Portfolio | Innovative Income Investor

Friday Portfolio Activity

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.

I Sold 2 Small Bank Positions

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).

Added Eagle Point Income Term Preferred

Finally I was able to buy a small position in the new 7.75% Eagle Point Income Company term preferred. The issue is trading under ticker EICPB right now – soon to be EICB. I was unable to buy on Fidelity but was able to get a small position on eTrade.

Someone asked why the Eagle Point Income (EIC) 7.75% preferred when there are other Eagle Point Credit Company (ECC) preferreds (and notes) available at a higher current yield. For me it is simply a case of the EIC issue being somewhat higher quality because the CLO portolio of EIC contains mostly debt tranches of collateralized loan obligations, while the portfolio of ECC contains the junior equity tranches of collateralized loan obligations. Being fairly conservative I chose to go with a little more safety–more aggressive investors may well choose the ECC issues.

I will add this to the ‘laundry list’ of positions.

Bought My Last Banker

Yesterday I bought what I think will be my last position in small bankers–of course market action could tempt me to adding to current positions.

In keeping with what I have been doing with my portfolios – and the small bankers in particular, I bought a 1/2 position in the CNB Financial 7.125% Fixed Rate Non Cumulative Preferred (CCNEP) issue @ $21.50. Current yield of 8.27%. I will add this to my ‘laundry list’ of holdings.

CNB is a small banker located in Pennsylvania – just $5 billion in assets. I reviewed their most recently available financials and didn’t find anything startling–similar to most bankers where year over year earnings have tailed off a bit as net interest margins fall off. Most bankers have some higher expenses as FDIC assessments have risen to pay for the failed bankers.

So with that I will hold on small bank purchases – will see what CD rates do in the next 10 days as we go through another Fed Funds rate hike next week. CD Rates should move 1/4% higher which would likely tempt me to add more if we get in that 5.7-5.8% area. We’ll see – CD rate increases are not a certainty, but high odds they will increase.