise with personal consumption expenditures numbers which were a bit hotter than expected–not supportive of interest rate cuts ahead.

On the other hand interest rates fell fairly sharply–the 10 year treasury is now off 8 basis points to 4.29%. I am not certain why rates should move lower. We did have University of Mich consumer expectations and sentiment come in soft, but that same survey come in with higher inflation expectations.

Strange market at the moment–but one never has to do anything at all investment wise if you are well positioned.

I have been watching the investment grade closed end fund preferreds-some are getting really close to a buy zone for me. I am talking about primarily the Gabelli family of funds (this includes the Bancroft Fund (BCV) and the Ellsworth Growth Fund (ECF)). I’m targeting at least a 6% current yield to be a buy–also this with dovetail with a potential for a 5-15% capital gain in the next year–so let’s say 11-20% total return IF we can get the 10 year treasury down around 3.75%. Of course this is the million dollar question.

I own the GAMCO Global Gold 5.0% perpetual preferred (GGN-B) which is trading right around $20.80–I paid an average price of almost exactly this price so I have just been collecting my measly 5% (6% at my cost). Here is a multi year chart of the issue.

I think it is pretty easy to imagine a 5, 10 or even 20% capital gain if interest rates moved down 25 or 50 basis points. Current yield is 6.01%.

Just now bought a few more shares at $20.78. If I am going to tiptoe into a few perpetuals they will be high quality shares with potential for some really substantial capital gains. This is one of the best in my opinion to get some upside if rates move lower–note the coverage ratio is over 900%.

I also own a bit of the Bancroft Fund 5.375% perpetual (BCV-A) although most of it was sold 80 cents higher back in December. Current yield is 6.02%–maybe next week–I’m in no hurry.

Yesterday was a tremendously busy day for me–lots of windshield time and I had little time to watch the markets (except on my iPhone), but I did squeeze in a little time to execute a nibble.

Being old–I always forget the potential good buys that are out there and thus I don’t buy them when I had previously intended to do so. To this end I decided to start a ‘list’ of securities where I could hide some money-mostly on a short term basis while waiting for long term opportunities. The intent is to garner coupons beyond the money market and CD rates.

I have added a ‘list’ of short term hiding spots for good returns–not great returns, but good returns. The list is here (I label this the Hiding Spot list). I will be adding to this list as there other issues out there, but this was my starting point for the list.

Yesterday I took a nibble on the Athene 6.375% fixed rate reset preferred (ATH-C). I paid $24.98. This issue gets reset on 9/30/2025 at the 5 year treasury plus a spread of 6.375%—at todays rates the coupon would be over 10% for the next 5 years. This is an investment grade insurance issue (owned by Apollo) so there are high odds of a redemption in 6 months and my shares will be called away.

I will add this to my laundry list today.

Disclosure–I own 8 of 10 of these issues as of 3/21/2025.

Just taking a quick review today and walking through each holding and some of my logic (or maybe illogical) thoughts on the holding.

Honestly I need a more structured look at each of my holdings–coupled with what I hope is logic to figure out where I am and where I am going.

‘Asset Managers’ is the 1st category on my ‘list‘. This is a small category with around 5% of the total holdings.

The offerings of income issues are relatively sparse in this category, but I have always been drawn to the Affiliated Managers issues–mostly to the 5.875% (MGR) baby bond since it has the earliest 1st call date and my thought was that at the point of lower interest rates it might get called and I would get a decent capital gains. My logic kind of worked well and in 10/23 I added shares @ $20.59. Interest rates started falling in 2024 and in October, 2024 I unloaded 1/2 my shares for $24.92. With the benefit of hindsight I should have sold it all. When I sold it I thought it was peaking and was fearful of the long dated maturity in 2059 and the thought was that interest rates might start moving higher again and send my shares tumbling. Obviously the price did tumble and now trades at $22.25. Certainly there is upside potential for a capital gain–BUT it will take much lower interest rates to move the price higher. We’ll see what happens, but I am maintaining my 1/2 position for now.

I had held shares in giant asset manager Apollo Asset Management 6.375% preferred (AAM-A) which was bought in 2022. This was originally an Athene (insurance company) issue which Apollo acquired. This issue was called for redemption in 9/2023 which gave me a total gain of about 18% in a little over a year.

Lastly, in this category, I have shares in the 4.875% baby bonds of Hennessy Advisors (HNNAZ) which have a maturity date in 12/2026–so still 20 months out. I have held some of these shares (bonds) since they were first issued in 2021. Even though the maturity date on this issue is relatively near the share price has moved up and down more than I imagined it would ever do. In August 2023 pricing moved lower by 10% and I added to holdings 3 more times down in the $22.25 to $22.55 area. Over the course of the next 6 months the price moved higher until I sold the vast majority of shares at $24.37 capturing a nice capital gain plus interest along the way. With a 4.875% coupon it was unlikely to move much, if any, higher with 2.5 years left to maturity. The price did fall back in April, 2024 so I added back some shares @ 23.35 which was near an 8% yield to maturity. Now it is trading at $24.22. I could sell for a nice gain–BUT there is no reason to believe that the price will fall significantly from here with less than 2 years to maturity. Yield to maturity at this time is in the 6.8-6.9% area–so I would be open to buying more of this issue. Certainly the YTM is better than a CD by bunches–yes I am going to see if I can snag a bit at a little lower than the current price. It is thinly traded as almost all issues are–and the spreads are typically wider than I would like to see so I may never execute a buy–we’ll see.

A note on Hennessy Advisors–this is a small company with total assets under management of $4.8 billion which generates revenue of around $9.7/quarter. (not very big). The company has been buying other funds and rolling them into the Hennessy Funds. These incremental assets have been extremely profitable and recent earnings were very strong. Their latest earnings are here.