Category: Portfolio

With the chance to bank a near 10% gain on Hennessy Advisors (HNNAZ) 4.875% baby bonds I took the opportunity with the majority of my shares. I held about 125% of what would be my normal full position. I did keep a few hundred shares as there little risk in doing so – the issue matures in 2026.

Update NOTE–I actually have 450 shares left–I have a GTC sell order in on more shares. In the last few days some GTC sell orders did execute.

Locking down some profits also frees up some cash which I can redeploy elsewhere – most certainly with as much yield potential.

I will update my laundry list of holdings reflecting this change.

Note–nothing wrong with this issue–just banking a few coins and planning to reinvest at a better yield.

After pondering all last week I decided to unload all of my shares (703 shares) of the RiverNorth Capital and Income Fund term preferreds shares (RMPL-P). This is a 5.875% issue which has a mandatory redemption on 10/31/2024. My sale price was $24.98. While the issue meets my need for safety, the coupon is no longer adequate.

Given the level of interest rates this is somewhat substandard in yield–and yield to maturity. There is zero upside to the share price and what price movements we see now are all dividend related. Shares go ex-dividend in a couple weeks, but there is no benefit in waiting for that date.

At $24.50 or so I could re-enter to make the return a bit more palatable, but am really looking to lock in a fatter return for the long term.

As I mentioned yesterday I did a tiny amount of nibbling on Tuesday and Wednesday.

In each case I added a tiny number of shares to current holdings–no use searching for some other issue since I am comfortable with the issues that I hold.

I added the following—

Affiliated Managers Group (AMG) 5.875% baby bonds (MGR) @ $20.59. 7.2% current yield at this level. Investment grade with BBB- from Standard and Poors and Baa1 from Moodys.

WR Berkley (WRB) 5.70% baby bonds (WRB-E) @ $21.85. 6.52% at that pricing level. Investment grade with BBB- from S&P and Baa2 from Moodys.

Athene Holdings (owned by Apollo Global-APO) 4.875% preferred @ $16.18. 7.6% current yield. Investment grade – S&P BBB with Baa3 from Moodys.

So as you can see each of these are quality holdings. 2 of the issues have current yields over 7%.

I nibbled at this point in time thinking we MAY be near a peak in rates–but of course one never knows (if we knew for sure we would buy full positions or more)—and after the inflation numbers this week, which were hotter than expected one has to guess that the Fed has 1 more rate hike. The Fed is NOT what concerns me–what mostly concerns me is that the amount of paper coming to market from the treasury which will be pretty massive. With buying from the Fed not part of the equation–what is the capacity to digest our treasuries?

So on these 3 issues I am hoping for worst case to collect my dividends and interest with share prices flat. Best case is interest rates remain at current levels or even drop just 25-50 basis points which will translate into a potential 5-10% capital gain in these issues—so I looking for a 7% to near 20% gain in the next 12 months.

All 3 of these issues are at around 1/3rd of my desired position size–when I reach a full position (if ever) will depend on economic data–I am very data dependent.

I will add this information to my ‘laundry list’ of holdings which is here. There is a link to this page in the side menu of the site.

I had a couple actions in my portfolios on Friday, 9/22/2023.

I had forgotten I had a modest position in the Apollo Global Management 6.375% investment grade perpetual preferred (AAM-A) which was redeemed on Friday–so cash came into the account. 18-19% gain in 51 weeks–bought 9/26/2022 for $22.30. Wish I would have had an overweight in this one (with the benefit of 20/20 hindsight).

I bought more of the RiverNorth Doubleline Strategic Opportunities Fund 4.75% perpetual (OPP-B) @ $19.50. This is the one I mentioned earlier in the week that I bought 4 shares on a good til cancelled order–so I lowered my order 25 cents and it was hit on Friday (should have gone even lower on the gtc). While current yield is just 6.15% the real potential lies in a peaking or reduction of interest rates in the next year or so–my mental target would be say a 16% gain a year from now (10% cap appreciation plus dividends) – of course who knows what interest rates hold for the next year.

The updated holdings are here.

Early yesterday I sold 2 of my small bank positions.

I sold the Heartland Financial 7% Fixed Rate Reset preferred (HTLF-P) at $24.30. Including dividends I had a total return around 8%.

I sold the CNB Financial 7.125% fixed rate preferred (CCNEP). I held this for a very short time and realized a 4% gain–no dividends received.

My logic here is simply to raise a little cash by selling a few issues which I believe will present another buying opportunity in the months ahead. Moodys is pounding on the banks and there are predictions everywhere of issues with the banks. While this may all be BS in the short term there could be (is) some pain.

I was fortunate in my timing on Tuesday because my GTC orders executed early in the day as banking issues got beaten later in the day. Numerous issues which I hold have given up 50% of my gains, although 100% of them remain in the green–although some only 1-2% (plus dividends).