Adding to Model Portfolios

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We had noted when we had wrote on September 20th that we would update you when we made further moves in the model portfolios.  We made some moves last week and again today.

In the Moderate Duration with Zip Portfolio we added the new issue Gladstone Investment 6.25% term preferred (NASDAQ:GAINM) last week.  Recall we had sold the “Zip” issues from this portfolio capturing very nice gains in Stag Industrial (NYSE:STAG) and Independence Realty Trust (NYSE:IRT).  Additionally our Kayne Anderson term preferred (NYSE:KYN-G) was redeemed. These items left us very under invested as these items generated over $20,000 in proceeds.  We deployed near 1/2 of these proceeds in the Gladstone issue.  This leaves us with a cash balance which we plan to invest in “Zip” issues.  What is a “Zip” issue?  It is either a REIT or MLP issue that gives us a fair yield with the opportunity for some capital gains.  The rules of this portfolio are that we seldom trade, we purchase mainly short/moderate duration issues and lastly we devote 15 or 20% of the portfolio to either REITs or MLPs.  This portfolio garnered a return of over 10% the first year.  The only way we can achieve an out sized gain is to have issues beyond the conservation.

It is our plan to add  Tortoise MLP Fund (NYSE:NTG) as one of our “Zip” issues, but we are waiting a bit longer to see if we can get a better entry point, although the current yield of 8.5% is very tempting.


In the Short/Moderate Duration Portfolio we added the same Gladstone Investment 6.25% term preferred shares. We paid more for the shares than we did in the other portfolio as we had little available cash until we received proceeds from the Kayne Anderson term preferreds  (NYSE:KYN-G) that we also held in this portfolio–we just received these proceeds.  While we paid $25.40/share and we prefer to pay nearer $25 on new issues getting the cash into one of few available issues is more important than getting the perfect price.  This purchase gets us fully invested in this portfolio.  Recall we don’t trade this portfolio and only purchase term preferreds or short/moderate duration baby bonds.  Because of this the returns are more muted, but it is low stress.  Just short of 2 years of age the portfolio has returned a total of 13.12%–about 6.6% annually.

We will communicate further moves as they happen with our logic behind our moves.






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