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Fifth Street Finance Corp. Message Board

  • thewisejman thewisejman Jun 19, 2013 4:08 PM Flag

    WHAT a DAY

    Cramer thought the market will tank and then rises back up today after Bernake speaks. But from past experience, every time it appears that when Bernake spoke, even if the market rose it will tank afterward. I was kind of surprised myself to see the DOW went down 160 pts and then rose back to only down 110 pts, then all of a sudden everything just tanked and the DOW closed down a bit more than 200 points (still not settled down yet).

    Well, I sold all my DXD and SH, make a little bit profit but they served their purposes. I bought about 73k of stocks today and CNBC said now we might have a pull back. I surely hope not since I now start buying some risky longs. But they just went down so much already. Bought CYS, AGNC, MTGE, IVR, PMT. TWO and even some NCT. May be I was too trigger happy today. Heck, even bought some PSEC. Will see what happen tomorrow. CNBC also said did not buy here. We shall see.

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    • Watch out for the 100% agency stuff. Yields on the 10Y Treasury are 2.3% and I would not be surprised to see them hit 3% within a few months. Coupon rates that the 100% agency mREITs currently hold will be worth less and less as mortgages rise. Sure they get to re-invest money from payoffs, but that's not much. Also, I suspect the cost of borrowing will begin to rise. There's a reason some agency mREITs cut their dividends: lower new spreads and probably using less leverage.

      NCT: a good pick. They are getting into senior housing and will become mostly an equity REIT. They already did one offering. By the end of the year, they should be paying 50 cents per years.

      NRF: Yielding above 8% and they are good to increase dividends by a penny every quarter for the next two years. Wow! I already own 7000 shares at 5.50. ;-)

      TWO, IVR, NRZ: These are the only hybrid mREITs I now own.

      LINE: BRY deal will happen and you will get 25 cents per month starting in July. The H*LL with the shorts on this one; it's a good long-term buy-and-hold. Also got VNR not long ago. VNR is fairly valued; LINE is still undervalued.

      I'll use my dividends to build my cash position. It's now only 10%. Maybe by summer we see better deals?

      • 3 Replies to sonnenwayne
      • Nice post sonnenwayne, I tend to agree with your concise points above. thewisejman, I'm a bit surprised you sold your DXD and SH already? I think we got further to drop. I am not reading too much good news around the global markets lately, yet here the USA is still trading on big gains while most other markets are negative for the year. I think people will get freaked when they see how big our current year deficit will end up considering all the blathering the media has done on how this will be the smallest deficit in 10 years. I think we end up over a trillion again which will cause consternation. Combine that with a poor labor participation rate, the average hours worked per week dropping, new jobs only being lower wage ones, etc etc etc. We got room to have a bad rest of 2013 IMO even with the Fed continuing to QE away.

        I wish I had purchased LINE in the low 30s. I was tempted but did not. The more I research where NRF is at right now the more I like it. Given the moves they've made, seems they can continue increasing the dividend slowly but surely for the next year. I hope I can get the chance to buy a lot more in the low $8 range!

        I'm holding onto TWO and NRZ right now also. I'm overweight in NRZ though so might take some profits if can rebound back to $7. I don't own any FSC right now so might take a nibble if I can get any below NAV. Maybe I'll put in a limit order tonight. PSEC seems to be holding steady since they announced the dividends through the remainder of 2013. Of course they could always rescind that announcement if things really get hairy, but there is at least the perception of stability there now with the high yield.

      • Hi, Wayne: I really appreciate your advice and I believe what you said are right on the money. I do not know what the FED can do to keep interest rate at bay. They seemed to lose control of it and is fast running out of ammunition. I believe it is because nobody including the Chinese want to buy any more US debts unless the yields for them are higher. That may mean we will be in troubles but it may actually be good for BDCs such as FSC and PSEC. Detroit just went broke and I believe many states and cities will follow suit and many muni are time bombs. BKCC will be in trouble because Virigina Retirement will continue to dump it on the market to pay for the pensions of Virginia public employees who retire. Right now, it is both hard and risky to invest. You are far sighted enough to hold so many NRF but I do not like to buy it at its current price. Same applies to NCT because it has been very volatile. Right now both MTGE and AGNC appeared to bottom out around June 13, but things can indeed change rapidly. My holdings of them did not account to be as high a percentage like your NRF though. I learn not to hold too many of one stock no matter how good it appears to be. In a down market, no stock is sacred. The only blessing (or weakness of mine) is that after I bought a bunch of stocks today I still have around 50% of dry powder, waiting patiently for more buying opportunities. Again, thanks, I am glad for your expert advices and glad that we have a group of experienced and civilized investors here who can help each other out by sharing our expertise and ideas. J

      • FSC has been weak since the acquisition of Healthcare Finance Group. This company appears to be a miniature version of FSC. It may be a brilliant investment but the shareholders do NOT seem to be convinced .

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