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Flaherty & Crumrine Preferred S Message Board

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  • wheelbarrowme wheelbarrowme Oct 15, 2011 12:39 AM Flag

    Up 13.5% in 5 Days

    Not sure yr in & out based on NAV is a profitable theory. since you can lose dividends when out of FFC. And Pimco CEF's always sells for up 40% above NAV and yields 10%+. FCC premium usually runs 5-8% above NAV. However, Crumine's LCM sells for 10% below NAV and still pays 10% annually, pays quarterly. PEMCO has good portfolios that allow high yields supporting prices 40% above NAV. There is no clear theory how to play CEFs other than performance and history.

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    • All reasonable points but it's been plenty profitable for me in regard to FFC.

      However, FFC has been trending down over time. When you are up more than one year's worth of distributions in such a short time(on a percentage basis), probably prudent to lock some of that movement in.

      With regard to premiums and discounts, it's the Gross managed funds that trade at premiums and they tend to stay as a premium. FFC has distinct periods when it doesn't.

      Add the two issues together and it provided me with some motivation to sell. Not liquidate, just lock in some profits and wait for that inevitable pull back into a discount to reload the gun.

      By the way, I made the mistake of buying one of those Pimco funds and breaking my cardinal rule of never buying at a premium. I should have stuck to my rule. I'll be crawling out of that hole for a while. :-)

      Very best of luck.

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