September 28, 2014

Funds on Clearance as Bill Gross Leaves PIMCO

Incase you don't know famous bond guru Bill Gross quit his position at PIMCO a major investment firm. This is the news story on his move. He left for Janus. As this news story was being digested lots of PIMCO funds began crashing as people sold. This really hit the closed-end funds the hardest. I was looking through the daily largest percentage losers on the NYSE. I found atleast 3 down almost double digits. Out of the ones I researched a couple stood out.

The first one is the PIMCO Corporate Income and Opportunity (PTY).  It traded down 6% Friday to 17.18. It isn't below net asset value (NAV) yet but still has a 7% yield now.

The second one is the PIMCO Income Strategy Fund (PFN). It lost 4% and is now at 10.31 which is a 5% discount to its NAV. It's sporting an 8% yield.

The other funds I looked at were heavy into mortgage related securities so I took a pass on those. I read that a lot of the PIMCO funds have traded at steep premiums to net asset value over the years so seeing some of these fall below NAV is a good opportunity.

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