Category: Portfolio

It took a few hours but I added to my current position in the Carlyle Credit Income Fund 8.75% term preferred (CCIA) at a buy price of $25.40—it is now trading at $25.29.

This may look like a pure ‘yield chase’, but it part of my plan–lower yielding, safe issues balanced with higher yielding issues. This term preferred issue with a mandatory redemption in 2028 is perfect for me. Folks worry about collaterallized loan obligations (CLOs), but on a historical basis going back to 1994 less than 1% of the loans held has defaulted–the reward pays for the risk in my opinion. This issue is superior to all of the Eagle Point Credit (ECC) term preferreds as well as the Oxford Lane Capital (OXCL) term preferreds. Carlyle is a newer and smaller company, but the sponsor (Carlyle Company) is a giant company and the largest CLO manager in existence (1 list has them at $38 billion while another says around $50 billion)–if they can’t successfully launch a CLO closed end fund I don’t know who can.

NOTE that I expect no capital gain on this issue–simply will collect a nice dividend. Term preferreds with mandatory redemptions will generally move in a fairly tight range over their lifetime–and that is my hope with this issue.

Of course I will add this to my laundry list.

I’ve been looking to buy something with a 8% yield–or yield to maturity of around 8% and the best idea I have for now is to enter an order for the Hennessy Advisors 4.875% Note due 2026 (HNNAZ) at a buy price of $23.30 which would give me about 8% yield to maturity. I entered this order yesterday–shares had hit this price level on Tuesday (of course I had no order in then). I will simply let this order sit for 60 days and see if someone want to give me a deal. The issue matures on 12/31/2026.

Recall I owned lots of these shares previously and sold most of them for $24.37–I kept 94 shares which I still own. I would look for this one to go back over $24 before the year is out at which time I could sell for a nice gain (interest plus a capital gain) or hold to maturity. Details of these transactions are on the ‘laundry list of holdings’ page.

I chose this one to buy (or try to buy) because I have a comfort level with this little money manager–they have enough cash on hand to call of their debt plus with the short maturity the price movements are not huge.

I just took a nibble on the newer Carlyle Credit Income Fund 8.75% term preferred stock—CCIA. This issue was floated 10/18/23. I have been watching the issue and it has been trading above $25 since issued and now is trading at $25.40. A bonus (at least to me) is that the issue is a monthly payer–I always prefer money in my pocket instead of waiting 3 months for a payment.

CCIF is a newer fund (actually a rebrand of another fund) and is relatively small–around $100 million and Eagle Point Credit (ECC) owns a large position in the common shares.

CCIF is an owner of CLO (collateralized loan obligations) – so comparable to the Eagle Point Credit (ECC) issues and the Oxford Lane (OXLC) issues. I bought the Carlyle issue because it is a 8.75% coupon and has a relatively short maturity which is in 2028. This nibble helps to balance the last purchase I made which was the Spire 5.9% perpetual preferred (SR-A) which is a quality utility issue.

Below is an AI generated recap of the Carlyle Credit Income Fund.

It is tough to get away from CDs at 5.3% or 5.35% for a non callable 3 or 6 month issue. I bought a handful again today.

As I have written about many times in the last few months I want my preferreds and baby bonds to average around 7% yield at my cost and thus far that has been pretty easy to accomplish. Near 6% on the safe issues balanced with around 8% on baby bonds from many of the business development company’s (BDCs)–this gets me my 7%.

Of course, the time will likely come when I have to forgo further purchases of CDs because the yield will slip into the 4.xx% area. As I review my holdings each day I am surprised at the amount of CDs that I have out into 2025 and 2026–noncallable issues around 5.25%–I won’t have to worry about these for a while. Whether I have to worry about less than 5% on CDs this year is anyone’s guess.

For the time being I am targeting around 50/50 split between preferreds and baby bonds and CDs–it could be 60/40 or 40/60 –but in the area of an even split. Obviously when the time comes to move to a heavier weighting of securities it will be difficult to maintain a 7% average, but for now I am not going to lose sleep over it.

I just added to my current position in the Spire 5.9% perpetual preferred (SR-A). I paid $24.75 – not a bargain, but it goes in my ‘sock drawer’ bucket with a current yield just under 6%. The issue becomes optionally redeemable on 8/15/2024.

I will add to my laundry list of holdings.