This is a get rich very slowly stock. The way to make a lot of money with it is to have enough confidence that the divy is secure that overweighting is acceptable. The best thing that could happen is a solid dividend reinvested and accumulating on the dips so one day after collecting 13% plus for several years. Somedsy the stock price and a higher dividend will result in a 10% yield. If you had faith and now sell several several thousand shares you will make a lot of money years from now.
Old post by a troll that doesn't have a life. It's comic relief. Can you imagine the dreary existence this guy has when he does this for fun? What a loser.
I think you are correct. This could become a great get rich slowly stock. I am going to add enough to take me up to my lmit and then add on dips and go over my limit. I think the dividend is now safe and will increase very slowly.
I think Sherwin is the or a troll. He certainly isn't funny and has be be slightly off to seemingly enjoy ignorant harassment. Anyway know that those who know you realize when fraudulent posts are made.
i am slowly coming to believe that RSO will outperform the market over the next 3 years. I think the first quarter dividend will be the bottom of the cycle and .64 is as bad as it gets. This is a 13% plus return and when the market realizes there are no more cuts coming and starts looking for an increase the pps will increase. Up until now I didn't believe buying the dips was a rewarding strategy. However, going forward that is what I plan to do. If a person accumulates several and I mean Several more thousands of shares than what I normally like to limit individual concentration too I think 5 to 7 years from now RSO might be one very nice success story. So I am going in for normal concentration limits(2.5%) now, and adding on the dips.
We will see what happens.
Sentiment: Strong Buy
I think this troll is seriously ill or just exceptionally stupid. One this he is not is funny. A loser without a life.
why does this guy/troll think he is at all funny. Every time he posts something like this he looks like a bigger idiot without any semblance of a life. And yet he continues, what a moron.
Didn't Mean to scare anyone. I believe the softness we have seen is because of two reasons. First, the large dividend has gone x and so its a 3 month wait for the next big one. Second, there is concern that the residential mortgage reits sector that includes the likes of Agnc and other leveraged retail agency reits is experiencing yield compression with the 10 year falling below 2% and earnings will suffer. I believe the probability of a collapse and call to be unlikely. However, this is the devil that is hiding in the details.
Personally, I own Morl, Bdcl, and Cefl equally for about 7.5% of total portfolio value. If you are investing for income and define safe sustainable income as being 8% then by owning all 3 notes equally and getting 21% you could have one note get called for $0.00 and still collect $4200 from the remaining 2 notes as opposed to $2400 @ 8% ( assumes a $30,000 investment as an example @ 8%.)
I invest for income so I am comfortable with a 7.5% position split between the 3 notes. GLTA!
I see no issue with UBS. The only thing that is possible, but not probable in my opinion, would be a collapse of the merit sector which with double leverage could drive Morl to 5.00 and result in a call and obviously a loss. If the sector can show decent earnings next month for 4 th quarter this fear should be put to bed for a while and price stability should return to the sector. If bad numbers look for additional fear levels and lower prices.
Current Discount is about 5% more than the 52 week average. Performance hasn't been great but that means they will be trying to turn it around. No leverage, some convertibles and paying a high dividend. With the market fairly valued probably can't get hurt any worse than the general market. The convertibles should cushion somewhat. I just bought quite a bit of Ety. Big discount, good yield and a class outfit. Looking at buying more GAB but they are leveraged and do not sell options. It's a straight stock fund paying 10% of value as a dividend. They used to sell a a premium and now at a discount. Had a bad year and a half. Also a quality outfit with S&P beating historical returns. Probably pick up some Nfj and gab and some Nrz. When rates go up Nrz will be rewarded and it pays 12% dividend to wait which was just increased GLTA
look at all of the BDCs and BDCL the entire sector is selling under book. FSC and KCAP are earning their dividend yet they go down. I truly believe 18 months from now people are going to be scratching their head and saying why didn't I buy? Discount to book, mid teen yield, dividend covered, no recession on the horizon, damage was done by Jan 15th 2015 and I stayed on the sidelines. Why?
Tell me in a market that is considered at best to be "fairly valued" how long do you believe BDCs will remain so "undervalued"? It might take 2 years and you will be forced to collect a mid teen dividend while you wait for a 30% pop in PPS. GLTA
The maturity value seems straight forward. Is there a provision for a call and is the call price defined in the same manner. Obviously, no one would want to get the note called away should prices be extremely low.
Lunco I agree wit everything you summarized. Well said. In a previous post someone speculated that should the price of CEFL drop extremely low then UBS would call the note. I have tried to find the authority on this point but haven't been able to do so. Are you aware if such an action on the part of UBS is possible and if so is there a stated call price. It would seem to me that rather than call the note they would repurchase at market prices if allowed to do so as the issuer. TIA.
Lunco, I was trying to determine the impact of rising rates independent of the effect they would have on the underlying investments. Clumsily put, would rising rates, which would increase UBS borrowing costs result in acting like a variable rate note? IE UBS pays more so our dividend becomes less.Or is the dividend simply and always a function of the underlying portfolio index? I realize I don'r actually own the index but get paid a dividend and experience capital fluctuations(more or less correlated) based on the performance of the securities in the index. Is this the extent of it other than market over reaction similar to when a cef NAV goes up but but market sentiment pushes market price down? I guess what I am curious about is since it's an index it will rise and fall and as long as you like the investments represented by the index and can stomach double volatility just hang on and collect the dividends. Am I missing something bif here? Thanks for answering my previous post.
When rates go up it will be in a smaller increment than what is anticipated. This will make both camps happy. Those who want an increase and everyone who is afraid rates will go up and choke off the recovery. Look for 10 basis points or an eighth of a point. Then those on CNBC will say "masterful".
Lunco, hope you are well and the market is treating you the same. I have a question in regard to rising rates and how they would impact the performance of cefl. Obviously, the market blames any downturn on the possibility of rising rates so I would assume the individual cefs in the index would most likely decrease in value there by decreasing the value of cefl. My question is how or will rising rates specifically impact USB. I assume if their cost of borrowing increases that cost would be passed on to the note holder in some fashion. So assuming rates increase modestly I would assume the dividend could be reduced modestly independent of what the underlying cefs are experiencing. Who knows what the market would do with the pps. I would appreciate any insight you have on this issue. If it were a straight note paying the holder 8% then rising rates would not impact the note holders except for the decline in value of their position. Howevr they would still get their 8% on the initial investment. How would cefl differ or would it? TIA.
So are we at the bottom in terms of the dividend being cut , assuming a .64 dividend? How about share price? Seems to me the convertible can only be accretive when cost of funds is 8%. Certainly cheaper than equity or preferreds. Dilutution shouldn't be an issue if the funds are put to work in an accretive manner and management seems to have a bit of a bonus here with the 10 percent exercise price and the ability to cash out. So is this where the worm turns?
I am planning on buying some more. I have about 2% of my portfolio in it now but really can't see the market cranking out 13.15% returns for the next 5 years which is what a .64 dividend would be. This has been a disappointing stock but they seem to be getting their plan together and 13% with just a little appreciation back to the convertible price gets you areound 15% over the next 5 years. It's slow but steady IF this is the bottom of the div cuts and the bottom for pps in comparison to the general market. Opinions welcome.
Well, another 2 years. I'll probably be dead by then too. That would put me at 89. I suppose we could both still be kicking then but I doubt we would be kicking very hard. Good luck to you and stay away from magnetic force fields. This etn is volitile enough to make people need pacemakers.