I have been watching a few of my holdings recently trying to determine the right selling price–assuming I decide to sell and today I pulled the trigger on a couple. Where oh where is the top in the preferred market?
As I mentioned last week I was going to exit part of my Highland Income Fund 5.375% (HFRO-A)–I am sure you all recall that last week the issue swooned a bit as a related company filed for bankruptcy. Anyway I let go of a little last week and then today sold some more—so I have about a 1/2 position left which I will just hold. All in all I had a gain of just 1% for my 5-6 week hold–not much, but at least not a loss.
Today I decided to let go of my Gladstone Commercial 6.625% perpetual preferred (GOODN). I am a big fan of the various Gladstone term preferreds which are issued by Gladstone Investment (GAIN) and Gladstone Land (LAND)–or the relatively short term debt issued by Gladstone Capital (GLAD) – I own them all–BUT I have never been a fan of the Gladstone Commercial preferreds because they are perpetual. For whatever reason the market loves them — I have exited for about a 4.5% gain in a month.
A big one I have been watching is the New Residential Investment 7.125% (NRZ-B) which was a real dog for a bit, but now has picked up some steam. As I mentioned on 10/11/2019 (here) I held through the ex-dividend date on 10/11/2019–so I picked up the 44.5 cent dividend and now shares have bounded back strongly to $25.48 right now (I think I bought around $25.04). This was bought as a flip and I have held it for 10 weeks–sometimes things don’t go as planned–regardless, a little patience has that position now up 3.5% (with the dividend which isn’t paid until 11/15). I’ll watch a few days and if the move is over I will exit–it is a full position.
Currently I still am holding the WR Berkley 5.625% Sub Notes (WRB-B) which I had hoped would bounce back a little better after ex-dividend. Right now with the dividend I have a very short term gain of about 1%. Shares are trading at $25.15 right now and with a call possible at any time investors are resisting the urge to push it higher. Honestly I am always happy with a gain–even 1%–it beats a loss.
So with some selling I think I am around 30% in cash–if I sell the NRZ or WRB it will be some higher. Hopefully I find the time to ferret out a few buys–or get a new issue with a coupon above 5% that I am comfortable holding for a while.