Re: I used to own PDI and have a few concerns
1. I don’t consider premiums/discounts in CEF buying decisions. I buy based on price and direction determined by macro trends. In this case, with interest rates dropping, PDI can do well. Cost of leverage will drop. Underlying assets, NAV, will gain value. I expect the share price to follow, the yield to consequently decline, with an increase in the distribution possible but not likely. I don’t think it’s changed in the last 10 years despite ominous predictions by SA analysts. That’s a solid performance by PIMCO in trying times. Great management team.
2. PDI is sensitive to interest rates. The decline aligns with rising rates. Now that they are dropping, I expect the price to recover. Same as other interest rate sensitive funds and bonds. Buy low, sell high. Good opportunities abound in the CEF marketplace. Despite the premium, the price is depressed as you point out. It’s so strange to me that you see a 10-year low price, but concern yourself with this premium concept. I see the same decadal bargain price, with a catalyst to turn it around, and I want to own it.
3. Overall, I don’t need PDI to succeed, though I do admire PIMCO’s stewardship through the post-Covid inflationary cycle. I own a small position. I like the return, which was as hard to believe in 2022 when I bought my first shares as it is now. Manage your risk. Buy small, or don’t buy any at all. I bought a little. It’s a fund that punches above its weight. |
