Into the Home Stretch

Well hopefully folks are getting through the holiday period with their sanity. With our 6 grand kids ranging in age from 4 to 15 holidays are becoming less stressful as they are quite content to play with each other instead of requiring adult supervision (at least as much).

So with just 4 trading days left in 2019 I hope we maintain our gains–I really expect market movements will be pretty muted, whether it be stock prices or interest rates.

Last night I was adding more data and filing in a few blanks in the database when I came upon an issue I thought I would mention. This is for folks looking for a stable value issue–with a relatively short maturity date.

The issue is the GDL Fund $50/share preferred (GDL-C).

This issue is cumulative, puttable and callable. The coupon is set at 4% for 2019 and 2020, which will potentially be reset later in 2020 for the next 4 years.

Investors can ‘put’ shares back to the company in March, 2020 and March 2022 at $50 plus accrued dividends.

There is a mandatory redemption in 2025 at $50/share.

The issue is trading around $50.90 and as happens with these types of issues it is somewhat illiquid–trading only 600 shares a day.

Being a Gabelli CEF (closed end fund) the fund must maintain a 200% asset coverage ratio–as of 6/30/2019 coverage was at 237%. The fund holds level 1 assets (common stocks mostly) and quite honestly, the fund performance is pretty lousy, but I am not overly concerned about the fund performance as long as they maintain asset coverage.

The issue is not rated, but would likely be investment grade if they decided to rate it.

So this issue has a lot of good qualities–for me the 2025 mandatory redemption is perfect. The puttable period in 2022 and the mandatory redemption will help maintain shares in the $50 price area. Also the 4% coupon isn’t too bad for this type of issue.

The company can redeem shares starting in March, 2021–but I would be surprised if a 4% issue were called.

Current yield is 3.93% and yield to worst is just under the 3% area.

I am pondering a purchase since I have a rather large position (for me anyway) of over 1000 shares of the Kayne Anderson 3.50% (KYN-F) issue and with the mandatory redemption in 4/2020 I am looking for a place to stash some ‘safe’ money.

19 thoughts on “Into the Home Stretch”

  1. I hope all you granddads with wives whose main involvement in the family investments is silence or carping have thought about who is going to keep everything in the road should something happen to you, the thankless drivers.

    If not, that might be a good New Year’s resolution. 🙂

    JMO

    1. Hello camroc
      I agree with you. Estate planning is my main topic of work this coming year. She knows where our money is and how to access it. If I leave the picture, she has the ability to decide what to do. The final estate plan will help her address all that.
      Hope you are well.

    2. Hi Cam – Thanks for the good advice. I’ve already done the estate planning because I’m pretty sure that I’ll be checking out before she does. She knows what to do. Been married to the same woman for 51 years … I have no real complaints.

    3. One of the things I’ve done is try to set up new stuff going forward as funds, especially for the common stock portfolio. The fixed income is based on preferreds but is about half individual issues and half funds. My reasoning being they will require much less daily ‘hands on’ which my wife has no intention of providing. One of our sons who lives in the same town is a CPA so he’ll be able to avert disaster but I have no illusion about how much time he can devote. Face it, nobody else will be willing to step in and provide the time and considered thoughtfulness that we devote to our finances.

      1. Jerseyvinny
        The best bet may be to find a qualified financial advisor and
        make that person known to your spouse. Just make sure that she imparts to that person explicity the type if way you want the account managed – growth, income, a combination, etc.
        You can make the free consultations ahead of time to
        choose the one you prefer.
        Younger workers are very busy and may not have the proper time devote to a portfolio.

    4. Good suggestion camroc. I do keep a ‘master’ sheet with everything on it so she monitors the grand total of everything, which works I guess–then when some are up and some are down she is focused on my micro errors, but looks at the big picture. We have talked with our lawyer about doing some legal documents–last time I saw him (at a gala) he reminded me we need to make it a priority to get the stuff done. Think that should be a New Years (as in Jan/Feb) resolution to get that done.

