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Post by Deleted on Sept 30, 2022 15:41:38 GMT
PAXS up 5.79% this morning.
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Post by johnsmith on Oct 3, 2022 13:00:53 GMT
PDO and PDI are hitting all-time lows today. I just don’t see why anybody needs to wade into charts as ugly as this. Discounts are nowhere near where they should be. Which means these gargoyles might have quite a way further to fall before they get into the 10-15% discount range. PTY hasn’t broken through its June 2009 low, but it’s getting close. PDI and PTY are still trading at premiums! I guess it shouldn’t come as a surprise that some people enjoy paying money to be spanked.
Getting spanked can be so much fun!
LOL.
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Post by johnsmith on Oct 3, 2022 13:04:51 GMT
I submit that posters who are focusing on just the "premium or discount" should consider that the NAV price of CEFs does not have an easy way to reflect all hidden values in a fund. Two examples: --The UNNI cash earned buildup that results in a special year end dividend/distribution. I point out that even a new fund, PDO, surprisingly paid a special year end extra distribution last year. --Facts such as the extreme discounts on mortgage backed securities. When these mortgages are paid off, the homeowner gets no discount...they are paid off in full; thus large cap gains from current market prices. Further, with home prices so far advanced upward, few homeowners will ever default on their mortgage. So credit quality improved without doing anything. R48 retiredat48,
I agree with you about MBS. I read the same thing that the mortgages have way better stats (FICO scores of 760, more money down etc - we shouldn't have problems in that market & banks like we did in 2008-09). That begs the question - what will blow up this time around?
UNNI should be reflected in the NAV. When a special year end distribution is paid out, NAV should fall by a similar amount.
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Post by ECE Prof on Oct 3, 2022 15:03:53 GMT
I never understood the logic behind the "experts" of SA when they bring about the leverage ratio and say that it would hurt the price of PIMCO CEFs. The price is determined by the investors, who even pay high premium to get the yield. Besides, they are making a lot more than the payout, as evidenced by the UNII numbers. So, if a bond fund makes good money and pays handsomely, where is the risk? A few days later, the same guys change their tune and never discuss the new reason for the reason. If the interest rate increases, the fund should also make more money than before. That is why I never buy the clickbaits of SA "experts," who are mainly traders. They scare you so that you would sell at the very lower prices, and they can scoop those shares cheap. They would turn around and sell the same at higher prices to make a profit and fill their pockets.
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Post by johnsmith on Oct 3, 2022 17:16:47 GMT
I never understood the logic behind the "experts" of SA when they bring about the leverage ratio and say that it would hurt the price of PIMCO CEFs. The price is determined by the investors, who even pay high premium to get the yield. Besides, they are making a lot more than the payout, as evidenced by the UNII numbers. So, if a bond fund makes good money and pays handsomely, where is the risk? A few days later, the same guys change their tune and never discuss the new reason for the reason. If the interest rate increases, the fund should also make more money than before. That is why I never buy the clickbaits of SA "experts," who are mainly traders. They scare you so that you would sell at the very lower prices, and they can scoop those shares cheap. They would turn around and sell the same at higher prices to make a profit and fill their pockets. The leverage ratio is good to know for 2 reasons - in the event they have to deleverage, the CEF may have a possible permanent loss to NAV.
a permanent loss in NAV could mean lower earning power in the future. I think PTY has reduced it's distributions in the past.
During 2008-2009, some PIMCO CEFs did have to deleverage and they did end up having a permanent loss of NAV and earnings power,
- it's good to know what you are buying.
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Post by ECE Prof on Oct 3, 2022 18:26:47 GMT
I never understood the logic behind the "experts" of SA when they bring about the leverage ratio and say that it would hurt the price of PIMCO CEFs. The price is determined by the investors, who even pay high premium to get the yield. Besides, they are making a lot more than the payout, as evidenced by the UNII numbers. So, if a bond fund makes good money and pays handsomely, where is the risk? A few days later, the same guys change their tune and never discuss the new reason for the reason. If the interest rate increases, the fund should also make more money than before. That is why I never buy the clickbaits of SA "experts," who are mainly traders. They scare you so that you would sell at the very lower prices, and they can scoop those shares cheap. They would turn around and sell the same at higher prices to make a profit and fill their pockets. The leverage ratio is good to know for 2 reasons - in the event they have to deleverage, the CEF may have a possible permanent loss to NAV.
a permanent loss in NAV could mean lower earning power in the future. I think PTY has reduced it's distributions in the past.
During 2008-2009, some PIMCO CEFs did have to deleverage and they did end up having a permanent loss of NAV and earnings power,
- it's good to know what you are buying.
I agree. There were defaults then in 2008 (Lehman and others), and it did happen. Now, it is due to interest rate hike. When the interest goes up, the earnings go up too, as it is evident by the UNII numbers. We are talking about apples and oranges, and there is no connection between these situations.
I do not go by their round-about statements to justify their arguments. I only go by the math, and their math is screwed up math. Dollars and cents add up here, and therefore, the leverage effect (OPM) has more earnings power when the interest rate goes up.
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Post by habsui on Oct 3, 2022 18:49:12 GMT
The leverage ratio is good to know for 2 reasons - in the event they have to deleverage, the CEF may have a possible permanent loss to NAV.
a permanent loss in NAV could mean lower earning power in the future. I think PTY has reduced it's distributions in the past.
During 2008-2009, some PIMCO CEFs did have to deleverage and they did end up having a permanent loss of NAV and earnings power,
- it's good to know what you are buying.
I agree. There were defaults then in 2008 (Lehman and others), and it did happen. Now, it is due to interest rate hike. When the interest goes up, the earnings go up too, as it is evident by the UNII numbers. We are talking about apples and oranges, and there is no connection between these situations.
I do not go by their round-about statements to justify their arguments. I only go by the math, and their math is screwed up math. Dollars and cents add up here, and therefore, the leverage effect (OPM) has more earnings power when the interest rate goes up.
Not exactly. CEFs pay more than the underlying assets are yielding due to leverage. While the yield is going up, the leverage costs are also increasing. The concern is that the increased leverage costs no longer allow to pay out the same additional %.
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Post by ECE Prof on Oct 3, 2022 20:30:54 GMT
habsui "CEFs pay more than the underlying assets are yielding due to leverage. " Exactly. Thanks for pointing out. It makes even more money with OPM. I love to make more money with OPM. I do it all the time using my HELOC with low interest. In fact, when the price of PDI fell below $19/sh, I could have done it, but it would be in my taxable account. It is not worth the hassle. So, I did not want to do it last Wednesday or Thursday. A proper use of OPM is fine, but getting into rough weather, with margins and margin calls, is not a good idea.
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