Purchases and Sales in Model Portfolios

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We had mentioned last week we would be making some purchases this week as well as executing a sale in the Blended Income Model Portfolio and we have done so yesterday.


We have purchased full positions in 2 fixed-to-floating rate perpetual preferreds.  We have been, and continue to be, reluctant to purchase perpetual preferreds up until this point, but a continuing stream of fixed-to-floating rate issues has helped us determine that adding a couple issues would be beneficial to our income stream.

We have added 500 shares of Spark Energy F-t-F perpetual preferred with a nice 8.75% initial coupon.  We have also added 500 shares of Chimera Investment fixed-to-floating preferred with an initial 8% coupon.  We were intending to purchase the FTF shares of mREIT Two Harbors (NYSE:TWO), but as we have noted before “when you snooze you lose” and we did just that on all of these issues.  The TWO issue raced higher before purchase and the 2 issues we did purchase could have been bought cheaper, but we wanted to get through the Fed rate hike last week.


Additionally we hope to buy more Independence Realty Trust (NYSE:IRT), but did not do so last week when we could have bought it lower–so we wait.  We are looking for an entry under $9/share.

Lastly we sold our part position in mega triple net lease REIT Realty Income (NYSE:O) today. We held a 7% capital gain so it was a reasonable time to exit.  We had mentioned that we had some concerns about various market segments–1 is the retail/triple net lease REIT segment and the other is the energy segment.  It would seem logical that the retail REIT space will have some amount of trouble growing in the next months and years ahead as the brick and mortar stores continue to hang “going out of business” signs in the window. There are no immediate worries here, but logically with all the bankruptcies (or potential bankruptcies) that are occurring it only makes sense that the pain will trickle down.  Given how conservative we are we simply find no reason to hang around for the fairly meager payout from Realty Income. If we held shopping center REIT shares we would exit, but we hold none.  If we held preferreds in any of these companies we would continue to hold them as the chances of them being affected are very remote at this time.



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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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