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RiverPark Strategic Income Fund Holdings as of 9/30/13 Posted (lip)
One of the comments that amused me a few weeks ago was folks suggesting that my enthusiasm for the fund might be premature (that's entirely possible) and allowing that they were going to withhold judgment until they had a chance to see the holdings. I remember thinking: "yuh, like they're going to make any sense to me, ever." And so as I notice the 3.68% position in HOA Restaurant 144A, I think "yup. I'm clueless."
If you're speaking of my question on that thread, David, if I didn't say so clearly, I meant holdings AND portfolio statistics and commentary ... not just the bare holdings info alone ... but stats such as duration, credit quality, asset type breakdown, SEC yield. I was asking the commenters on that thread as a group how they had made the decision to invest in the fund, given what little information I could find about it other than the prospectus language.
I e-mailed Matt Kelly, Riverpark's marketing guy, earlier today and asked about statistics and commentary, and received a reply that there will be no commentary, but that David Sherman will send me the stats I asked about. When he does, I'll pass them along to the board.
I contacted Matt because there doesn't appear to be anywhere in the Riverpark organization of fund info on the web site set up for that kind of info, which is usually available for bond and hybrid funds. (With the notable exception of Pimco, of course, where they don't report the credit quality of the stuff they invest in ...)
No, I don't think I was recalling a post of yours. More I was just marveling at the challenge I face in talking about fixed-income funds, and especially those that aren't simple closet indexes. I feel at least vaguely clueful about the research, shape and metrics of equity investing. On FI, it's a struggle.
Perhaps talking with David on the December 9th call would be useful?
Reply to @linter: Chip and I, separately, bought shares as soon as they became available through Scottrade. That said, I'm not particularly banging the drum for the fund because it is distinct enough that it's going to take some time to understand fully. David Sherman has impressed me, I'm fairly conservative and pretty dubious about the underpinnings of both major markets, which is what convinced me to entrust a bit more money to the guy.
For what interest it holds, he speculated that RSIVX might yield about twice what RPHYX (which is closed to most new investors) did. Since inception, a $1000 at RSIVX has grown by $12.31. The same amount invested on the same date in RPHYX would have grown by $6.68. Here's the chart, RSIVX in blue:
The fund that Sherman imagined as most comparable to RSIVX was Osterweis Strategic Income (OSTIX), a four-star, $5 billion fund that Morningstar assigns to the multisector bond category. RSIVX is categorized as "conservative allocation," which normally signals a small but noticeable equity stake. It's not clear that that will be the case here.
Again, the chart:
After just six weeks, it would be lunatic to consider performance as anything more significant than a conversation starter.
And the safe option is.... Treasury sells three-year notes at 0.64% The Treasury sells $30B in three-year notes at 0.64%.Bid-to-cover ratio of 3.46, vs. the previous 3.05.Indirect bidders take 33.3%, vs. the previous 34.4%Direct bidders take 19.4%, vs. the previous 19.7%. 1:06 PM Seeking Alpha The S&P 500 (SPY -0.3%) slips, as do Treasury prices, the 10-year yield up 3 bps to 2.78%
Here's a quick report on RSIIX/RSIVX portfolio statistics for Oct. 31, which David Sherman generously e-mailed to me this morning and okayed my sharing with the board.
David stressed that these figures are based on in-house, unaudited calculations and judgments and should be understood on that basis.
Current yield: 8.43% Approximate expected gross investment yield: 7.12% Approximate duration: 3.12 yr. Avg market price: 103.61 Currency exposure: 94.5% U.S. $, 4.5% Canadian $ Estimated liquidity (scale = 1-10; 10 = most liquid): 7.42 Estimated average credit quality: BB*
(*David provided this figure, but qualified it by saying Cohanzik doesn't treat ratings as accurately reflecting credit quality.)
Holdings by category, per David's breakdown of port strategies in the fund materials: R'park Sht Tm HY overlap: 15.6% Buy & hold: 37.9% "Above the fray of dented credits": 17.9% Off the beaten path: 4.4% Interest rate expectations: 3.2% Other *: 7.2% Total invested = 86.1% Cash = 13.9%
* Asset-backed, distressed, equity.
From my POV, this all looks good, and RSIVX is going on the short list for a possible provisional-watch position. This ~ category (unrecognized by M*) of mostly-debt funds with shorter duration & mainly non-investment grade but not truly junky holdings, has become a favorite in this family's portfolio, and this fund looks to me, at this point, like a very worthy addition to the options in the category.
