Continuing Our Slow Harvest of Profits

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This week we have continued to harvest some of our profits in the Blended Income Portfolio which we had written about last week.

On Wednesday we sold our holdings in Gladstone Capital 6.75% term preferred stock (NASDAQ:GLADO).  While there is nothing fundamentally wrong with Gladstone it simply was time to take a nice profit.  We had purchased 400 shares of this issue in mid January during the last market panic at a purchase price of $20.90/share and we sold it for $24.89/share. It is reasonable after collecting a few monthly dividend payments to book this 20% gain.  We hold 3 other Gladstone family issues so there is more than adequate exposure to the group.

Today we sold our Realty Income shares (NYSE:O) which were purchased last September when the share price was very depressed.  Our purchase price was $43.42 and we sold our 100 shares for $59.42 which gives us a 37% profit not including the 7 dividends collected.  We have no fundamental reason to not like Realty Income, in fact it is our favorite REIT, but has become fully valued in our opinion.


 With the above sales we move our cash position to almost 14.75% which is getting us closer to our short term target of 20%.  We likely will sell the balance of our Ashford Hospitality Trust 8.45% preferred stock (NYSE:AHT-D) next week, prior to their earnings release. We are really in no rush to unload these, but with the poor GDP numbers released this morning, we are better off letting it go as a slowing economy can do real damage to a poorly managed REIT.

With the above actions we will have the cash cushion we would like to have available for new “opportunities” which may present themselves.  We are hopeful that some bargains can be found in the next 30 days as holding this much cash is detrimental to our portfolio performance.  Certainly at this moment there are few bargains to be found in preferred stocks and exchange traded debt issues as the scramble for yield has driven prices too high on a risk/reward basis.  When CCC (very low rated junk) rated issues climb toward par you know that share prices have been driven too high.


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Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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