I’ve been looking to buy something with a 8% yield–or yield to maturity of around 8% and the best idea I have for now is to enter an order for the Hennessy Advisors 4.875% Note due 2026 (HNNAZ) at a buy price of $23.30 which would give me about 8% yield to maturity. I entered this order yesterday–shares had hit this price level on Tuesday (of course I had no order in then). I will simply let this order sit for 60 days and see if someone want to give me a deal. The issue matures on 12/31/2026.
Recall I owned lots of these shares previously and sold most of them for $24.37–I kept 94 shares which I still own. I would look for this one to go back over $24 before the year is out at which time I could sell for a nice gain (interest plus a capital gain) or hold to maturity. Details of these transactions are on the ‘laundry list of holdings’ page.
I chose this one to buy (or try to buy) because I have a comfort level with this little money manager–they have enough cash on hand to call of their debt plus with the short maturity the price movements are not huge.
Forgot about an order for NMFCZ I had sitting out there. It filled on Friday at 25.60 may buy more if it moves lower and flip the first purchase. I have confidence in NMFC but with my unease about the market I expect it to go lower. It had been as high as 26.74 out the gate so there is a demand for this note and I have been impatiently watching for it to fall and may have gotten in too early.
Which broker? I had bought a tiny amt. in Fidelity when it came out, sold half when it went well over 26, then tried to buy some back recently and Fidelity prevented bid, with the error message just like the old days of not allowing purchase of F-F/variable rate issues, even tho it’s fixed. I didn’t bother calling them as I was able to buy it on Vanguard. I might have to move some of my IRA over to them.
Looks like YTC is pretty close to their 6.875 coupon 1k bond maturing 2/1/29, although if not called the YTM would be much higher.
Hello CR, I had it sitting in my wife’s account. Hadn’t thought about looking for bonds. Talk about Nannies, T Rowe is worse than Schwab. At least at Fido I was able to set a limit order for EAGPP. Schwab wouldn’t even let me place an order.
Not sure what rules the different brokers are going by,
FWIW, not sure how the calculator is doing it’s math, but if I use my simple formula I get 7.94%. But the tried and true XIRR function returns at 7.92%. This is based on purchase of 4/8 @ $23.30 and interest collected on 6/30 and every quarter end until 12/31/2026. So close enough to the magic “almost 8%” Tim mentioned. Give it another week and it’s even closer at 7.98%/7.99%.
Tim,
Do you pay much attention to whether dividends are “qualified” or “non-qualified” (and consequently their respective tax treatments)?
Thank you
JimF
jimF–in my case I don’t as almost all of my investments are held in IRA’s. I have a very large fixed income account (let’s call it savings) at 4.5% fixed which I pay ordinary income taxes on each year, but the 4.5% savings is the only option in this account. I have a couple cash accounts which are less than 10% of assets and not significant enough to worry about.
Tim, thank you very much. JimF
JimF—you’re most welcome.
Wouldn’t the YTM be more like 7.62%? Still looks good though.
Norm, using this calculator https://quantwolf.com/calculators/bondyieldcalc.html
It comes up with 7.66% YTM and 7.88% equivalent annual rate
With the spread to the current Treasury rate of about 4.3% not bad. if the price dropped farther in a market drop you could average down.
Charles ; thanks for the YTM calculator ; i been looking for one
Don’t thank me, thank 2WR who posted about the site before I think. I just Googled for a calculator and when I scrolled down, I recognized the name from when 2WR mentioned before. Credit where credit is due. I came across the sale of SRS holdco being sold by Berkshire and showed my boss. He posted it to the CEO and Corp sales manager and took credit.
If you really want to go back to the source, I think it was Alpha who first mentioned the site… I know I spent time verifying its accuracy when compared to my fav, https://digital.fidelity.com/prgw/digital/priceyieldcalc/. Both usually are dead on in allignment but not always….. https://digital.fidelity.com/prgw/digital/priceyieldcalc/ offers a little more flexibility for situations where payment dates do not match up with maturity dates and also can show YTC along with YTM…
Norm–I come up with something in the 7.9% or so area.