Just a few items of interest to note today for those that may have missed them. Many (most) of these items have been commented on in the various commenting categories.
Eagle Point Income (EIC) ‘right sized’ (cut) their dividend by cutting the common share payout. The cut was from 20 cents to 13 cents. Honestly the payout was too high anyway. While the common shares are taking a bit of a hit today there has not been any affect whatsoever to their senior securities (preferreds and baby bonds). I look at this as a positive for senior securities holders.
Another interesting item today is that the Gabelli Convertible and Income Fund (GCV) called for redemption a $10/share 5.20% perpetual preferred–this is not a publicly traded issue. My guess is that these few shares are from a prior ‘rights’ offering (just a guess as I didn’t look it up) Just interesting that they would call the issue–it is a small issue so maybe they are just getting rid of a paperwork headache.
And lastly Compass Diversified (CODI) has gotten themselves in trouble with some potential tinkerings with the financials of one of their companies—the common share dividend has been suspended and the preferred shares have taken quite a shellacking–all 3 preferreds look like the chart below. Maybe someone thinks this is a bargain?
Do you see any additional risk to the preferreds of EIC?
There is trouble in this space…
It has been about 4 months since I looked at the NAV for EIC, and my often faulty memory says that it was in the mid-14s. Now it is $13.58 according to Schwab. I understand that their NAV has fluctuated historically from nearly $20 in 2019 to below $10 during COVID. I’m reading this as one more sign that the overall economy is in a little trouble, which is not necessarily reflected in the S&P 500.
Goin2cali I was reading a article about a certain BDC and in the comments section a reader mentioned when a company production slows down the lender needs to get concerned. I said it starts before then. When the phone calls slow down and the orders drop off is a warning.
Can we have both high borrowing rates and a slowing economy? Or we reach a inflection point and rates start to drop?
This last quarter earnings reports from a slew of companies showed earnings had been up but they withdrew earnings projections for the remainder of the year. Why? The uncertainty but possibly sales were already slowing down. In my field April was a granade. Close but not on target. May is looking to end about 1/3rd or worse off projections. Meaning the start to June isn’t looking promising. How does this relate to BDC’s and CEF’s?
Think about the loans outstanding and the borrowers starting to look stressed.
goin2cali—there NAV is down minimal compared to the equity tranche CLO holders. They have been simply overpaying their dividend which moves the NAV lower.
No interest in the CODI, note they also suspended their management fee I believe. To let this happen on their watch tells me they were not doing a very good job at management.
I’m a little confused.
The SEC filing says “5.200% Series G Cumulative Preferred Stock, par value $0.001 per share, liquidation preference of $10.00 per share (the “Series G Preferred Stock”) (CUSIP #: 36240B604).”
And that CUSIP # is actually THE GABELLI CONVERTIBLE AND INCOME SECURITIES FUND INC. I believe the ticker for the common is GCV
Mark–sorry for the confusion–you are correct it is GCV–I made the tweak.