Category: Portfolio

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.

I had positions in the Carlyle Credit Income Fund 8.75% term preferred (CCIA) since April and had bought shares a number of time since–now 95% of the shares have been sold.

Shares had moved sharply higher in the last week–actually hitting the $27.80 area–were I would have sold, but the move escaped me until today when I finally got out at $26.67–a capital gain of around 4-5% to go along with the juicy dividends I have been collecting.

Nothing wrong with CCIF–just moved too high for a term preferred with mandatory redemption in 2028.

I hope to re-enter shares when they come back to earth—and they most certainly will drop back into the $25’s soon.

Well equity markets are a bit ‘goosy’ today–can’t decide and what they are believing–are interest rates going higher or are they going to drift back down. Almost unquestionably they are awaiting news on the producer price index (PPI) tomorrow and then the consumer price index (CPI) on Wednesday.

In the mean time I did a little buying and a little selling. I let go of a chunk of the super safe Tricontinental $2.50 perpetual preferred-$50 issue (TY- or TY-P or a number of other tickers depending on the quote source). The reason I choose to sell a bit of this sock drawer issue is because it can move kind of violently if we were to see interest rates move higher.

I chose to buy (add to) a couple of my CLO holdings. I added some of the Eagle Point Institutional Income Fund 8.125% term preferred (EIIA) at $25.05 and a few shares of the Carlyle Credit Income Fund 8.125% term preferred at $25.72 (CCIA).

Now I know some think I am getting a bit aggressive but I continue to research and research on the CLO baby bonds and term preferred issues and I am having trouble gathering any info that says they have the huge risk that they are perceived to have—nothing says they are extreme risk. Does that mean they won’t go down? Of course not – I think the biggest risk is they are not well understood and what investors don’t understand they sell off in times of uncertainty. I am closely watching the net investment income and the net asset values of the issues–both will give me substantial indications of where the asset class is going. Of course I monitor the asset coverage ratios closely.

I will be publishing my tweaks to the laundry list page of holdings before the day is out.