Category: Portfolio

This morning I was able to add shares of a BDC (business development company) $25 baby bond to the portfolio which has a reasonable yield to maturity.

I have added shares of the Crescent Capital 5% Notes due 5/2026 (FCRX) which was originally issued by First Eagle BDC which was acquired by Crescent Capital in 3/2023. This one is not very liquid so getting any shares requires patience.

I reviewed Crescent Capital (CCAP) quite closely over the weekend and didn’t find any glaring issues. They are a decent sized BDC with around $1.5 billion in assets with net asset value of around $727 million. They do receive some PIK (payment in kind) income, but it is minimal (3-4% of total income).

The issue I chose was based on a yield to maturity of about 6.75% which isn’t super, but much better than a CD or money market. Additionally I own a few BDC baby bonds already so this adds to diversifying the sector. The short maturity date should keep the share price in a tight range minimizing volatility.

So I have gotten in 1 buy for the week–will search for more potential buys, but would be satisfied with just this singular add.

I’ve been working hard to raise my portfolio yield with out a huge amount of risk, but both UMB Financial (UMBF) and Wintrust Financial (WTFC) announced calls this week which, while expected, are making it a bit tougher to get the reward while minimizing risk,

UMBFP which was a 7% fixed rate reset perpetual originally issued by Heartland Financial was called for redemption for 7/15/2025.

Wintrust Financial announced a couple of calls Friday–both the 6.50% fixed to floating perpetual (WTFCM) issue and the 6.875% fixed rate reset issue (WTFCP) will be redeemed on 7/15/2025.

All of these issues were on the ‘hiding spot’ list and I owned 2 of the 3–I did not own the 6.50% Wintrust issues. The redemption of these issues, along with the Priority Income Fund 6.625% term preferred (PRIF-F) issue earlier in the week put quite a hole in our holdings–and I suspect many of you have the same issue to deal with now.

The hiding spot list still contains viable options, although more limited and I already own many of the issues.

Well it looks like my weekend due diligence project just got a little larger.

Last year in August I had sold a position in the business development company (BDC) Runway Growth Finance, based on performance concerns and while I still have some concerns the company has improved some metrics.

I bought a small position in the Runway Growth 8% baby bond (RWAYZ) due 12/31/2027.

BDC’s almost always rate their investments 1-5 with 1 being the top of the heap with 5 being on non-accrual status. Here is a chart of the current ratings of their companies.

Since December 31, 2024 they have successfully nursed about $30 million in investment from Category 3 into Category 2–improving the overall quality of their investments somewhat. Of course I would like to see everything in Category 1 or 2–it’s all about risk/reward. They continue to have the same 2 investments on ‘non-accrual’ status that they had in December and have forgone about $5 million in interest thus far.

I will keep this on a shorter leash than my other BDC holdings–as well as keep my position small. It is critical that one monitor their BDC holdings. No reason to think there will be big issues–but in this environment of the unknown one can never be too careful.

As mentioned over the weekend I was planning to do some rearranging of CLO preferreds and baby bonds in our portfolios this week and I got a decent start on it yesterday.

I sold the entire Sound Point Meridian 8% baby bonds (SPMA) position. Also I sold the entire position in the Eagle Point Institutional 8.125% Term Preferred (EIIA). I also sold the Oxford Lane Capital 6.25% baby bond (OXLCP). So nothing left of these issues. I may have taken a tiny capital loss on these–but tiny and the dividends/interest received far outweighed a few pennies of capital losses.

I bought more of the Eagle Point Income 7.75% baby bonds (EICB) at $24.89 to add to what I already owned.

Also I took the opportunity to once again add to the Gladstone Land 5% term preferred (LANDM) at $24.65 which has a mandatory redemption in January, 2026 so the yield to maturity is around 6.90%.

I am not implying that anything I sold is bad, or that they are in ‘trouble’–this is simply a rebalance to a more conservative positioning–for a conservative like me risk now more equals the reward.

I will get these posted to the my ‘laundry list of holdings‘ sometime today.