Personal Portfolio Sale

Today I let go of the last of my Eagle Point Credit Corp 7.75% term preferred (ECCA). I was most happy to get rid of this at $26.26–it is now trading at $26.38. Anyone holding this issue is looking for trouble–about $1.00/share of trouble.

The above issue is callable, and in fact the company did a partial call back in June (they called 909,000 shares of 1.6 million original shares–so there is about 700,000 yet outstanding)–at that time I told myself “I need to unload the rest of my holdings when it is an opportune time”–then I promptly forgot. The issue was trading 75 cents lower than it is currently trading. It is a monthly payer so there is not much accrued dividend ever in the price (16 cents at best).

Also I went right ahead and held our New Residential Investment 7.125% (NRZ-B) and WR Berkley 5.625% Subordinated Notes (WRB-B) right through their ex-dividend dates today. Neither were meant to be long term holds, but I have had the full position of NRZ-B since 8/9/2019 as the new issue did not give us a decent bounce until recently so I decided just to go ahead and lock down the dividend and then ponder selling–I simply seldom hold a mREIT issue for long. The WR Berkley issue is now trading around $25–so I will hold it for a while and see what develops.

22 thoughts on “Personal Portfolio Sale”

  1. thanks for the note on this Tim. I got caught sleeping on it for the partial redemption earlier this year and just sold the rest today. The partial redemption cost me a few dollars and brought down my average annual yield (although i’m still happy with how it worked out but i did leave dollars on the table by not paying attention to the redemption date). Good lesson for me (and all?) — keep a calendar or your redemption dates because i have a lot of holding and selling too late can lower your annual yield even after you’ve made all the right moves previously.

    1. Franklin—yes a person has to pay attention. Sometimes I hold issues for years and years and totally zone out on the redemption dates.

  2. I don’t understand the 10/11 ex-date for NRZ-B. shows what seems a bit convoluted : “…will be paid quarterly on 2/15, 5/15, 8/15 & 11/15 to holders of record on the record date that will be the first day of the calendar month prior to the payment date ”

    I take it to mean the prior month is OCT- ok, but – if the record date is the 1st of Oct, then the ex-date would be the first business day before that = Mon, Sep 30th. I see no way to get to the 11th. For the 11th, the record date would be 10/14 And- why make the record date the first anyway- it would always throw the ex into the month before that- as in this case.
    Looks like they should have said the record date will be the first day of the month it is paid. (NOV 1)- in which case, the ex would be 10/31 this year.

    1. Gary – Sounds like a good question for IR, however, either way, I think the correct interpretation of “the record date that will be the first day of the calendar month prior to the payment date ” should mean November 1, not October 1. “Prior” is referring to the date of payment, not the month… So right now, it’s saying record date will be on the first day of November given the next payment date is November 15. Still, it does seem to make one wonder why Oct 11 is the announced ex-div date….

      1. BTW, that language is not unusual and I, too, looked around the prospectus quickly to see how they came up with Oct 11 for ex date and I didn’t see anything either..

        1. Perhaps because it will be a partial payment–maybe after the first payment they will change to regular wording.

          1. Gary – I’m not quite sure what you’re getting at…. The wording is in the final prospectus.. It won’t be changed nor does it need to be changed…… What’s left to be explained is why they’ve declared an ex-div date different from what the language says it should be… Maybe you’re on to something that it has something to do with the first payment not covering a full quarter which I will take as gospel without double checking….. But even so, you would think that would be spelled out somewhere as well….Maybe it is and we’ve just not uncovered where but that’s why I thought it’s a good question to ask of Investor Relations…….

      2. Copied this from another recent issue:
        will be paid quarterly on 1/15, 4/15, 7/15 & 10/15 to holders of record on the record date that will be the first calendar day of the month in which the payment is due

        I think they got mixed-up on the the one first cited. Especially since it does not appear in the prospectus.
        thanks for looking.

        1. FYI, the NRZ-B and NRZ-A have been ex dividend on October 11, on Doug Le Du’s paid “engine”. This matches perfectly at Per Le Du, record date: 10/15/2019. Payment date: 11/15/2019. Ditto for NRZ-A.

          1. I agree that it shows up that way- but why. And why the weird wording of when it is to go ex.
            I have Schwab- it had Oct 11, so I was not unaware.

  3. Good morning Tim, I had a similar epiphany about ECCA about a month ago and switched it out for ECCB. These monthly payers are nice to hold and smooth out the lumps in my investment income stream, but I learned the hard way with ECCA that they can be tricky to hold past their call date when they’re trading well above par value.

    1. CORR-A is another high yield one that is coming up on first call date and trading 75c above par

      1. A4I – I know nothing about CORR as a credit but at 25.75 and with one more coupon in between now and first call date, CORR-A is a breakeven bet on being called on first call date of 1/27/20. Nothing to lose if it’s called but opportunity cost lost if it is.

        1. Yep, break-even bet. I’d rather bail now, collect my divvies and redeploy my soldiers to another battlefield where I don’t watch my capital decay. NRZ-B would be a good bet but I’m full there. CHSCN might be receiving that $ from me.

  4. How about replacing ecca with its sibling eccb, not callable until 2021?
    Although it is priced ~$27, its YTC is >7%, if my math is right.
    Since I sold ecca a while ago, I have held eccb, selling only a few >$27.

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