Thanks for posting that. I just read it. I think the article is saying what us long term investors in NCZ amd NCV already know. NCZ and NCZ are trading too cheaply. They will both probably double in market price over the next few years and in the meantime they pay a real nice distribution. I think the best strategy here is to buy NCZ or NCV, put it away for the long term and collect your monthly distribution. At least that is what I'm doing.
Sentiment: Strong Buy
That last paragraph was poorly written. But I think you probably know what I meant. The market share is at a 13.3% premium to the net asset value. But net asset value doesn't take account of the earnings potential of leverage or of the expertise of the management company both of which presumably are included in the market price.
Pimco has recently updated their UNNI chart on the Pimco website. I looked at the website a few days ago and at that time it was still showing November numbers. So they must have just updated the chart within the last three days or so. To look at the chart yourself go to Pimco.com, type "PHK" under closed end funds, then click on the tab for "documents" and then click on the tab for "UNNI report."
The UNNI chart is current as of December 31st. It shows that in December PHK's net investment income exceeded its distribution by 107.26%. For the fiscal year beginning August 1st PHK's net investment income was 99.35% of their distribution. (I believe that includes a period of time prior to their dividend cut when their distributions exceeded their net investment income. )
Their asset value is $6.52 which is a 13.3% premium over the market value. Just my humble opinion but I don't think this is an unreasonable premium in exchange for Pimco's management and since NAV doesn't include the earning potential of leverage.
Sentiment: Strong Buy
Agree. You simply can't time the market. Short term traders eventually go broke. And trying to short a high dividend stock is just asking for trouble.
This is the kind of stock that you buy when it is low and then you put it away and forget about it. It's a long term core holding for income. I don't know what the price of this stock will be tomorrow or next week. But I'm pretty confident that it will always pay an attractive dividend and that in ten years the price per share will probably be higher than it is now.
If you want to short a stock there are plenty of overvalued stocks out there that don't pay dividends. I'm mystified why anyone would short a stock with a 16% dividend. Or why anyone would think that talking down a stock on a Yahoo message board would have any effect on the share price.
I mean that unless the price of oil goes up soon some of the MLP's will go bankrupt. Most of the oil and gas exploration MLP are surviving on their hedges which they entered into when oil was high. Without their hedges they aren't profitable and can't support themselves on their current cash flow. For most of them the hedges will start to roll off in the second half of this year or early next year. After that they are in trouble. Some of them will probably survive a bit longer by attempting to merge to cut costs or by selling off property.
On the other hand share prices are ridiculously cheap and if oil rises some of them will literally rise like a rocket. Take LINE for example. I used to own it but I don't anymore. I could see the share price rising from the current $1.50 to $30 or $40 a share in a matter of months if the price of oil went up to $70 or $80 a barrel. But if oil stays where it is I doubt LINE will survive. It's terribly risky.
The funds probably won't go bankrupt. They would probably merge or change investment policies.
These are just my opinions.
I'd wait another six months. The oil and gas MLPs are still dropping and some of them aren't going to make it. Accumulate cash for now. When (if) oil steadies at about $55 a barrel or if a war breaks out between Saudi Arabia and Iran then jump back into one or more of the oil and natural gas MLPs like LINE, ARP, or BBEP, or an MLP fund like FLP. Right now with Iran going on-line it looks like oil could actually get to GS's $20 floor.
Two things to keep in mind.
(1) Last month PHK had a negative UNNI of minus $0.08 per share. This month their UNNI is zero. The negative UNNI was a carry-over from before they cut their distribution. It looks like they managed to pay it off last month. These numbers are from the UNNI chart on the Pimco web fund. (If I am mis-reading or mis-interpreting the chart please explain the error. I'm not a professional and would appreciate any knowledgeable input.) The chart doesn't offer an explanation as to how the fund paid off the negative UNNI so quickly. But since the numbers are from Pimco's website I'm assuming the numbers are accurate.
(2) Assuming that PHK has kept some reserve cash on hand this must be a terrific buying opportunity for the managers of PHK. As the share prices of what they are buying drops the yield of what they are buying rises. Additionally with the spread between long and short term interest rates increasing the fund's leverage income is probably rising.
I'm not convinced a cut in the distribution is coming. It looks to me like the fund's income is probably growing.
Sentiment: Strong Buy
23.3%. (To calculate an annual yield as a percent take the yearly dividend, $0.50, and divide it by the share price $2.14.)
The Pimco web site shows a UNNI of zero with a current distribution coverage ratio of 101.8%. The UNNI chart on the web site is current as of September 30, 2015. I believe that is the most accurate and the most recent information available on the UNNI. If these numbers from Pimco's web site are accurate and don't change it appears that since the dividend cut the fund has been earning slightly more than they have been paying out and in theory the UNNI should start to rise from here. I bought my shares of PHK (and NCZ) after the dividend cut and I'm planning to hold long term for the dividends.