I think most all of us are in the same predicament. Shares in the preferreds and baby bonds that we hold as “sock drawer” holdings have climbed higher and higher. The question one always asks is “when should I sell my position?”
Our sock drawer holds the positions that we intend to hold for a very long time–of course we never imagined that they would climb as high in prices as they have during this time of falling interest rates.
In particular some of the base holdings we have they we are eyeing are the following—
- National Rural Utilities 5.50% Subordinated Notes (NRUC) which is trading at a crazy $26.69. We bought these on 5/16 for $25.35.
- Nextera Energy 5.65% Subordinated Debentures (NEE-N) which is trading at $26.10. We bought these 4/3 for $25.31.
- Gladstone Investment 6.375% term preferred (GAINL) which is now at $25.87, but has been popping above $26 many days.
Many of you are in the same situation. The problem is simply one in which there are few better options out there to buy and with interest rates falling it is not likely to get easier in the near future.
I think it is likely I will sell the National Rural Utilities issue as it simply has gone too far too fast–a years worth of interest is a pretty good premium to capture. The others we will hold as their price isn’t crazy high–yet.