You may not be short but I now am. at a 40% premium I'll gladly pay the dividend of 1.5% this month if I have to. I doubt it will trade at a discount anytime soon but there is plenty of downside especially if JNK keeps falling with the equities.
KK - Can't say that I gleaned a lot from it; he did specifically say that a way to square the yields was through defaults; I would have to say that I much prefer your way. My personal thought is that yields will be normalized through a combination of the two, and from what I think I read, re implied default rates in the current pricing, primarily through price appreciation, in the bond market in general, not specific to PHK.
You or someone else on the board made mention that his comments re "his favorite child" were made when there was no 20+% premium in the price. PHK's yield on NAV is 27%+ though, so any way one looks at it, there seems to be a significant disconnect on price/yield vs the rest of the market and especially given the recent reduction in the portfolio holdings.
Bottom line: It won't take much opportunity for me to continue to reduce my position, but if the premium narrows, I will tend to hold.
I certainly agree with you that those comments posted yesterday from Mr. Gross look mighty bullish on PHK.
As to them causing (even) you to back off from the thought of a divvy cut, I just don't know what to think.
Look at this video from the same Roundtable at the same magazine/newspaper from which those written comments presumably came yesterday.
This one is not specifically about PHK, but towards the end of the 4-minute video he clearly and inequivocally says "an economy cannot provide 15 to 20% yields" in the environment we find ourselves in today.
There are ways of squaring that without a divvy cut, I guess, specifically an increase in share price of PHK that would follow a corresponding increase in N.A.V. But having said that, I am having trouble rectifying both sets of comments presumably to the same newspaper. . . .
Putncalls - You might want to take into account the fact that PHK reduced their holdings by 30% last month to redeem ARPS - I would put some of excapnal's money on the premise that your cash flow info is out of date with respect to this action.
Having said that, Gross has indicated that he is very bullish on this fund, to the point that, were they to cut the dividend, it would surely raise some eyebrows in the wake of these public statements.
That is a very important point to remember in all bond investments. But, somehow, it seems to get lost in the noise, especially during distress time like this. Thanks for reminding.
At some point, you may be correct, of course, Exc. One question I guess would be how much they overearned their divvy last year, and were able to use some very legal loophole to avoid paying that out in a special year-end distribution. Do they publish their UNII anyplace?
In the meantime, reading your latest post here, though, couldn't help but thinking that you give new meaning to the term "Ex" Dividend!