CEF Holdings --- June 2026

COcheesehead said:
But wait we’re all income investors and we shouldn’t worry about the underlying value of the asset as long as we keep getting our dividend. :horse::devilish:
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talk about off-topic
you still have no clue what's going on here even though you have a ton of money to play w/

That was an unkind comment on my part.
No one in this thread is saying that's how they invest.
At no time have I ever written that as long as I keep getting my distribution (not dividend) am I ever satisfied.
I have always written: you gotta SELL when it is EXTENDED. I wrote that and you basically gave a that comment a thumbs down. I made a mental mark of that: he's gonna be sorry--- But you were so exuberant that there was nothing more to say.
But----how you read posts is projection on your part. You see what you want to see as a result of your experience. Eventually you'll get over your sarcasm and move on to a broader understanding what happened.
We all read posts w/ some amount of inner projection and then we comment on the stuff we have just projected. The whole thing, the entire story, is smoke and mirrors. nothing else to do but find a way to live w/ it
Your post says to my heart: you are still very upset w/ yourself. Stop beating yourself over losing a bit of money.
Now if you are trying to be helpful and wake up folks to the danger of staying invested in bond-ish cefs, that was not a nice way to help those folks.
 
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marget said:
talk about off-topic
you still have no clue what's going on here even though you have a ton of money to play w/
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If you follow the thread like I do, my statement is so on point,
 
COcheesehead said:
But wait we’re all income investors and we shouldn’t worry about the underlying value of the asset as long as we keep getting our dividend. :horse::devilish:
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Getting the regular dividend is the underlying value.

ANYWAY, speaking of CEFs:

Depending on portfolios and convictions, there are some decent "deals" out there on quality CEFs right now if you want to buy at discounts. UTG is back to a rather substantial discount for its recent history. STK has lost its large premium, and it's a fund that has a total return on NAV of over 100% this last year. NXG just raised its distribution and is still at a discount coming off a rights offerings. ADX is coming close to returning to its average discount. GAM remains relatively cheap. BST remains absurdly cheap.

Those are some of the higher quality equity names if you are so inclined.
 
BuckeyesRC said:
Getting the regular dividend is the underlying value.

ANYWAY, speaking of CEFs:

Depending on portfolios and convictions, there are some decent "deals" out there on quality CEFs right now if you want to buy at discounts. UTG is back to a rather substantial discount for its recent history. STK has lost its large premium, and it's a fund that has a total return on NAV of over 100% this last year. NXG just raised its distribution and is still at a discount coming off a rights offerings. ADX is coming close to returning to its average discount. GAM remains relatively cheap. BST remains absurdly cheap.

Those are some of the higher quality equity names if you are so inclined.
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I picked up a starter position in NXG last week, added to BDJ today and last week.
 
COcheesehead said:
That is exactly my point. Repeated often on here by many. All the concern about market price should not be a concern, right?
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I know! Income investing as I see it is about compounding income-producing shares. Metrics like payment reliability, diversification, and relative valuations outweigh the bare market price for me. That's not a popular take, I suppose, but as far as I can tell, it works just fine for the objective of securing income streams.
 
richardsok said:
Fleiger --- It's been on my mind too. I don't mind PDI bumping a couple of pennies now that we're within spitting distance of recent lows and essentially flat here. I worry about breaking through 16.50 or so as well as broad interest rates. This morning I asked claude.ai the following question. "If the ten-year treasury rate were to climb to 5%, how would Pimco PDI be affected?"

I got an interesting response which I have excerpted below. Sorry for the length. I tightened it AMAP but think it's worth reading:

------------------------------.



NAV Pressure — Moderate, Not Catastrophic​

The ... mitigating factor here is PDI's relatively short effective duration. The fund's effective duration has been running around 2.63years, …...​



However, it's not zero risk. PDI holds significantcredit-sensitive assets — corporate bonds, non-agency MBS, and securitized debt — and a rate spike to 5% would almost certainly be accompanied by credit spread widening, adding NAV headwind …..


Leverage Costs....​


This is where things get ... complicated. PDI funds roughly 31–35%of its assets through reverse repurchase agreement leverage, makingthe fund highly sensitive to financing costs. As of mid-2025, PDI wasalready paying a weighted average interest rate cost of about 5.62%on its reverse repo leverage. ...

