What are your winners & losers today?

[fenders53]

MO was the daily loser and VSTO the winner. My chip stocks were all down. No portfolio ATH today. Down about .40% overall as most everything down a little today. Doesn't move much on small index moves.

[ken-do-nim]

There are good days, bad days, heavenly days, and days you get your head bashed in. Today lies within the 4th category.

And I think it is very useful to know what stocks are in the green on a day when most everything is red. And with that, I dub RIO the daily winner. Huzzah! The silver medal goes to HII, and the bronze to RA. Also noteworthy is CURE, the only triple in the green.

The biggest loser is surprisingly not a triple, it is my golden boy HRZN. Ex-div day blues I guess.

[fenders53]

Earnings not covering the div so keep an eye on it. That wasn't even close to a typical ex-div drop.

[ken-do-nim]

It certainly was not. Will do.

[fenders53]

(04-19-2021, 04:02 PM)ken-do-nim Wrote: It certainly was not.  Will do.

It's a CEF and their primary business is loan sharking to companies that need financing by any method.  It's also a small CEF.  The bond market is not in turmoil today so it is highly likely one of the following causes....

-they have loaned money that is expected to default soon and not many know it yet. It would only take a couple bad loans in a fund this small.
-somebody big or an insider sold a lot of shares and they were just riding Momo into the ex-div.  Couldn't exit cleanly.
-the dividend significantly exceeds their typical earnings so they are likely playing with options to make ends meet.  Might not have worked out this week. 
-just simple Momo and the gang has moved on to the next target fund/stock.  Maybe it rebounds some tomorrow?

I didn't notice todays volume.  If it's heavy dig for facts.  I have owned CEFs that loan shark but they were much larger funds.  Still get roughed up if the market is bad but that didn't happen today.

[ken-do-nim]

Thanks for the analysis!

On the yahoo board, people are thinking it just ran up too fast and this is profit taking. In fact on Saturday someone said wow the PE ratio is at 47 so it's probably going to fall.

[fenders53]

(04-19-2021, 04:37 PM)ken-do-nim Wrote: Thanks for the analysis!

On the yahoo board, people are thinking it just ran up too fast and this is profit taking.  In fact on Saturday someone said wow the PE ratio is at 47 so it's probably going to fall.

It's not analysis.  It's stuff I actually saw happen on CEFs I owned or was watching lol. 

I like them coming out of a crash.  You can make 30%+ on the shares in a half a year and collect a 10% div.  Get the hell out fast if the bond  and stock market gets rocked.  They get dumped fast.  Even the larger CEF funds that are actually 90% safe get beat up.  You can always get back in a few months later.

[fenders53]

OK this is very basic analysis. This is a BDC (Business Development Corporation). They used to be called Venture Capitalists. There is nothing wrong with that but they are loan sharking to new businesses. Usually private, maybe always because a publicly held company can just sell share in one form or another.

I mentioned Ares Capital, ARCC here a week or two ago. I believe it is the largest BDC. It withstands bad markets but it gets roughed up.

ARCC

-Price to Book 1.15 1.0 PB is fair value so currently ARCC trades at a 15% premium. They don't manufacture anything. It's a bank of sorts so you are paying $115 for $100 worth of assets in exchange for a high dividend. I don't like to pay much over book because I'll get smoked when the market gets scared. Guaranteed.

-Payout ratio 93%.

HRZN

-Price to book 1.58

Payout ratio 335%

See anything alarming? PE is not relevant to a fund like this. These are income machines period. It's an income machine. They harvest income, pay themselves some fees and pass out the dividend. If they want to get larger they likely issue new shares if they can loan it out for premium rates so no harm is done. I sold ARCC recently 15% overvalued is asking for trouble as some point. Most likely a very rough market. If HRZN pulled back 30% it would be close to ARCC PB and they would still have to financially engineer the dividend. There is no comparison between these funds and ARCC dividend is not that much lower actually. I'll buy ARCC again on a hard correction. I've done so several times.

A BDC needs to pass this very basic scrutiny. I don't pretend to know all the accounting. The above can't be a hard fail or you get torched sooner or later. You saw today how fast it can come.

[ken-do-nim]

Makes total sense. I wonder why it shot up so high given it's enormously high payout ratio.

[fenders53]

(04-20-2021, 06:40 AM)ken-do-nim Wrote: Makes total sense.  I wonder why it shot up so high given it's enormously high payout ratio.

Income chasers, sheer momentum?  Probably the latter at this point.  It's hard to know when to sell anything.  That payout ratio doesn't work for long.  They need to find higher yielding loans as old ones are paid off.  Much of the reason they crash is when the market decides conditions have changed and default rates will rise.  If they are not followed by an analyst their required reports are about the only place to see details.  I really don't have the skills to truly understand the quality of their loan portfolio.  I have a few that I buy and it may be awhile before they trade at fair value.  You could just buy and hold the best ones if you don't mind watching three or more years of dividends vanish in capital loss.  The best ones recover if your entry was near a sane valuation.

[ken-do-nim]

Yesterday's villain was today's hero, HRZN.

The biggest loser, after culling HIBL and NAIL, was RETL.

[fenders53]

NIKE got a whuppin. UTEs and Pharma saved the day. Port ip a few hundred. No ATHs since last week. I think it's rigged Ken.