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Post by Deleted on Jan 24, 2023 1:58:26 GMT
The December info has just appeared, seen in its usual location at www.pimco.com/en-us/investments/closed-end-funds . A few 100+% coverage numbers appear, but just a few. For the funds of interest to me, there are declines in various coverage ratios. How the special distributions in December factored into this, I don't know. edit: elsewhere, there have been discussions of possible internal black-box financial actions that could distort the coverage numbers just a bit, actions possibly unseen and unknown to the public at the time. What I do know, and do take some comfort in, is that the CEF NAV's have been increasing during the past month+ (per CEFConnect). And remember, the CEF market-price is set by investors, not by PIMCO. --- Frank
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Post by richardsok on Jan 24, 2023 2:09:02 GMT
Yeah, I saw it.
PDO & PDI show zero added UNII accumulated but still have previous UNII on the books -- enough to cover distributions for several months. PGP continues to do well.
Nevertheless I will be a PDI seller at the open while I still have gains. I did heavy buying early January. Will take some PDI chips off the table. Six-month rolling coverage still very good, but recent performance looks worrisome. Have marginally more confidence in PDO and PAXS. I use PGP as a purely technical trader.
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Post by johnsmith on Jan 24, 2023 2:46:56 GMT
3 - 10 cent income over 3 months for many taxable CEFs.
JeJe. That's hilarious. Black Box at work. Probably nothing to worry about. I'll check NAV changes over the last month or two to see patterns.
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Post by gman57 on Jan 24, 2023 3:57:47 GMT
I have no problem with this report re: PDO income .1333 -- distribution .1279.
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Post by richardsok on Jan 24, 2023 9:57:50 GMT
I have no problem with this report re: PDO income .1333 -- distribution .1279. Where do you see PDO earned .1333 ?
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Post by marpro on Jan 24, 2023 15:57:01 GMT
On PDI: Recent NAV is going up this year. The drop in NAV in December is due to the special distribution. So, it is understandable. The 50-MA was dropping and has slowed. In fact, it is trending up now. They had more UNII than the December distribution. I assume that PIMCO is redeploying some cash. I recall that the coverage ratio of PCI back in Jan. 2020 (before the pandemic) also went down due to the excessive special in December 2019. But, it came back roaring in June 2021. We have no idea what is in the block box. So, no. I am staying in there.
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Post by gman57 on Jan 24, 2023 17:04:01 GMT
I have no problem with this report re: PDO income .1333 -- distribution .1279. Where do you see PDO earned .1333 ? As of 12/31 -- estimated fiscal ytd NII = .80 Fiscal Year 6/30 so to 12/31 is 6 months .80/6 == .133333. I know it's estimated. Am I looking at that wrong?
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Post by richardsok on Jan 24, 2023 17:23:17 GMT
Where do you see PDO earned .1333 ? As of 12/31 -- estimated fiscal ytd NII = .80 Fiscal Year 6/30 so to 12/31 is 6 months .80/6 == .133333. I know it's estimated. Am I looking at that wrong? No doubt my own vision is flawed, but my understanding is that most (all?) of that 80 cents was earned in the EARLY months of that 6-month period when coverage was robust. Coverage has dropped sharply since. I note with some concern that UNII has not been growing recently. What I also don't know is how much of that 80 cents earned earlier in the year was paid out in the December special distribution. Some? Most? All of it? PDI remains leveraged, of course, and serving that debt with higher interest rates will be a headwind to work against. Also, how much cash on hand remains to make up for the current coverage shortfalls? That last question is particularly germane, IMO b/c that is what will be used to maintain the dividend until Pimco can take steps to increase PDI income from operations. Please do not think I am trying to persuade you over to my thinking -- I am merely expressing my concerns as a reason why I did a big sale this morning and, like you, I invite insight.
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Post by Deleted on Jan 24, 2023 18:08:07 GMT
The last column on the latest UNII report states that PDO distribution coverage from beginning of its fiscal year to the end of Dec. is 46.40%. CC warned that the Dec. report would be a doozy.