If the 10-year pushes to 5%, short-term repo rates ... may notmove in lockstep — but the cost of carry on new repos would remainelevated. The key question is whether portfolio income still exceedsborrowing costs. NII was covering only about 74% of the dividend asof late 2025, with return of capital supporting the remainder —meaning the fund was already in a somewhat fragile NII position evenbefore any additional rate stress.

3. Premium Compression …..​

PDI has been trading at a premium above 10% to NAV, even as NAV ….eroding. A rate spike to 5% would likely compress that premium …. —the fund could move toward NAV... That's a double hit: NAV falls andthe premium shrinks, meaning the market price could dropdisproportionately relative to NAV.


4. Dividend Sustainability — Under Stress butUnlikely to Cut Immediately​

PIMCO has historically defended the ... distribution even throughadverse periods, often by leaning on return of capital. That said, ifthe fund's interest coverage dips below 1.0x, distributions mightneed to be cut to prioritize debt service — and with NII alreadycovering only ~74% of the dividend, further spread widening orborrowing cost increases would narrow that buffer further.

Some Natural Hedges.....​

PDI holds ….. floating-rate and shorter-duration instruments. T he portfolio spans corporate debt, MBS, securitized assets, Treasuries, and repo agreements, and PIMCO actively manages duration. PIMCO has previously used rate sell-offs to increase overall interest rate exposure opportunistically, while staying underweight duration vs. passive alternatives — suggesting ….. position defensively..... if rates moved sharply higher.

PDI is meaningfully less rate-sensitive than something like PCN or PTY given its shorter duration, but the combination of high leverage, existing NII shortfall, and a rich premium makes it more vulnerable to a 5% scenario than the duration number alone suggests.......
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Well Claude is getting better, but of course there is no nuance because it's a mechanical scraper and summarizer. PIMCO tends to use multi-month repo financing, so there's always a lag behind SOFR. At 3/31, repo financing was primarily low to mid-4%s. PDI holds A LOT of floating rate products and I believe some curve steepeners. But all this is blackboard smart stuff --- retail investors make prices move, and capturing THEIR fear level is critical.
Regards, Dick
 
Sold my discounted GOF DRIP early in the day. Just adding to cash. Otherwise, staying the course.
 
dickoncapecod said:
I'm back down to about 20% cash.....think I'll stay here and see how folks react to the (frankly no surprise) 4.2-ish% CPI. The talking heads will gum it to death waiting for Thurs open of SpaceY and 10yr note auction.
Regards, Dick
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I have a hard time keeping up with the in and out….

Flieger
 
I was curious to see how much the high yield bonds index (HYG) returns factors in the PDI returns.
Here are the results (see chart below). This is a scatter plot, HYG monthly % returns on X, PDI monthly % returns on Y.
Here is what is says:
1. They are very strongly correlated, with a correlation coefficient of 0.89. That is, almost perfectly correlated. See the straight regression line.
2. The beta (i.e the slope of the regression line) is 1.81. That is, for every +-1% return for HYG, PDI returns almost double, up or down, +-1.81%. Here is the regression chart:

1781035026188.png


Now, with this info, look at the unadjusted charts of PDI price (red) PDI NAV (blue) and HYG (green).
What I see is that the main contribution to the apparent NAV erosion is actually a decline in HY bonds price index since PDI inception. Since 2013, HY bonds index has been on a trend down, and so was the PDI NAV as it correlates so closely to the index:

1781035531334.png


However, if you re-invested the dividends, the story changes dramatically. These are TR (ie. dividend adjusted) charts of the same actors. Look at the relative performance of PDI NAV (blue) vs PDI price (red) as well. Also, based on current charts of PDI NAV and HYG (its main driver factor as per the regression chart above), I judge them as a small correction in a solid uptrend. While the wild volatility of the price around teh NAV is just the irrational fear/exuberance of retail:

1781036066192.png
 
dickoncapecod said:
You missed interim posts somewhere....and what I do fits very few investors here.
Regards, Dick
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This is perfect for my needs. When I see Dick moving in and out with short period of time I have my yellow flags up. I remember moons ago when Dick was very bullish over many months, he would say something like these CEFs are bargains I may never see again up until they plant me. Is that even still possible again, Dick?
 
