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Strategies & Market Trends : Coming Financial Collapse Moderated -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (492)	7/10/2001 6:47:50 PM
From: NOW	Respond to of 974

thanks Heinz

To: pater tenebrarum who wrote (492)	7/10/2001 9:25:47 PM
From: chris714	Read Replies (1) \| Respond to of 974

Thank you very much Heinz......I just entered NAT today. I'll be spending some time studying your high-yield list. Thanks for the effort. Chris

To: pater tenebrarum who wrote (492)	7/11/2001 10:41:47 AM
From: ild	Read Replies (1) \| Respond to of 974

RE: high yield Heinz, do you like CEF preferreds? Burke recommended some: #reply-15664968 O.K., that being said, some closed end funds like to use leverage. To get the extra money to invest, they borrow by issuing preferred shares. For some reason, this technique is especially prevalent among the value funds managed by Royce and Gabelli, though General American, a very savvy, large cap growth fund, also has a preferred issue. These preferreds pay set rates, most of them over 7% at a $25 par price. You can find them under symbols on SI with a - behind them, for example: GAM-, GAB-, RVT-, RGL-, GCV-, etc. Several neat things about them. One is, the full assets of the fund back the preferreds, which are usually less than 15% of total capitalization. In other words, most of the funds would have to lose 85% for the preferreds to have any capital risk. And there are forced buyouts if coverage drops. Remember, these are mostly value funds, so an 85% drop is not nearly as likely as in a run and gun tech fund or some other POS fund. Another positive, in practice, most of the payout is long term capital gains, 60% in most cases. That provides a nice tax advantage over bonds. Of course, they don't guarantee that and it is possible that it will change. The negative is that nearly all the preferreds have a $25 par price and most of them have gone over that price during the recent drop in rates. Though I no longer make any investing recommendations, I would be leery about buying something that can be called at a lower price. Unlikely for a call, but possible.