investingfromtheright

I am retired and take educated guesses on all things financial.

March 24, 2008

March 25, 2008: In Your Face Yields

Not for the faint of heart, in the land of high yield there are some pickings worth taking a look at to juice up your portfolio return. Before the snipers of finance target me for a burst of incoming, I admit that these issues are highly speculative. Most are not secured by a lot of assets, if any. Some, like the Canadian Energy Trusts, face an uncertain taxable future. Many can be described in terms that stretch even an "R" rating.

In markets we are witnessing worldwide, I submit that many seemingly safe investment bets made during the present cycle have been, looking through the rear view mirror, highly speculative. Over the past year, I have invested in high yield for my speculative portfolio covering the dollar and other currency securities with satisfactory results.

Herein contains a short list of securities that may be worthy of consideration, especially if the dollar is near a bottom and the financial and real estate fiascos are no longer all hiding under a rock but being addressed responsibly. Investors like you and me want to put money to work and may be willing to place a modest wager on products such as those below to perform acceptably.


Penn West Energy Trust (PWE) $27.42 yield 15.4%. Canadian Energy Trust.

Enerplus (ERF) $40.95 yield 12.3%, Canadian Energy Trust.

Teppco Partners (TPP) $34.30 yield 8.10%. Master Limited Partnership.

Alpine Global Dynamic Dividend Fund (AGD) $18.55 yield 11.00%. Closed-End Fund.

Sirius 9.625% Unsecured Note 8/1/13 Cusip:82966UAK9 $82.00. A favorite of mine.

GMAC Smart Notes: 6.00% 2/15/10 Cusip:3704AOWR9 $80.27
4.25% 03/15/09 Cusip: 3704AOGS5 $87.90
Note: There are scores of Smart Notes available in $1000.00 increments. They are thinly traded, and the investor should plan on holding them to maturity. It is my experience that there are always a few notes priced out of sync with the market, providing a superior yield to other like securities. Although rated junk, I do not think that these notes, held by tens of thousands of GM employees, will be allowed to default. Be careful on the spread when ordering.

Embridge Energy Partners (EEP) $45.34 yield 8.5%. Master Limited Partnership.

Annaly Capital Management Perpetual 7.85% Preferred (ALY+A) $20.96 yield 9.4%.

This post is not intended to be the defining word on high yield. One can find exceptional yield with risk through the most perfunctory of searches. Digging for information to keep the odds of success in your favor to successfully play this game requires skill. And luck.

DISCLOSURE: THE AUTHOR HOLDS THE FOLLOWING SECURITIES IN HIS SPECULATIVE PORTFOLIO - SIRIUS, TEPPCO, ANNALY CAPITAL, ALPINE GLOBAL and GMAC SMART NOTES.

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