Following up on my Friday column about my new clients portfolio, here are the rest of my new purchases. All (and thus the indicated yields) are based on the securities' prices at the time I bought them. Locking in yields at attractive levels is paramount in income investing, and opportunism is just as important as financial analysis.
Navios Maritime Midstream Partners LP (NAP) ; 16.6%. An MLP spinout from the Navios Group that owns six crude tankers (VLCC class) with options to buy more from the parent. All NAP's ships are on long-term charters to reputable counterparties (no Hanjin or HMM.) Shares were beaten down as crude tanker rates fell during the summer, but rates have rebounded and NAP's regular dividend announcement Monday has put the shares in an uptrend.
NAP pays a very attractive dividend -- $0.4225 per quarter -- and the next payment will be made on Nov. 10 to holders of record on Nov. 8. So, if you are interested in Navios Maritime Midstream Partners, you must buy it by the end of the day on Nov. 3 to receive that dividend.
Callon Petroleum, 10% Series A Cumulative Preferred Stock (CPE-A) ; 9.5%. As oil prices have rebounded through $50 a barrel, I decided not to buy dividend-yielding -- yet highly volatile and highly dependent on price of crude -- oil stocks, but rather to go with fixed income securities, in the form of Callon preferreds. The company has been aggressively buying assets in the Permian Basin, in my opinion the most attractive shale play in the U.S., and just raised $400 million in equity (and the same amount in debt) to pay for recent land acquisitions. Callon paid the dividends on this preferred series (a tiny portion of its capital structure) and even when oil fell below $30 a barrel in in the first quarter, and with oil prices now double where they were nine months ago, Callon's cash flows are much, much stronger, making the preferred dividend much, much safer.
Navios Maritime Holdings, 8.625% Dep Shares Series H Cumul Red Perp Preferred Stock (NM-H) ; short-term holding. We initiated the portfolio the day after Navios increased its tender offer for its preferreds, but we still will capture about 10% return as a straight arbitrage play if the tender offer is approved. Also, we will have the proceeds (our capital plus the spread) to reinvest elsewhere in early November.
Scorpio Bulkers, 7.50% Senior Notes due 9/15/2019 (SLTB) ; 8.7%. More exposure to the recovering dry bulk market through Scorpio's bonds, which are trading at a mid-teens percentage discount to par. Scorpio's aggressive new building program is putting a very young fleet in the water just as dry bulk rates have rebounded smartly. Scorpio's president has made repeated purchases of common stock in the past month and company was able to raise equity in June.
Second Sight Medical Products (EYES) ; no yield. Second Sight is the only non-dividend-payer among our long-term long holdings. EYES' revolutionary Argus II system uses micro-receptors implanted in the patient's eye to send images from an external camera through the optic nerve into the patient's visual cortex. Simply put, EYES restores sight to blind patients. EYES shares have been hammered this year due to a Medicare reimbursement issue, but that sunsets at year end, and I believe there is deep value here. I am meeting privately with the management at a conference in Philadelphia on Tuesday. EYES shares have been so beaten down that any positive news could send the shares skyrocketing, and I managed to pick them up last week with a basis under $2.80. It is a risky longshot, but it's our only one, and is the smallest component of the new portfolio's value.