    5. Such great advice Camroc. After completing our family trust, I still had the nagging feeling that something might be “missed” by the kids after we’re gone.

      To supplement the trust, we created a single page cheat sheet for the “kids” that lists all accounts and properties, current values, account numbers, signon IDs and passwords – everything on one page so if anything ever happens to both of us at the same time, they have instant access to everything. We update this sheet quarterly, maintain it in multiple locations and have reviewed with them both how to access if need be.

  2. Happy Holidays to all!
    Thanks for everything that you do for us.
    My wife gave me free rein to manage investments years ago and never questions anything. She manages the bills and tax returns, and does a good job. Thankfully, my 2 grandsons, 20 and 21, do not have any wars to worry about.

  3. Tim – Thanks for the GDL-C tip. I’ll take a look to see if it could fit
    my strategy. PS: We also have 6 grand kids, ranging from 3 1/2 to 18. The oldest one is being recruited by the US Navy for the intelligence field. Also, we discovered last year that our wives are similar in that they don’t applaud when we do well with an investment, but they give a little grumble if/when we lose a dime…. Here’s to a good year in 2020.

    1. You’re right about our wives Bigbear–finally I have reached a point (I think) where she quits looking at the accounts at all–she used to look maybe once a month.

    1. Tim and all,
      I was under the weather, missed some good ones. I do want to thank you and many others. Greatest investment WEB on earth, indeed. Both Siliconinvestor.com and Doug’s web and thank to Steve A, I picked up some CBB-B, merged (or acquired) Brookfield. Better late than never for this one IMHO. KRG eREIT got upgrade by one analyst, another good one, suggested by someone on this WEB site. My belated Merry Christmas and Happy New Year to you and all,

      John

        1. Tim, yes. So true. MBNKP, despite the small bank’s weakness, the issuer seems to be able to sustain as long as there is no air of recession. Too late at this time IMHO. At age of 77, I almost got killed over, sleeping only 4 + hours daily even after I got a Tammyflu and got rid of the fever in less than 24 hours. Apparently from severe deprivation of sleep. I fell asleep driving and getting lost with my GPS was malfunctioning. No serious damage except to my own car and got my driver license suspended. . Now, I begin to behave more normally with MUCH MORE sleep, even if I do less DD. I gave up teaching my daughter income investing. She seems either having little interest or have made extremely slow progress despite her CPA background. My freedom seems much more important.
          Hence, I should add that among wealth and happiness, health is perhaps at least as important. Wish the best of health to you and your family and all.
          John

          1. Glad your ok, John. Take care of yourself, the car can be fixed. Sleeping is well a box of chocolates for me also. After about 3/4 nights of 5 hour sleep, my body lets me put a good 8 hours in. Im about due myself for 8 tonight.
            Concerning MBNKP, I am in the pruning stage with it. Still have half, but wont be buying here. That certainly doesnt mean it wont shoot to $26 soon though. The first dividend doesnt get paid until April, that is a lifetime away.

            1. Thanks Gridbird. I did pick up a few shares of CEQPR following one SA writer in addition to Rida Morwa’s machine. Then the new CBB-B, bought today seems to be much better and safer buy. All my best to you, John

              1. John, Preferred Stock Trader recommended that. Despite my correct opinion of Moron being an obfuscater of facts, PST can be trusted 100%. I bought a small amount for long term hold of CEQP- the other day in tax free account myself. It basically had to be small to avoid UTBI and long term cost basis issue of holding in tax free account.

          2. Geez, John, health is not “perhaps at least as important.” Health is everything. Just ask Steve Jobs or Paul Allen. Oh, wait…

            Take care of yourself.

            JMO

            1. camrock, thanks. Yes, health is always #1. I suppose I kept on going forgetting how old I have become, with more than half of my classmates all gone. All my best to you,

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