Last Friday, overweight positions were trimmed and capital deployed into a few (33!) closed end funds. Net gain from that day was exactly $6,156.00, not too shabby for a few short months invested in preferred shares. But, then again, I bought when shares were comparatively cheap. Now, however, share prices have surged so far in a relatively short time so that there are far fewer bargains that aren’t prone to bankruptcy and suspended dividends like the common and preferred shares of BBEP (BBEPP). Oh, sure, there are bargains like DSX and SB, but those are both dry bulk shippers that are suffering because trade with China is like everything else from China – substandard at best and most likely to poison you and your loved ones like your kids and pets. I think China is toxic, and not just because their air has big chunks of pollutants which can fall from the sky and kill or maim, but that is the intent of the Chinese government. They need a better way to control the population and there’s nothing better than making them live in a toxic environment and letting them die of “natural” causes or letting them kill themselves to escape their brutal living conditions. Yup, it’s all about the ones at the top. Screw the little people.
But thankfully, this post isn’t about China, or Republicans, or Democrats, or Libertarians, or whatever the hell those 2 “frontrunners” are. It’s about position sizing and our portfolio.
Last Friday, June 3rd, I sold some of our preferred shares for a sizable profit and re-deployed the capital. We now have 48 positions with an average dollar weight of 2.08% across the portfolio.
I am looking to trim positions that exceed 4.0% of our portfolio and they happen to be some of the exact same positions (preferred shares) I trimmed last Friday, plus 2 more (common stock).
This is how I plan to address that;
- ARRPRB – ARMOUR Residential REIT, Inc. Preferred Series B
- June 13th is the next ex-dividend date – position size is 5.10% – currently holding 400 shares – 200 shares will be sold after “capturing” the dividend.
- CLNYPRC – Colony Capital, Inc 7.125% Series C Cumulative Redeemable Perpetual Preferred Stock
- June 28th is the next ex-dividend date – position size is 5.58% – currently holding 400 shares – 200 shares will be sold after “capturing” the dividend.
- CMREPRD – Costamare Inc. 8.75% Series D Cumulative Redeemable Perpetual Preferred Stock
- 2nd week of July should be the next ex-dividend date – position size is 4.69% – currently holding 400 shares – 200 shares will be sold after “capturing” the dividend.
- CNSL – Consolidated Communications Holdings
- July 13th is the next ex-dividend date – position size is 4.28% – currently holding 300.094 shares – 3 covered calls expire October 21st – I will probably sell more covered calls unless the position is called away. Rinse and repeat if necessary.
- PSEC – Prospect Capital Corporation
- June 28th, July 28th, and August 29th are the next ex-dividend dates – position size is 14.84% – currently holding 3,321.056 shares – Trailing stop orders entered to close out the position, but I am expecting a run up to $8.00 per share or higher before that happens so I will just collect the monthly dividend(s) in the interim.
- RSOPRB – Resource Capital Corp. Pfd Ser B
- The end of June should be the next ex-dividend date – position size is 7.11% – currently holding 600 shares – 400 shares will be sold after “capturing” the dividend.
- TOOPRA – Teekay Offshore Partners L.P. 7.25% Series A Redeemable Preferred Units
- The beginning of August should be the next ex-dividend date – position size is 4.42% – currently holding 400 shares – 200 shares will be sold after “capturing” the dividend.
We currently have 48 different holdings; 9 common stock, 6 preferred shares, 6 tax-free closed end funds, and 27 taxable closed end funds.
I have trailing stop orders to close out 4 of the common stock positions, and have sold covered calls against the remaining 5 positions. When/if the calls expire worthless I will either sell more covered calls or close the position(s). If the stock(s) get called away I will not buy any more common stock. At least I have no current plans to do so now or in the foreseeable future.
I have outlined the plans for the preferred shares above, and the only “fly in the ointment” is the merger of CLNY-NSAM-NRF. It will be interesting to see how that plays out. The rich get richer…
The plans for the closed end funds are to acquire more at some point. They are moderately stable at this point, and have reasonable yields.
As always, YMMV!