Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!

Ugly Day for Virtually Everything

Watching the futures markets after the release of the Hot CPI numbers this morning I was confounded that the S&P500 was off just 1%–but now about an hour into the day it is off 2.50%.

Interest rates which actually moved a little lower after the inflation numbers were released are up 7 basis points now to 3.10%–more in keeping with what I thought would happen.

I note today that a couple of the Oxford Lane Capital (OXLC) issues are getting hammered. OXCLO which is a 6% 2029 term preferred is off about 2%, while the 6.25% 2027 issue-OXLCP-is off over 1%.

The OXLCM term preferred issue has traded stronger trading at $25.15–this is a 6.75% issue. This issue has a mandatory redemption in 2024.

The lesson is that the higher coupon issues trade stronger–in particular with a mandatory redemption in 2024. Note that the new Oxford Lane 7.125% term preferred is trading on the OTC market at 24.64 (of course not buyable by us ‘non experts’).

18 thoughts on “Ugly Day for Virtually Everything”

  1. Anyone notice the odd (to me) closing prices between 7% NRZ-D @ 22.94, and the 7.5% -A @ 24.30. The -D enjoys the higher 6.22% float rate – and which occurs 15 months After the -A (with 5.8%) floats. “All else being equal” – which it ain’t) the D Friday close price seems an anomaly – at least relatively. Didn’t see this until after the close Friday ~ only Monday will tell if this sticks ~

    1. NRZ-D has been underpriced relative to other NRZ’s for awhile. and I don’t know why. It’s my largest holding since I kept buying it at what looked like a bargain.
      NRZ-B was inexplicably priced hgher than D recently. Last month it was almost a dollar lower for a couple days. Those swings have happened several times this year. There is money to be made swapping between them. Another reason why it’s my largest holding.

  2. These big swings are great for trading. I pick up some MO today at $48.69 and sold the July 1 $49 call options getting $.78. Max gain if called away is $1.09. MO is also is ex-div june14 for $.90 and could get called before next Tuesday as it is now trading over the $49 strike.

    1. 35spline Nice. If assigned on Jul 1 your max is the $1.09 plus $0.90 for div = $199 total per contract. That’s 4.09% in 3 wks ($199/$4869).
      But note that while the market volatility/investment bank calls on MO may be moving the price around a bit on this 0.52 beta stock, the IV on your CC was only 19%, so you’re still inside ‘normal’ MO volatility.
      Selling covered calls and puts is a wonderful way to generate profits in this market.

  3. OXFCV- costs 6.95 at Schwab ( for now).
    OXLC & ECC have reported rather severe continuing drops in NAV this week.
    pass on getting any more.

    Drops in the stocks I own/watch seem to be taking bigger hits in this 700-800 down day (on the Dow) than on previous similar days. I find that concerning- possibly the start of something big.
    Bring it- holding a lot of dry powder.

  4. I had planned to buy some of the 2024 issue today, but Oxford Lane makes its money on the lowest tranche of these issues and with a recession either already here or coming that is not where one would want to be. Inflation not moderating seems to guarantee that there will be defaults at some point down the road.

    It is hard to find places to put your money. Even cash is getting hammered so it is not like you can sit everything out, especially if we are in for a long haul.

    1. I have a large position in OXLCM and am pretty comfortable holding due to its short 2 year maturity. This issue is next in line to be redeemed and the current issuing of more preferred stock only increases the relative safety of OXLCM. Due to the points you mentioned, I would not buy the new 2029 issue.

  5. RTLPP down on heavy volume. Don’t know if it’s a fire sale or the beginning of a crash.

    1. MG -rtlpp

      Yeah I tried to pick some up in the $21’s today, but too slow for me. If I remember correctly this is a 8% CY under $23.50 or so. I’ll see if it retests the low sooner than later.

      1. I bought because RTLPP fell a lot more than RTLPO which is almost identical. Either I’ll make money on the bounce or I’ll bail out when the other one falls down to this level.
        Today’s low was an outlier during a high volume dump so it may not be a realistic price target.

Leave a Reply

Your email address will not be published. Required fields are marked *