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Post by marpro on Jan 24, 2023 20:31:09 GMT
I thought of buying a few hundred shares of PDI, expecting that there will be a big sale below $20/sh. I am still waiting. It has not happened. Oh, well. Another day.
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Post by Fearchar on Jan 24, 2023 23:55:11 GMT
The 3 month rolling coverage ratios are terrible. 8.68% for PTY; Wow! PIMCO Muni CEFs actually looked better just before their cuts.
PGP and PCM have the best chance of not being cut based on coverage ratio's.
PAXS and PDO trade at near NAV, which could end up as the floor. But notice too that PCK and PNI are trading at ~6% below NAV. So, that could be rock bottom.
Lower leverage costs are on the way, but that will be much too late.
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Post by Fearchar on Jan 25, 2023 0:06:06 GMT
and screenshots from spreadsheet:
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Post by marpro on Jan 25, 2023 0:29:09 GMT
Your plots in the second attachment (plots) shows the money has plunged. What happened? They did not eat it away. I assume that they have moved to buy cheaper ones they can find. That is exactly the reason I am not worried. They will show up later this year.
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Post by Fearchar on Jan 25, 2023 0:59:41 GMT
There were special (extra) distributions in December which naturally reduced UNII more than typical.
What's telling are the UNII declines in November, when there were just the normal distributions.
So, not much of a cushion is left and 3month rolling coverage is low for most funds. Hence, my suggestion that NAV may serve as a loose floor. Not a guarantee though as these funds can trade 5-7% below NAV for extended periods of time.
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Post by marpro on Jan 25, 2023 1:28:25 GMT
There were special (extra) distributions in December which naturally reduced UNII more than typical. What's telling are the UNII declines in November, when there were just the normal distributions. So, not much of a cushion is left and 3month rolling coverage is low for most funds. Hence, my suggestion that NAV may serve as a loose floor. Not a guarantee though as these funds can trade 5-7% below NAV for extended periods of time.
Yes, indeed true. I have bought PCI with 5-10% discount. During the pandemic, I gobbled up the PCI shares at 25-30% discount too. That is the primary reason why my current paper loss of 10% is not indeed a loss, while I'm gobbling up cash every month, as steelpony10 used to say. Besides, it is a good time to reinvest the distributions too.
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Post by Chahta on Jan 25, 2023 19:02:28 GMT
Please help me understand a little more about UNII. Undistributed Net Investment Income apparently is important for future distributions. Why is it so important for CEFs? I assume they are bringing income in each month. Is that amount not exactly related to the amount they can actually afford to distribute? I would assume UNII is built up from excess interest collected or CGs from sales.
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Post by gman57 on Jan 25, 2023 19:14:24 GMT
Please help me understand a little more about UNII. Undistributed Net Investment Income apparently is important for future distributions. Why is it so important for CEFs? I assume they are bringing income in each month. Is that amount not exactly related to the amount they can actually afford to distribute? I would assume UNII is built up from excess interest collected or CGs from sales. Heh.... good luck with that. I'm not sure any of us really understand how it builds, where is all comes from, how it's doled out, how derivatives and swaps affect it etc... etc... etc... It really is inside the black box. Hopefully someone has a better understanding.... I sure don't.
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Post by marpro on Jan 25, 2023 19:39:28 GMT
Please help me understand a little more about UNII. Undistributed Net Investment Income apparently is important for future distributions. Why is it so important for CEFs? I assume they are bringing income in each month. Is that amount not exactly related to the amount they can actually afford to distribute? I would assume UNII is built up from excess interest collected or CGs from sales. Gary, UNII is the excess income built by the CEF, as you said. The law says that a CEF must distribute 90% of the income in any year. So, the managers can decide to distribute the part of the UNII as special in November/December time period before the end of the year. In fact, PDI distributed part of the UNII, not all. I understand that PIMCO managers can move the UNII or part of the UNII to increase the NAV. That is what seems to be going on here. In fact, PCI distributed more than the UNII back in December 2019 because the managers might have predicted to recover the small excess amount in the next few months. But then, the pandemic hit. That is another story.