I'm also interested in a starter position in RSIVX. I wonder what your opinions are with respect to going in now vs waiting for some sort of pullback? Thanks- OJ
Reply to @Old_Joe: I dunno -- seems like this kind of fund is in a pretty sweet spot now, and maybe they're only rarely in a really bad spot because they've typically got some, but not a whole lot, of both kinds of bond risk. So it might not be a bad time to start a position, unless there's some credit wipeout on the horizon that nobody's talking about. But even in that kind of situation, OSTIX lost only ~ 5% in the 2008 credit fiasco.
I did see a piece of advice recently, forget where, to be at least a little price conscious in the HY space ... recommendation was to buy at ~ 103 or 104 at the priciest, and RSIVX is in that range. Not many that I've looked at lately are closer to par than that.
I may wait at least another month to see how it's doing, but if I do, it won't be because it's in overvalued territory or anything. I also have two other small initial/watch positions going, and don't like to get too strung out on that sort of thing.
I'm curious, how does a fund like this get such a high yield when something like Vanguard's hi yield fund has an SEC yield of 4.37%, a duration of 4.87 years and an average 'B' quality? Is it purely the liquidity issue?
Reply to @Vert: Hi Vert, no bond expert here, but my guess would be it's mainly a result of bargain-hunting management of a very small level of assets versus an enormous fund without a lot of room to add value. VWEHX is over $16 billion.
But don't use SEC yield to compare to the 8% current yield of RSIVX-- they're not the same thing. It's probably just the one month's dividend annualized for RSIVX, so you'd need to do that calculation for VWEHX to get a comparable number.
"El Pollo Loco bank loan" for 1.9%. Guess that's me, since I just put my mutual fund winnowings into RSIVX. 8% sounds WAY too good to be true - nearing Madoff territory, but I'll settle for 4% and capital preservation for the next three years.
Reply to @Vert: My distinct impression is that RPHYX' advantage is pure alpha created by David Cohanzick's research and strategy. Managing it is a ton of work. I am trusting you see the same thing here. Disclosure: long the strategy.
Why was the monthly dividend for RSIVX paid at the end of October nowhere close to 8%? It was more like 2.76% on an annual basis. I'm sure there's a good explanation for it. Does anyone know?
Reply to @mohan: I saw that this morning and wondered the same thing.
According to Yahoo price quotes, it opened on Oct. 3, so DS was probably buying over the course of the month and missed interest payments that would have come in if he'd been invested to the degree he is now from the beginning of the month. Also, the interest payments may be lumpy ... kind of all over the calendar. But if the 8% annualized he computes is correct, there should be a whopping increase in the div this month and next.
Reply to @willmatt72: It was certainly open on October 1st when I made my initial investment at the NAV of $10.00. I believe it opened some time in September.
Thanks, Andy. I'm looking forward to the 'whopping increase' in the dividend in the future. The capital appreciation (1.1%) during the last month and a half is not bad either.
Reply to @linter: Good point. Appreciate your perspective, as it made me look only a bit dopey. I must have been having a good day. When they let me out of the home they warned me that stuff like this could happen...
Reply to @AndyJ: Ditto on the thanks. And this quote makes me even more likely to invest in the fund, probably when I start transferring out of the stock market if it keeps going up: "Cohanzik doesn't treat ratings as accurately reflecting credit quality".
Reply to @AndyJ: I would tend to agree that DS probably didn't have the portfolio firmly in place at the beginning of October. He was probably buying throughout the month so the first dividend would not be an accurate indicator of things to come.
Looking at the list of "holdings" leaves me rather uncomfortable, because what appears is not holdings at all, but simply names of issuers. There's often no way to identify the particular securities.
This becomes apparent when one compares the website's stated "holdings" of RPHYX with those stated clearly and explicitly in the SEC filing. (The date of each's list is different, so the holdings don't always match; that's not the point.)
For example, the website lists PANORO ENERGY ASA twice (separated by a few lines), which I suppose means that there are two different securities. But what's the difference - yield, maturity, coupon, ...? There's no information at all. In contrast, the SEC filing shows that there are two different notes held, 13.5% and 12.0% coupons, with the same 11/15/2018 maturity. And one of these is a 144A placement, the other is not (per footnotes). But the website, which sometimes notes that securities are 144A placements, makes no mention of it on the Oct holdings. Is this an error, simply lack of detail, or did the Panoro holdings change between June and Oct? No way of knowing.
