I had mentioned a week or two ago that I have made some nibbles on some good until cancelled orders for some baby bonds. I wanted to get the details out here and then I will update my ‘laundry list’ of holdings.
I made 3 small purchases of the Hennessy Advisors (HNNA) 4.875% Notes due in 2026 (HNNAZ).
Note that I had a good til cancelled order in at $22.55 for the 1st 2 ‘nibbles’–which was lowered to $22.25 for the last nibble.
Now do I want this low coupon security that bad? No–but it has a maturity on 12/31/2026 and the yield to maturity was just over 8%–and I do want the 8%. These nibbles were added to what was already a full position–and while I don’t necessarily want more I have a $22/share good til cancelled order in right now.
It should be noted that I am very comfortable with this small company (Hennessy Advisors)–they have a market cap of just over $50 million so definitely a small cap. They advise open end funds and thus are paid on assets under management which have trended down in recent years, but finally they have assets moving higher and are taking over management of other funds which should drive assets higher.
Additionally the company carries a high cash balance of $59 million and essentially has no debt EXCEPT the HNNAZ issue which is $39 million.
This is not a recommendation to buy this security–but maybe a yield to maturity of over 8% is attractive to someone. Please fully understand how they make their money and the motivations of managers to secure more assets under management (money of course).