CEF Highland Income Fund Sells a New Preferred

The Highland Income Fund (NYSE:HFRO) has sold a new issue of perpetual preferred stock.

A big thanks to Roger for using his eagle eye to catch this announcement.

We are not familiar with this fund, but we are very happy to see this new issue and it is likely, subject to due diligence we will purchase some “sock drawer” shares.

The shares will trade soon on the OTC Grey market as noted in the chart.

Shares are rated A1 by Moody’s–strong investment grade.

The final prospectus can be read here.

26 thoughts on “CEF Highland Income Fund Sells a New Preferred”

  1. Still trading at around the lows. Briefly it touched a new low of $24.70. Probably time to pull the trigger and buy it for a 1-2% gain.

  2. Compare to SCE-K for instance. Gotta go somewhere and it looks like issues resolved at EIX.
    I do like the statement ,”..than I was ten minutes ago…”

  3. TDAm had some allocation. Income desk rep called but by the time I called back, they had sold out. Rep mentioned that it was non-QDI (FWIW).
    Best regards, No. 12

    1. I don’t suppose that this fund’s pfd distributions fall under the 199A category for the 20% reduction in taxable income…??

      The 199A benefit sure did come in handy last year for my REITs and MLPs but I don’t think it applies to this type of holding…. or maybe it does because it is a pass-through structure? I admit that I am very new to CEFs. . I’ve always just bought individual issues.

        1. Thanks, Justin. Maybe we can hope for it being a partial QDI as I had to put this in a taxable account.

    2. Not available in MerrylEdge, but Got some in TDam @24.84 at 2:25, aarod, maybe you can get some now.

      “Hunting” for the best broker that carries these new issues has become quite annoying.

      In your experience, which brokers are usually the firsts to allow trading in the new issues?

      In my experience, TDam is not always good, neither is Vanguard, and MerrylEdge is among the lasts to allow trading (and sometimes with extra security codes needed).

      Is this also your experience?

      Are there like 1 or 2 brokers that consistently trade earliest? If so, it may be a good idea to open an account there — the difference in price in a few days can be significant (especially these days that almost every new issue goes up within days). And even more if we are just trading for a 1-2% gain….

      Thx!

      1. I set up an order at Schwab as soon as I saw the postings here. Schwab could get a quote but wasn’t allowing trading until just a few seconds ago (11:40 Pacific time) and my buy order at 24.84 filled immediately.

          1. At schwab, , go to the very bottom of your screen and enter it in the box at the lower left corner. Then click “trade” from there. That will take you to the order page. Mine just filled at $24.82 even though I swore I was not going to buy anything below 6%.

            I’m in ‘pout mode’ over these low coupons.

            1. Found it thanks. I forgot new issues can only be found in schwab website and not in streetsmartcentral. Weird but this time it’s the same. I can’t get excited at this issue, I see it traded as low as $24.66 anyway. At those levels it would be worth a quick trade.

      2. Daniel, I find Schwab to be pretty darn speedy. I’ve been buying new issues since 2015 and have been happy with Schwab.

        I often have to call and ask them to “reach out to your trading desk to get the ticker set up online and trade-able” but they will usually get the issue available to trade within an hour.

        1. Amy Tx!

          Do you or (anybody?) know if Schwab is an ok broker also for bonds and treasuries, (i.e. good pricing, commissions, availability, on-line trading without calling the desk, etc)?

          Thx!

          1. I have bought several bonds through them and, just recently, some T notes and T bills. Easy to do online.

            I’ve heard that Fido allows limit orders to be entered for bonds…. and as of about six months ago Schwab told me “we are working on setting that up that also” but, as of now, it’s a ‘take the price we offer’ situation and they charge one dollar per bond…. if my memory serves me correctly.

  4. It is a fund, so it will issue characterizations of the payments after the end of the year.
    CUSIP is 43010E503

    1. Right Justin–I list most of the CEF preferreds as not qualified—really have to check the issuer website to get the breakdown from past years etc. to find out the ‘mix’.

  5. I doubt that it will be qualified. The description of the fund is as follows: “The Fund invests primarily in floating rate loans and other securities deemed to be floating rate investments.”.

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