That is my understanding, not necessarily complete. Perhaps, there are others who can explain better. But, I do believe that PDI has moved a part of the UNII to increase the NAV, as it has happened recently. I have full confidence in the PIMCO's managers based on my experience since about July/August 2017, when I started gobbling up PCI shares when they went on sale at a discount of 10%. I only care about UNII and the coverage ratio. Sometimes, the coverage ratio is less than 100%,and they go on sale at a discount because some traders dump them. If I am investor, that is the time to buy more, not sell. I did that during the pandemic time and bought the shares of PCI at 25-30% discount. But it has roaring back within a few months, as it happened back in 2020/2021. So, I never worry about anything, but keep adding more shares whenever I can.
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Post by Deleted on Jan 25, 2023 20:07:25 GMT
Please help me understand a little more about UNII. Undistributed Net Investment Income apparently is important for future distributions. Why is it so important for CEFs? I assume they are bringing income in each month. Is that amount not exactly related to the amount they can actually afford to distribute? I would assume UNII is built up from excess interest collected or CGs from sales. Footnote 1 on the December Report has helpful information. Basically, a low or negative UNII may lead to a distribution change, such as ROC. Investors worry about the possibility of distributions being cut.
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Post by Fearchar on Jan 25, 2023 23:46:17 GMT
Please help me understand a little more about UNII. Undistributed Net Investment Income apparently is important for future distributions. Why is it so important for CEFs? I assume they are bringing income in each month. Is that amount not exactly related to the amount they can actually afford to distribute? I would assume UNII is built up from excess interest collected or CGs from sales. Footnote 1 on the December Report has helpful information. Basically, a low or negative UNII may lead to a distribution change, such as ROC. Investors worry about the possibility of distributions being cut. Yes; that's basically where I'm at. December is not a standard month, so it's more difficult to interpret. However, Delta UNII was negative for both October and November. A single negative month could be due to short term issue. But coverage ratio's fell. So, I'm very concerned. Maybe they will turn it around, but unless they have planned extraordinarily well, leverage cost will eat them up.
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Post by marpro on Jan 26, 2023 0:26:14 GMT
"leverage cost will eat them up."
Yes, and I agree that it could for 6 months until FED is done with its job. Is it what happened during the pandemic too? Until then, that is the time I want to buy more. But, I have a full plate. So, except for reinvestment until FED is done, I am staying still – no move either way. I will go with history rather than assumptions.
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Post by Chahta on Jan 26, 2023 0:57:05 GMT
So NII includes income less leverage costs and I would assume management fees?
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Post by Fearchar on Jan 26, 2023 0:59:23 GMT
"leverage cost will eat them up." Yes, and I agree that it could for 6 months until FED is done with its job. Is it what happened during the pandemic too? Until then, that is the time I want to buy more. But, I have a full plate. So, except for reinvestment until FED is done, I am staying still – no move either way. I will go with history rather than assumptions. No, I don't think so. During the pandemic there was lots of fear of a recession, with little reason to expect the FED to start buying as much as they did while lowering interest rates for as long as they did. The FED's actions during the Pandemic were extraordinary. Also, there is still a good amount of Pandemic money sloshing around. State/County Governments have not spent all of their stimulus money.
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Post by marpro on Jan 26, 2023 1:12:08 GMT
So NII includes income less leverage costs and I would assume management fees? I also think so. Besides, in my opinion, interest hike increases the NII too, and so, it is a “two-edged” sword. That is exactly the reason, I also think that NII will increase and not decrease. In any case, I am not going with assumptions and guesses. I am staying put.
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Post by Chahta on Jan 26, 2023 1:54:52 GMT
Yields are what they are. PIMCO has a good name to protect. I would assume they know how to run their funds to keep customers.
From the PIMCO link above for PTY: $0.13 (UNII) $0.05 (3 month income avg,) $0.118800 (monthly dist.)
If PTY brings in .05/month then .1188 -.05 = .0688 per month short. Does the .13 UNII make up the difference?
