We have had a couple new issues lately that have many of the attributes that I like for a spot to ‘stash the cash’.
It seems like there has never been a time this year (and last actually) when I didn’t have too much cash in our accounts. Each time you turn around one of our holdings was being redeemed. It is frustrating and of course expensive (cash pays little to no interest).
I determined last week that I would ‘stash’ some of that cash in the Eagle Point Income Company new 5% term preferred (EICPP now) and in the Hennessy Advisors 4.875% baby bonds (HNNAZ).
The primary attribute for these 2 issues are that they have short maturity dates–both in 2026. Short dated maturities tend to be less volatile than their ‘perpetual’ peers. The closer the maturity date the less the movement.
Additionally, at least in theory, these 2 issues are reasonable quality. EIC while a holder of CLOs (collateral loan obligations) holds primarily the debt tranche of the CLOs–versus the more risky equity tranche. The issue is rated ‘BBB’ by Egan-Jones (for what that is worth). This issue is still trading on the grey market under ticker EICPP.
The Hennessy issue is rated ‘A’ by Egan Jones (again for what it is worth). Hennessy is a manager of mutual funds and their revenue is derived from fees from the funds. While the company has lost assets under management the last few years, it is likely they will adjust and start to grow assets again. The company has been around since 1989. You can read about them here. This issue is trading on NASDAQ under ticker HNNAZ.
I have positions in each issue and will add on price weakness as I did this morning when the EIC issue fell from $25.50 to $25.30.
In summary I am going to use these 2 issues to stash some cash. I will collect the dividends or interest while waiting for better opportunities–whether that be a panic or higher interest rates which reduced pricing in current outstanding preferreds or baby bonds OR force new issues to come to market at higher coupons.