Since we don't have any SEC filings on RSIVX's portfolio, we really don't have much of a clue what's in its portfolio (i.e. the website only gives issuers, not securities). But here's a brief stab:
David asked about HOA Restaurant 144A. Given that this is (or at least appears to be) a Hooters (HOA Restaurant Group) private placement (144A to qualified institutional buyers), one has to wonder what's on David's mind. Can't tell any details about this particular security, however.
It took me awhile to translate the largest holding - MAV 2009-2 A1 ABS 7/15/56. First guess was preferred securities (leveraging) of the closed end fund Pioneer Municipal Advantage Trust (MAV), but the rest of the data didn't match. Finally got to Master Asset Vehicle II, Class A-1, issued January 21, 2009, and maturing June 15, 2056. Canadian paper, seems to be part of Canada's handling of the 2008 meltdown. Haven't delved too deeply into it, but here are some background docs that might help:
Note that this is just a guess on my part. For example, the docs that I found all refer to Asset Backed Commercial Paper (ABCP), not ABS (asset backed securities) that RiverPark used in identifying the issuer.
Personally, I want to know what securities are in a portfolio. Without that, I don't have enough information to figure out what's driving the yield. At least the next annual report (Sept 30th holdings) should be out shortly.
Comments
David
I e-mailed Matt Kelly, Riverpark's marketing guy, earlier today and asked about statistics and commentary, and received a reply that there will be no commentary, but that David Sherman will send me the stats I asked about. When he does, I'll pass them along to the board.
I contacted Matt because there doesn't appear to be anywhere in the Riverpark organization of fund info on the web site set up for that kind of info, which is usually available for bond and hybrid funds. (With the notable exception of Pimco, of course, where they don't report the credit quality of the stuff they invest in ...)
AJ
No, I don't think I was recalling a post of yours. More I was just marveling at the challenge I face in talking about fixed-income funds, and especially those that aren't simple closet indexes. I feel at least vaguely clueful about the research, shape and metrics of equity investing. On FI, it's a struggle.
Perhaps talking with David on the December 9th call would be useful?
David
For what interest it holds, he speculated that RSIVX might yield about twice what RPHYX (which is closed to most new investors) did. Since inception, a $1000 at RSIVX has grown by $12.31. The same amount invested on the same date in RPHYX would have grown by $6.68. Here's the chart, RSIVX in blue:
The fund that Sherman imagined as most comparable to RSIVX was Osterweis Strategic Income (OSTIX), a four-star, $5 billion fund that Morningstar assigns to the multisector bond category. RSIVX is categorized as "conservative allocation," which normally signals a small but noticeable equity stake. It's not clear that that will be the case here.
Again, the chart:
After just six weeks, it would be lunatic to consider performance as anything more significant than a conversation starter.
David
Treasury sells three-year notes at 0.64%
The Treasury sells $30B in three-year notes at 0.64%.Bid-to-cover ratio of 3.46, vs. the previous 3.05.Indirect bidders take 33.3%, vs. the previous 34.4%Direct bidders take 19.4%, vs. the previous 19.7%.
1:06 PM Seeking Alpha
The S&P 500 (SPY -0.3%) slips, as do Treasury prices, the 10-year yield up 3 bps to 2.78%
David stressed that these figures are based on in-house, unaudited calculations and judgments and should be understood on that basis.
Current yield: 8.43%
Approximate expected gross investment yield: 7.12%
Approximate duration: 3.12 yr.
Avg market price: 103.61
Currency exposure: 94.5% U.S. $, 4.5% Canadian $
Estimated liquidity (scale = 1-10; 10 = most liquid): 7.42
Estimated average credit quality: BB*
(*David provided this figure, but qualified it by saying Cohanzik doesn't treat ratings as accurately reflecting credit quality.)
Cash 13.9%
Investment grade 21.6%
Non-investment grade 64.6%
Holdings by category, per David's breakdown of port strategies in the fund materials:
R'park Sht Tm HY overlap: 15.6%
Buy & hold: 37.9%
"Above the fray of dented credits": 17.9%
Off the beaten path: 4.4%
Interest rate expectations: 3.2%
Other *: 7.2%
Total invested = 86.1%
Cash = 13.9%
* Asset-backed, distressed, equity.
