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Contributor ○○

DSL

It is strange to me how DSL trades at a premium when its NAV TR since Jan has been so bad (-24%).  Most peer CEFs aren't that bad, and I would compare it some blend of JNK & EMB, like Gundlach suggests himself.Snag_4f7d645.png

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Participant ○

Re: DSL

The price has just been catching up with the NAV over the last few weeks.

I loaded up on this about one month ago, with a reasonable stop-loss (as for all my CEFs).  So far, so good...  

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Frequent Contributor

Re: DSL


@aubergine wrote:

It is strange to me how DSL trades at a premium when its NAV TR since Jan has been so bad (-24%).  Most peer CEFs aren't that bad, and I would compare it some blend of JNK & EMB, like Gundlach suggests himself.Snag_4f7d645.png


         It might be cheap borrowing for awhile. This time the Fed might not raise rates in anticipation of inflation but will wait and look at inflation as recovery. EM and Junk should benefit from cheap money along with anything else. I think investors jumped on CEF’s in anticipation of that as the next best value as evidenced in recent days.

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Participant ○○○

Re: DSL

ugly.   

BTW, DoubleLine has a webcast today on all three of their siblings:  

DoubleLine Closed End Funds Audio Webcast 
Tuesday, June 2, 2020
1:15 pm PDT / 4:15 pm EDT

Add to Calendar


To view the webcast please visit

https://event.webcasts.com/starthere.jsp?ei=1323445&tp_key=c1116ae3ce
 

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Participant ○○○

Re: DSL

from the call w/ Sherman...

  • DSL had some EM and Energy defaults...
  • structured credit has not recovered compared to IG or anything Fed-backed..so DSL and especially DLY stay low
  • delevered a bit in March to meet margin calls (DSL)..
  • believe in more volatility, but still see value in structured credit with no "artificial bid"
  • also believe in a "square root" recovery model - longer and more painful than the "U" shape
  • think that the yields are sustainable for now... no talk re reduction
  • do not chase yield or add leverage.. 
  • DLY still has some cash, and no leverage yet... they are being careful, but don't touch IG or anything "manipulated by the fed"... 
  • believe there is disconnect between the real economy and the markets; suspect there will be another leg in virus/ lockdown
  • still bullish on secularized market as long as one does the credit work and stresses for forbearance, etc.  - hotels at under 30% occupancy, oil glut and TSA traffic - down 90% y/y is what stressing these assets. 
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Frequent Contributor

Re: DSL

Thanks JR.  DoubleLine called an audible that I was not aware.  The webcast today was on my calendar for July 28.

I am not in buying mode on any bond CEFs right now.  I currently hold more DBL than DSL.  We need economic recovery to continue to improve DSL NAV.  Why it sells at a premium is a mystery to me.  The yield is double digits so maybe investors are buying that.  If I were buying today, I would be buying DBL.  I don't know/understand enough about DLY.  24% cash still to deploy.  No leverage yet.  Apparently selling at premium so that mystifies me too.  Although I asked the question on how to think about using DLY while owning DBL and DSL, Sherman just said DLY is heavy securitized credit and a complement to other 2 funds.  I still don't have answer on if it would be expected to perform during different parts of economic cycle and IPO'ing into the teeth of a pandemic muddies the water for me. 

Edit:  After further pondering this is my thinking.  My favorite is the original DBL.  It is the less risky with a healthy chunk of IG grade MBS securities.  It should perform better in a weak economy and do OK in a strong economy.  So this is really an all weather fund for me.  But the yield will be lower.  DSL and DLY are riskier as all credit funds, DSL with a tilt toward EM junk debt and DLY with a tilt toward securitized products.  In general, during normal premium/discount conditions and particularly in a recession like now, I plan to hold a majority position in DBL and spread balance between DSL and DLY (once I learn more about DLY) with the following exception.  DBL has in past gone to very high premia, so if that happens I will need to re-assess the entire suite of funds and make appropriate change, like selling DBL and buying the others until normalcy returns.  

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Contributor ○○

Re: DSL


@JRinNY wrote:

from the call w/ Sherman...

  • DSL had some EM and Energy defaults...
  • structured credit has not recovered compared to IG or anything Fed-backed..so DSL and especially DLY stay low
  • delevered a bit in March to meet margin calls (DSL)..
  • believe in more volatility, but still see value in structured credit with no "artificial bid"
  • also believe in a "square root" recovery model - longer and more painful than the "U" shape
  • think that the yields are sustainable for now... no talk re reduction
  • do not chase yield or add leverage.. 
  • DLY still has some cash, and no leverage yet... they are being careful, but don't touch IG or anything "manipulated by the fed"... 
  • believe there is disconnect between the real economy and the markets; suspect there will be another leg in virus/ lockdown
  • still bullish on secularized market as long as one does the credit work and stresses for forbearance, etc.  - hotels at under 30% occupancy, oil glut and TSA traffic - down 90% y/y is what stressing these assets. 

great color JRinNY, thanks for sharing.  i agree with them on the unmanipulated bids....but the flip side of course is that is stuff that - for right or wrong - doesn't have political friends.  society doesn't really care about CLO equity since its not owned by regulated entities (generally).  Look at the tough story on CQS HF selling all their stuff at the troughs for 80% discounts....

it'll be interesting to watch the used car markets, and how it ripples through into securitized/ABS.  a lot of paper is linked to that.  poor Hertz got itself into trouble because they agreed to some kind MTM facility with their rental car backed loans, basically if car prices went down, Hertz got a margin call!  So maybe it was 'cheaper' than conventional corp bond finance, but it ended up being much more lethal.  

 

 

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Explorer ○○

Re: DSL

Maybe because it's a heck of a FOMO trade.  Recent NAV performance has been fantastic.  Flip side of what some might say is an irresponsible level of risk taking at DSL.  I wish they'd take a more balanced approach, it's begging to blow up, someday.    I'm a worry wart, I can never convince myself hold more than tiny slivers of it.

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Contributor ○

Re: DSL

Thanks, JR, for the DbL call summary.

NAV performance for FMY and PGZ since March 30 (two months) indicates dead money.   DMO NAV barely up about 10%.  Massive opportunity cost.  Amount of market price erosion in these could leave mental scars on buy & holders. 

Loss of nearly 20% NAV for DLY for a fund inception on 3/4 makes no sense, given managers' commentary on webcasts. 

It would be useful to get your take on credit and equity markets.

A

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Contributor ○○

Re: DSL

Snag_1578a1e0.pngThe performance of DLY seems odd compared to similarly advised funds, and others with different advisors.

Starting with a cash position unlevered and no difference with a global junker like GHY? !

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