At or near the close I added 50 of AEB at 5.5 as I said I would and I made a small purchase of the closed end fund JQC at around 4.3. The AEB is discussed in a prior blog, and to briefly summarize it is a floater from AEGON. Who trusts insurance companies these days? Anyone? It pays the greater of 4% or .875% over 3 month LIBOR with a $25 par and no maturity. At the guaranteed rate, the yield at a 5.5 cost is 18.18%. If LIBOR stays as it is now or rises, it will be the applicable rate and the yield will rise. That is enough on that one.
JQC is a leveraged closed end fund which I do not like. It can work for or against you. If rates rise, this could hurt and leverage always works both ways. It would have been best recently for example not to buy much of anything with debt. So by using leverage and buying more, the return becomes that much worse. JQC is a balanced fund with a decent stock portfolio but a lot of lower rated debt securities for the bond part which I do not like generally and especially do not like now. I bought it today because it had been decimated, crushed, demolished, whipped, beaten to a pulp, and generally just annihilated. The fund page at Nuveen says it was selling at a 27.8% discount to net asset value. That gives me some room to say the least. The expense ratio is reasonable before you take into account the interest expense. Dividends are paid quarterly in M, J, S and D. JQC - Nuveen Multi-Strategy Income and Growth Fund 2 The yield is around 23% at a 4.3 price but the dividend may certainly be cut. I read everything at the web site about this fund and reviewed its annual and semi-annual reports before making an investment. I did that last night thinking that I might buy today.
In full disclosure, I own shares of JQC AND AEB and will continue to buy additional shares at or below the current price, or even slightly above BUT ONLY FOR JQC. I am full on AEB. This is not a recommendation to buy or to sell. Trade at your own risk, and perform research about this security by reading the prospectus at sec.gov and further studying the financial health of AEGON (symbol AEG at yahoo finance) before making any investment in one of its preferred stock issues. Consult with your financial advisor prior to making any purchase. In this blog, I am merely describing my reasons for purchasing this security and the potential pitfalls that I identified prior to purchase. This security may not be suitable for others based on their unique financial position and risk profile. The reports on JQC can be found at Nuveen investment's web site for closed end funds. Never invest in a closed end fund without first looking at the discount to NAV, its historical discount, the amount of leverage if any and the annual and semi-annual reports. Sometimes S & P or Morningstar reports may also be available for closed end funds.