Leveraged Income Experiment

[George the original one]

June 2012 results are posted:

https://docs.google.com/spreadsheet/ccc ... y=CMHbguoK

[zazz]

Thanks for doing this experiment George. Interesting stuff.

[George the original one]

Mr. Market granted me more excess liquidity, so I added 100 TICC. Naturally, having committed to a purchase, Mr. Market then dropped the price of TICC...

[George the original one]

Latest results are posted:

https://docs.google.com/spreadsheet/ccc ... y=CMHbguoK
Made use of more excess liquidity this week, so increased stake in BWP to bring the February dividends back up to par. Naturally it was the next day that BWP announced a share dilution and shares dropped 5% or so.
So the question remains of how to best optimize the use of excess liquidity? If you wait for prices to go down, then the liquidity goes away. If you invest it immediately, then the price you pay is usually inflated.

[44deagle]

Nice going so far. I did something similar a couple years ago. Opened a HELOC @ 4.9% and bought HYG which was yielding around 9% at the time. Ended up collecting the spread for a year or so and selling it for a capital gain of around 10%. Looking back I shoulda just kept doing it.
What you're holding should be good for awhile still. Bernanke says rates will be low throughout 2014. Also there are rumors that the FED may buy more MBS's.
Good luck. I look forward to more updates.

[George the original one]

August results posted:

https://docs.google.com/spreadsheet/ccc ... y=CMHbguoK
Right now I'm sitting on excess capital, but it's not enough to buy what I want.

[secretwealth]

I see monthly income fell in May--is this just due to timing of dividends, the result of dividend cuts, or something else?

[George the original one]

@secretwealth - Sold half of the AGNC at that time after tightening the stop loss and redeployed to lower yielding shares. AGNC subsequently recovered -- I achieved more capital gains elsewhere, but lost the income from it.

[George the original one]

Today's market bump after the Fed announcement has allowed me to add 100 OHI. I'm not real happy with the price I paid, but that purchase fleshes out the income to $300+/mo. When I began this experiment, I was going to feel good if I reached $200+/mo, so it looks like a wild success in retrospect.
At this point, apart from any reactions to market moves, I'm going to let the portfolio collect income for awhile.

[George the original one]

Latest results:

https://docs.google.com/spreadsheet/ccc ... y=CMHbguoK
As expected, market went down a bit from when I bought 100 OHI in the middle of the month.

[George the original one]

October found me getting skittish with AGNC when it dropped after going exdividend. I sold, locking in a solid 20% capital gain... hindsight suggests I should have hung on as they've since shown solid numbers.
I've not yet redeployed the excess capital. In theory, until the January dividends roll around, it won't hurt my income to be patient while election turmoil settles down.
The numbers:

https://docs.google.com/spreadsheet/ccc ... y=CMHbguoK

[George the original one]

ARCC handed me a juicy surprise in their dividend declaration... they're handing out an extra $0.05 on top of the expected $0.38 dividend next month.

[secretwealth]

ARCC has a nice yield and strong fundamentals, or so a quick glance at Google Finance tells me. I also like the mez loan business for the next couple of years.
George, would you recommend buying at this price level?

[George the original one]

ARCC is priced a bit high relative to net asset value (NAV) and historical yield. However, the premium may be worthwhile if they continue performing as they have.
OK, to cut through the wishy-washy words, buy a little, but don't go whole hog unless you know it's a bargain. Remember that the dividends are taxed at your marginal rate, like a REIT.

[secretwealth]

I've had a limit order for AGNC for 31.88 for about a month now--damn thing won't fall. I like ARCC's price curve--maybe I will dip a toe in.

[George the original one]

November statement is not ready yet, so you'll just have to bear with some commentary...
November has been a rollercoaster. I still haven't replaced the January income that AGNC represented and couldn't even begin to replace it until today. And my mood today is one of caution. Sovereign debt trouble and continued recessions in European nations and the USA fiscal cliff have me considering pulling back from my riskier investments.
But what would I sell from this portfolio? TICC is an obvious choice, but it won't be ex-dividend until Dec 13, so sometime next week just before it goes ex-dividend will be the opportunity. BWP would be a chance to lock in capital losses for tax season. ADC is on the high end for their history, yet I don't have a lot of it and I like what management is doing. OHI, ARCC,& PNNT are companies for the long haul.
So the only potential moves at this time would be selling TICC and maybe BWP. A little over a week can be spent pondering that decision.
The other question to ask myself is what would take away my unease of the future? A budget deal would be the most likely event to cut my angst for the short term. Increased revenues for the broader market and decreased unemployment would be better news -- an unlikely event by next week. European recessions ending, but that's not going to happen in a week.

[George the original one]

November results and current holdings are available:

https://docs.google.com/spreadsheet/ccc ... y=CMHbguoK
*** For those of you who are interested in dividend

*** growth, note how the portfolio yield-on-cost is

*** now over 20% in only two years.
My angst is increasing and decreasing at the same time. The fiscal cliff political theater offers hope as I believe some honest bargaining has finally begun. Unemployment numbers slowly improve in the ADP report, but Citigroup announces they will lay off 11,000 people. TICC, a stock that should be going up with approaching ex-dividend, has nose-dived... hmm, maybe I should grab another 100 shares instead of selling as a contrary move?

[secretwealth]

I hold TICC--I think the stock is great, it's selling below book value, and it's in a good market IMO. I think the recent fundraising has worried the market, combined with the fiscal cliff, but that'll pass.

[George the original one]

I went ahead and bought 200 TICC. Puts me out of kilter on my monthly income, but, as secretwealth notes, it was selling at about book value.

[jennypenny]

I'm curious how you went from wanting to sell TICC to buying TICC in a month? A month ago it was cheaper.