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Fifth Street Finance Corp. Message Board

  • thewisejman thewisejman Aug 19, 2013 2:50 PM Flag

    Massive exodus on REIT pref. stocks and Pref. stock CEFs OH and REITs

    They have been dropping and their drops accelerated today. In my pref. stock watch list, ARR-B top the loss leader list, down 7% today, at the price of around 20.38, making its yield 9.66%. Of course, it may continue to tank. Nobody knows it bottomed out yet since ARR is tanking badly.

    RSO-B and RSO-A reached their 12-mo lows today.

    On the pref. stock CEFs, many of them continued to make new 12-mo lows. FFC, FLC, JPI, HPF, HPI and HPS now all have yields of 9% or higher. I did buy some HPF and FFC today. Too good to resist. Not a lot yet though. Conserve my dry powder for later employment. Since I now have as much short ETFs as longs to back me up, I am free to keep adding on quality dividend stocks every time the market tanks. Some investors still have not come to the term that bond tapering will happen SOON. I feel sorry for them.

    The reason that I did not say anything about REITs was because I really do not have any (may be a few shares here and there), therefore, not going to even watch them till September.

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    • Hi J, Do you think some of the drop in pref.s is already built in? Also, it looks like reits really got hammered today. Posed the question to the board a long time ago about whether an increase in rates would be detrimental to reits and someone answered me, saying that it was not something I should worry about. Glad I never bought anything. Don't see rates rising to double digits but who knows? Am still stuck in VVR. This is my worst year ever trading the market. Was up huge at the beginning of May and decided to buy some bonds just to stash some money and stay out of stocks for the summer. It's been a nightmare ever since. Have 20% in VVR and 4% in FFC. The rest is cash. Think the FED should get out of the bond business and let the markets decide things. Right now there is no free market.

      • 2 Replies to bozox5512
      • To answer your questions, as long as REITs continue to tank, people will start dumping their pref. stocks at whatever prices they can get since most of them have very thin trading volumes. That means they can continue to tank and their accidental yields continue to rise.The problem is none of us know when they will bottom out, therefore, if you wait too long you many miss the chance to grab some good pref. stocks. As long as the REIT will not go bankrupt and their pref. stocks are cumulative, that means we will get the dividends before anybody will. Therefore, I am hurting with RSO-B but I doubled my position on it today. I also bought some CYS-A today and intend to buy some pref. of both IVR and NRF because both are good companies and I do not believe they will go bankrupt. Try to balance out the hurt, I will continue to buy IMV, TBF and TBT just in case 10-year treasury rate will rise to and above 3%. I did tell everybody to grab some not too long ago. I am not selling any of my short ETFs right now. QID was in RED early today because of recent rise of AAPL but it soon turned GREEN. You may want to grab a few. I like EEV, SRS and SKF the most at this time. If there are dips on them, I will keep adding. GL

      • Welcome back, bozox, have not heard from you for a short while. I have been trying to tell everybody to get out of REITs, pref. stock CEFs, BDCs.......Of course, since I am the resident chicken BEAR, people may not pay too much attention to me. I am glad I paid attention to myself. If the FED kept warning you they will start bond tapering, why in the world will people still want to keep REITs especially mREITs? Do tell.

        People must think I was crazy because on last Monday, I spend half a day moving all my money from Bonds, REITs, stocks, to CASH in the 403b retirement accounts of my wife and myself because it would take the next day to have them moved (like on Tuesday). Good thing I did. I also sold off every single RIETs and even some pref. stock CEFs in my friend's ROTH IRA account I help managed last Wednesday, used the money to buy DXD and TBF for her. Wow, talking about good timing for a change.

        I was 100% out of stock in last market crash. Right now I have equal amount of longs vs shorts, with 60% cash on hand, because this time is not YET as bad as last time but can get worse if the FED does something stupid or rash. I am also not repeating my mistakes in last market crash - I stayed out too long because of FEAR. This time, I will continue to buy every time the DOW drops 150-200 points. When can you buy pref. stocks or pref. stock CEFs that will start paying 10% or more?

        When BDCs start tanking, I will be loading up. I have my eyes on PFLT, FSC, PSEC, TICC, BKCC, AINV, ARCC.

        Any good buys lately? J

    • I plan on nibbling on a few more shares of NRF should it drop to $8.30. That presents a yield comfortably over 10% given the future dividend raises of $0.01 per quarter are locked in through next year.

      I sure wish I had purchased more TBF a month ago. I have some but not enough. Maybe Fed will talk rates back soon so I can buy more then.

      • 1 Reply to clrodrick
      • I know Wayne has high regard for NRF and I respect his opinion and also would like to grab some. Its current yield at today's closing price of 8.65 is 9.25%, quite attractive. But I am just not sure because its 12-mo low was 5.55 on 11/14/12. Its closing price of 8.65 today is about 1.63x of its recent NAV. I am not sure I want to buy any. I would rather buy either FSC or even PSEC since both have higher yields and "less" risk since both are traded close to their NAVs. If FSC drops to or below $10, it will be time to start buying. Now of course I can be wrong and NRF appears to always bounce back, therefore you should do what will be best for you. My timing was never great. GL J

 
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