PaulR888 said:
This is perfect for my needs. When I see Dick moving in and out with short period of time I have my yellow flags up. I remember moons ago when Dick was very bullish over many months, he would say something like these CEFs are bargains I may never see again up until they plant me. Is that even still possible again, Dick?
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It's complex and depends on the investor's objective. Folks who want to buy CEFs so they can sell them at higher prices are obviously very sensitive to prices, and I'm not certain we've seen the low prices. For me ---- an income investor, I think we're In a yield range where one CAN buy (say) PDI and put it away for the long run. Whether I buy it to yield 15.5% or 16% is not really important in the big picture. One can even imagine the unlikely event of a distribution cut. What happens? The yield for new purchases falls to what 14% 13%? AND instead of spitting 22c, it spits (say) 20c and all else equal the NAV grows an extra 2c / mo.

Why am I trading so much? I was concerned by the steepening of Fed funds and SOFR curves, also reflected in the 1 to 2 year section of the Treasury curve. If the narrative really turned to one envisioning multiple policy rate hikes, we might suffer serious drawdowns in CEF, bond and equity holdings. In the mid-17's I worried I worried we'd fall to around former lows where we are now. I saved some money being out at 17+ and back in around 16+. I'm waiting to see if the obvious and expected inflation number tomorrow panics folks who choose not to pay attention.

I firmly believe --- in fact I KNOW --- that drawdowns/mark losses echo forever in my future returns, so when I think I can risk imagined upside to avoid drawdowns I do. Pretend story: suppose an investor was seriously worried about a dive of unknown proportion. He sold at around 17.40, felt the bottom was in and bought back at around 16,75, changed his mind and sold at 16.80, then bought MOST again today at about 16.65. Pretend he did that with 35,000 shares. His net drawdown avoidance would be about 80c or $28,000 --- worth a lot across the combined investment horizons --- probably 30-50 years ---of the investors and heirs. Just do a reinvested bond expansion at 10% over 40 years.
Regards, Dick
 
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dickoncapecod said:
It's complex and depends on the investor's objective. Folks who want to buy CEFs so they can sell them at higher prices are obviously very sensitive to prices, and I'm not certain we've seen the low prices. For me ---- an income investor, I think we're In a yield range where one CAN buy (say) PDI and put it away for the long run. Whether I buy it to yield 15.5% or 16% is not really important in the big picture. One can even imagine the unlikely event of a distribution cut. What happens? The yield for new purchases falls to what 14% 13%? AND instead of spitting 22c, it spits (say) 20c and all else equal the NAV grows an extra 2c / mo.

Why am I trading so much? I was concerned by the steepening of Fed funds and SOFR curves, also reflected in the 1 to 2 year section of the Treasury curve. If the narrative really turned to one envisioning multiple policy rate hikes, we might suffer serious drawdowns in CEF, bond and equity holdings. In the mid-17's I worried I worried we'd fall to around former lows where we are now. I saved some money being out at 17+ and back in around 16+. I'm waiting to see if the obvious and expected inflation number tomorrow panics folks who choose not to pay attention.

I firmly believe --- in fact I KNOW --- that drawdowns/mark losses echo forever in my future returns, so when I think I can risk imagined upside to avoid drawdowns I do. Pretend story: suppose an investor was seriously worried about a dive of unknown proportion. He sold at around 17.40, felt the bottom was in and bought back at around 16,75, changed his mind and sold at 16.80, then bought MOST again today at about 16.65. Pretend he did that with 35,000 shares. His net drawdown avoidance would be about 80c or $28,000 --- worth a lot across the combined investment horizons --- probably 30-50 years ---of the investors and heirs. Just do a reinvested bond expansion at 10% over 40 years.
Regards, Dick
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Thank you Dick. I'm in the camp that doesn't think you owe any of us here any explanations for why or what you do at any time but you give generously with your knowledge anyway. Good man. I've learned much w/o paying a cent. And you're right, we all have different portfolios and sizes and we need to handle them the way we see fit instead of crying or complaining that Dick didn't warn us or tell us what to do.
 
Hi Dick ... first of all, thanks for taking the time to share your thoughts with complete transparency and explanation. I like following you because you know an awful lot about the subject matter if something concerns you about a potential drawdown, I want to be aware because of the ripple effect beyond my smaller CEF but also to my larger equity holdings. Btw, I listened to a "Gundlach Unlocked" webcast today and he said his firm is expecting a 4% May CPI tomorrow but acknowledges others are taking the under on that.
 
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