Irrational Exuberance Continues

We are all grappling with the same problem–too many gains in our ‘base holdings’–we should have these problems all the time. We all know the time will come when the issues is how to minimize the losses, so I guess we should just enjoy the ride.

Today the Gladstone Capital 6.125% Note (GLADD) issue spiked mid day which I saw and figured it was some ridiculous ‘market order’ which cost someone some bucks–but no, there were trades after this one and it continued to stay high–closing the day at $26.67 (up 79 cents).

I did not let mine go–maybe should have–always the same problem–what to buy with proceeds? On the other hand 2 quarters of interest is pretty lucrative.

7 thoughts on “Irrational Exuberance Continues”

  1. Lately, I have found the best values in buying those that IPO and flip the for $0.25-$75 more in weeks. Some such as BAC-N that have just a 5% coupon I managed to snag under $25 are now touching $26 (I am waiting for more to exit before it pays the first dividend). Others such as MBINO I flipped after they paid their first partial dividend.

    Yes, as the post says I do often run into problem of selling the appreciated securities and not finding where to invest the proceeds but my rule of thumb is a 3 Qtrs or a year’s dividend in appreciation and I sell it

    1. September was a great month for IPO flips. Recent IPOs haven’t done much the coupons are too low. My best strategy this month has been arbitrage between preferreds. I’ll continue to try some IPOs at least until they start losing money.

  2. I saw that, and figured it’s about 4+ quarters of interest?, so YTC ~0 or negative?? (off the top of my head). The listed bid on Fido when I looked was much lower and I couldn’t get my price. We’ll see tomorrow.

  3. If GLADD gets called on 11/1/2020, 100 shares with interest would yield $2,653.12 That would break down to 100 X $25 =$2,500 and $38.28 quarterly interest X 4 payments = $153.12 Total yield of $2,653.12
    If 100 shares of GLADD are were sold today they would yield $2,667.00

    1. I feel like micro-caps are one area where the individual investor has an advantage over the big Wall Street boys, who can’t take a position in them without running up the price excessively, and who have so many assets to invest that the time spent on research isn’t worth it, because they can’t put a large enough fraction of their portfolio to work to matter.

      Of course, possibly the Bogleheads are right and I am all wet and should just buy the indexes and be happy.

  4. “Irrational Exuberance Continues”

    Indeedy. There are no preferreds worth anything selling for par or less. They’ve followed their common brethren into irrational exuberance territory.

    Thanks for your continuing great articles on preferreds and their ilk.

Leave a Reply

Your email address will not be published. Required fields are marked *