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Post by Deleted on Jan 26, 2023 14:45:24 GMT
So NII includes income less leverage costs and I would assume management fees? The term net means after expenses, so I would assume that is how NII is being stated. It is the interplay between NII and UNII which is important, and I trust PIMCO to manage that aspect. On the matter of leverage, I like it being used in income producing funds and why I own individual CEFs and selected OEFs.
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Post by marpro on Jan 26, 2023 16:19:29 GMT
If you look at the recent Price Momentum for XPDIX, you will see that it is positive with a positive slope – increasing. Also, look at the cash flow index of the daily chart. It is booming because people must be buying big time. Of course, traders can cash their gain because the MACD seems to be leveling, but there is no reason for an investor for income to cash out because you will miss out the distributions and could result in not being able to buy at a lower price. stockcharts.com/freecharts/gallery.html?PDI
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Post by uncleharley on Jan 26, 2023 16:44:21 GMT
If you look at the recent Price Momentum for XPDIX, you will see that it is positive with a positive slope – increasing. Also, look at the cash flow index of the daily chart. It is booming because people must be buying big time. Of course, traders can cash their gain because the MACD seems to be leveling, but there is no reason for an investor for income to cash out because you will miss out the distributions and could result in not being able to buy at a lower price. stockcharts.com/freecharts/gallery.html?PDII see the 50/200 dma's sloping up to make a golden cross on the daily chart today or tomorrow.
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Post by marpro on Jan 26, 2023 17:00:37 GMT
If you look at the recent Price Momentum for XPDIX, you will see that it is positive with a positive slope – increasing. Also, look at the cash flow index of the daily chart. It is booming because people must be buying big time. Of course, traders can cash their gain because the MACD seems to be leveling, but there is no reason for an investor for income to cash out because you will miss out the distributions and could result in not being able to buy at a lower price. stockcharts.com/freecharts/gallery.html?PDII see the 50/200 dma's sloping up to make a golden cross on the daily chart today or tomorrow.
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Post by johnsmith on Jan 26, 2023 19:11:47 GMT
Looking at NAV of PDI from Nov 2022 to today
Nov 9 NAV - 18.32 Nov 10 Ex Date - 18.30 So in that one day, after distribution of 0.2205 (NAV fell only 2 cents, NAV went up by 20 cents in that one day(most likely bond values increased due to falling interest rates))
Dec 8 NAV - 18.69 (so between Nov - Dec they earned increased NAV by 39 cents (part income + increase in bond values)) Dec 9 Ex Date - 18.47 (fall of 22 cents - perfect) Dec 13 NAV - 18.57 (increase of 10 cents - from income + bond value rising over 4 days) Dec 14 Ex Date - 17.94 (special dividend of 65 cents) (NAV increased by 2 cents as the fall in NAV is less than special dividend)
Dec 15 NAV - 17.93 Jan 11 NAV - 18.08 (increased NAV by 15 cents over 27 days possible income + bond value increases) Jan 12 Ex-Div - 17.98 (falls 10 cents after distributions of 22 cents)
Jan 13 NAV - 17.98 Jan 25 NAV - 18.15 (NAV rises by 17 cents over 12 days)
Between Nov 9th - Jan 25th NAV has gone from 18.32 to 18.15
a fall of 17 cents after distributions of 2 regular dividends + 1 special total = $1.09 approx.
That looks like a heck of a lot of bond value rising + income coming in. I can't readily decompose the two portions of the NAV.
anyone else know how to decompose the rise in NAV between income + bond value increases?
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Another way to look at PDI might be: (12 * .2205 ) + 65 cents Special Distribution = $3.296 in income and cap gains from bonds. Average of 27 cents per month.
If the NII (last 3 months Oct - Dec 22) says - 9 cents a month Then they earned $3.02 in the first 9 months or 33 cents a month.
Are PIMCO managers going to suddenly go from earning 33 cents each in the first 9 months to 9 cents in the last 3 months of the year? Highly Unlikely!
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