Wednesday, March 21, 2012

Reducing Fixed Income Positions

According to plan outlined in my Annual Portfolio Review, I closed two positions today.
Annaly Capital Management (NLY): REIT with a huge dividend, which lately is coming down. Stock price is coming down as well. I think this dynamic is unavoidable. Annaly is an agency mREIT, making money by buying mortgage notes supported by government agencies. mREITs have been able to buy these notes at a big discount during crisis, and used low yields to borrow cheap. Now a lot of mortgages were refinanced or defaulted. mREITs are forced to buy current notes, yielding less and at a smaller discount. Today stock popped because dividend reduction was smaller than expected. Good time to sell.
Helios Multi-Sector High Income Fund (HMH). Last corporate bond closed-end fund I had in my portfolio. Yield became too low (so low that muni CEFs have better yields, taking taxes into account). Besides, stock trades close to net asset value.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I have positions in several muni closed-end funds and in one more mREIT: AGNC. Positions can change any time.

No comments: