As I mentioned yesterday I did a tiny amount of nibbling on Tuesday and Wednesday.
In each case I added a tiny number of shares to current holdings–no use searching for some other issue since I am comfortable with the issues that I hold.
I added the following—
Affiliated Managers Group (AMG) 5.875% baby bonds (MGR) @ $20.59. 7.2% current yield at this level. Investment grade with BBB- from Standard and Poors and Baa1 from Moodys.
WR Berkley (WRB) 5.70% baby bonds (WRB-E) @ $21.85. 6.52% at that pricing level. Investment grade with BBB- from S&P and Baa2 from Moodys.
Athene Holdings (owned by Apollo Global-APO) 4.875% preferred @ $16.18. 7.6% current yield. Investment grade – S&P BBB with Baa3 from Moodys.
So as you can see each of these are quality holdings. 2 of the issues have current yields over 7%.
I nibbled at this point in time thinking we MAY be near a peak in rates–but of course one never knows (if we knew for sure we would buy full positions or more)—and after the inflation numbers this week, which were hotter than expected one has to guess that the Fed has 1 more rate hike. The Fed is NOT what concerns me–what mostly concerns me is that the amount of paper coming to market from the treasury which will be pretty massive. With buying from the Fed not part of the equation–what is the capacity to digest our treasuries?
So on these 3 issues I am hoping for worst case to collect my dividends and interest with share prices flat. Best case is interest rates remain at current levels or even drop just 25-50 basis points which will translate into a potential 5-10% capital gain in these issues—so I looking for a 7% to near 20% gain in the next 12 months.
All 3 of these issues are at around 1/3rd of my desired position size–when I reach a full position (if ever) will depend on economic data–I am very data dependent.
I will add this information to my ‘laundry list’ of holdings which is here. There is a link to this page in the side menu of the site.