Appreciate the advice!
Do you think the price will bottom when they announce the dividend cut or is this already priced in? I may put a limit buy order in at say $2.50 to pick it up on a major dip.
And to think I was kicking myself for missing the buying opportunity a $5/share a few weeks ago!
This is my biggest loser and also my most conservative investment...go figure. Maybe I should buy a lottery ticket.
There is no skunk here. Their current borrowing costs are in the 3.6 to 4.0% range. Go to their website and it shows the daily rates they are paying. Perhaps someone is or was using JQC to short because they were not able to short many financials until Thursday. No doubt the dividend will go down, but it currently yields around 30%. Even a cut in half would only drop the yield to 15%. The discount to the assets it holds is 37%. These are all publicly held securities which include stocks, preferreds, convertibles, senior bank loans. As long as it is not the end of the world, a double or triple in your money is entirely possible with this fund.
JQC is a diversified portfolio of various products within the financial sector but the share price doesn't follow the financial sector ETF (XLF). There appears to be a "lag period" before JQC catches up with the upswings. There also seems to be an exaggerated decline on the downswings. If this were secondary to leveraging then why doesn't NLY and other leveraged financials reflect these trends? Should we be tracking the NAV instead of the share price? Why isn't diversification limiting the downside risk?
There's a skunk in this somewhere...and I fear the fund could collapse especially if the dividend is dramatically cut to save on borrowing costs...but what else can they do?
It would really be nice if we could find out a few things.
Maybe some of you know or have an opinion on whether the bailout will help the portion of JQC's assets that are tied to mortgages.
Everyone on this board who is a little upbeat mentions the great dividend. The div was just cut a little. Seems to me a cut to $.05 or $.10 per quarter is not out of the question.
This is so extraordinary.... with discount to NAV probably above 40% as I write... Historically, prior to this month, the greatest discount to NAV on JQC was 15%! There are a LOT OF QUESTIONS I'd love to have answers to. Does the redemption of auction rates mean there's no longer leverage in JQC? How much will redemption of auction rates affect dividend rate? Given the QUARTERLY setting of dividend plus having had it just recently paid out, this is all part of the unknowns affecting JQC'S price right now.. How accurate is NAV calculation? Are any shares in portfolio estimated in value as opposed to being based on actual market value?
I keep adding to JQC and getting pummeled immediately... Is this opportunity to stupidity? I have so much more respect for Buffett knowing he thrills at the opportunities afforded in this environment.....
65% down for my dad who is 78 and depends on the dividends to live on. He w3as told it was safe for him too. I wish I had extra $ to help him dollar cost average some of the closed-end funds that he bought almost 2 yrs. ago. Good luck!
Wirtz, know how you fell. I'm invested too much in CEFs also. I plan to hold tight & wait for a recovery. Many CEF investors seem to be in "panic mode" and will sell just to get out. I know we are now in "untested waters" but I think/pray that we will recover slowly.
Don't beat yourself up Wirtz. No one saw the financial meltdown coming. If the sharpest business minds on Wall Street and in Washington with access to the best available information didn't foresee any of this, then realistically how could average guys like you or me have foreseen it?
For whatever grim comfort it brings I'm in the same position you're in. I'm no expert, but I'm planning to hold. The income is still good. Assuming we don't have a depression and that the market eventually recovers, the share price should go back up in time.
Good luck to you. And don't blame yourself because you didn't do anything wrong.
Now is not the time to sell however. It is the time to buy. The Net Asset Value is almost 30% higher than the market price and the yield is over 20%. In addition, the assets they do hold are being thrown away at stupid prices. There is a reasonable change the price of this fund in a year could be double what it is right now plus you receive a 20% dividend to wait. The price in August was $9 per share. If it doubles in price, the payout is still over 10%. Hang in there.