From my POV, this all looks good, and RSIVX is going on the short list for a possible provisional-watch position. This ~ category (unrecognized by M*) of mostly-debt funds with shorter duration & mainly non-investment grade but not truly junky holdings, has become a favorite in this family's portfolio, and this fund looks to me, at this point, like a very worthy addition to the options in the category.
ha, ha, just kidding. but i am curious ...
I did see a piece of advice recently, forget where, to be at least a little price conscious in the HY space ... recommendation was to buy at ~ 103 or 104 at the priciest, and RSIVX is in that range. Not many that I've looked at lately are closer to par than that.
I may wait at least another month to see how it's doing, but if I do, it won't be because it's in overvalued territory or anything. I also have two other small initial/watch positions going, and don't like to get too strung out on that sort of thing.
But don't use SEC yield to compare to the 8% current yield of RSIVX-- they're not the same thing. It's probably just the one month's dividend annualized for RSIVX, so you'd need to do that calculation for VWEHX to get a comparable number.
Echo David in saying nice work obtaining that. Very helpful to the Board.
My distinct impression is that RPHYX' advantage is pure alpha created by David Cohanzick's research and strategy. Managing it is a ton of work. I am trusting you see the same thing here. Disclosure: long the strategy.
According to Yahoo price quotes, it opened on Oct. 3, so DS was probably buying over the course of the month and missed interest payments that would have come in if he'd been invested to the degree he is now from the beginning of the month. Also, the interest payments may be lumpy ... kind of all over the calendar. But if the 8% annualized he computes is correct, there should be a whopping increase in the div this month and next.
Thanks, Andy. I'm looking forward to the 'whopping increase' in the dividend in the future. The capital appreciation (1.1%) during the last month and a half is not bad either.
This becomes apparent when one compares the website's stated "holdings" of RPHYX with those stated clearly and explicitly in the SEC filing. (The date of each's list is different, so the holdings don't always match; that's not the point.)
Website (Oct 31): http://www.riverparkfunds.com/Funds/ShortTermHighYield/FullHoldings.aspx
Quarterly SEC filing (June 30) http://www.sec.gov/Archives/edgar/data/1494928/000113542813000441/riverpark-nq.txt
For example, the website lists PANORO ENERGY ASA twice (separated by a few lines), which I suppose means that there are two different securities. But what's the difference - yield, maturity, coupon, ...? There's no information at all. In contrast, the SEC filing shows that there are two different notes held, 13.5% and 12.0% coupons, with the same 11/15/2018 maturity. And one of these is a 144A placement, the other is not (per footnotes). But the website, which sometimes notes that securities are 144A placements, makes no mention of it on the Oct holdings. Is this an error, simply lack of detail, or did the Panoro holdings change between June and Oct? No way of knowing.
Since we don't have any SEC filings on RSIVX's portfolio, we really don't have much of a clue what's in its portfolio (i.e. the website only gives issuers, not securities). But here's a brief stab:
David asked about HOA Restaurant 144A. Given that this is (or at least appears to be) a Hooters (HOA Restaurant Group) private placement (144A to qualified institutional buyers), one has to wonder what's on David's mind.
It took me awhile to translate the largest holding - MAV 2009-2 A1 ABS 7/15/56. First guess was preferred securities (leveraging) of the closed end fund Pioneer Municipal Advantage Trust (MAV), but the rest of the data didn't match. Finally got to Master Asset Vehicle II, Class A-1, issued January 21, 2009, and maturing June 15, 2056. Canadian paper, seems to be part of Canada's handling of the 2008 meltdown. Haven't delved too deeply into it, but here are some background docs that might help:
Trust Document (long and painful)
Debt Restructuring Description (what MAVs are, what the classes are, etc. - shorter and clearer)
One paragraph description (incredibly dense, terse, and technical)
2011 Press Release (amounts outstanding in each MAV series and each class therein, along with ratings)
Note that this is just a guess on my part. For example, the docs that I found all refer to Asset Backed Commercial Paper (ABCP), not ABS (asset backed securities) that RiverPark used in identifying the issuer.
Personally, I want to know what securities are in a portfolio. Without that, I don't have enough information to figure out what's driving the yield. At least the next annual report (Sept 30th holdings) should be out shortly.