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9% Yield, 25% Discount: HFRO Is A Strong Buy

Published Thu, 17 Dec 2020 08:35:00 -0500 on Seeking Alpha

Seeking AlphaClosed End Funds9% Yield, 25% Discount: HFRO Is A Strong BuyDec. 17, 2020 8:35 AM ET|| About: Highland Income Fund (HFRO), Includes: CTT, HFRO.PA, OXLC, OXLCM, OXLCO, OXLCP, XFLTby: Rida MorwaRida Morwa High Dividend OpportunitiesThe #1 Service for Income Investors and Retirees, 9-10% dividend yield.SummaryHighland Income Fund is trading at 25% discount to NAV.
They also are holding and buying their positions at a discount to PAR.
CLOs have seen strong positive price action, helping the fund to maintain a large discount as market prices rise.
Co-produced with Treading Softly
I love getting a good deal. It seems most people do. Black Friday sales have passed, but throughout much of the holiday season stores and shoppers clamor to get deals made. Customers love maximizing their return by scoring on sale items. Stores love raking in the extra profit from sales, even if the per item tally is lower than normal.
Today I want to cover a fund that's been a holding of High Dividend Opportunities for a little while: Highland Income Fund (HFRO) which yields 9.4%.
Doubling Your Discount
Imagine if you could spend $100 to get $171 back? That's how HFRO's discount to NAV and purchasing positions at a discount to PAR is working. It creates a massive discount by doubling them.
Data by YChartsHFRO's NAV has remained significantly more stable than HFRO's market price. Even as its market price has strongly appreciated, HFRO's NAV hasn't been idle. It's been rising as well! We actually don't see HFRO's NAV slowing its climb. Why? Because of its holdings. When you buy one share of HFRO, you're buying their currently-priced holdings at a phenomenal 25% discount. This is actually largely reduced from the 35% discount since our last update in October. CEF's like HFRO often feel the powerful force of "reversion to mean" – essentially a CEF at a large discount will see its market price pulled back toward its NAV, likewise, CEFs trading at a large premium... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
OXFORD LANE CAPITAL 9.73   0.0 0.00 1.62 16.65

OXFORD LANE CAPITAL - OXLC
OXFORD LANE CAPITAL - OXLC  


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