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PIMCO CEF Aug earnings report

The August earnings report is out. Numbers generally look good.

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Note that the FY starts in July or August for most of these, so the YTD coverage ratio can change a lot in the 1st month or two. Example - the unusually high NII last month gave PCI a coverage ratio of 220%, now down to 150% in month 2. (they have not updated the monthly distr figure for PCI to reflect the increase to 0.174 some months back...)

PCI's NII for the month of Aug was a little bit short of the distribution (15c NII vs 17.4), but UNII still went up for the month from 0.57 to 0.64. So at the end of Aug they had accumulated 3.7 month-equivalents of potentially distributable UNII for the calendar year, vs 3.3 months at the end of July.

PDI did well for the month with NII of 0.34, well in excess of the 0.2205 distribution, and an increase in UNII from 2.8 to 3.3 months equivalent.

PFN also out earned the0.08 distribution with NII of 0.11 and UNII increased from 0.1 mo to 0.6 mo equiv.

PKO out-earned with NII of 0.22 vs 0.19 distr and UNII increased from 1.3 mo to 1.5 mo equiv.

PHK... not so nice, but it is just the 1st month of the FY.

etc.

These CEFs seem to be doing just fine at what they do best... but worth recalling that NAVs were down during the month in part due to Argentina and in part due to yield curve positioning. NAV decreases do not seem to be attributable to over-distributing, at least for those I pay attention to.

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Re: PIMCO CEF Aug earnings report

Thank you for these numbers. I am a newbie in CEF's. Is there a way to figure if a possible large December extra dividend could be paid by these CEF's? How about, in general, other CEF fund families?

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Re: PIMCO CEF Aug earnings report


@judger wrote:

Thank you for these numbers. I am a newbie in CEF's. Is there a way to figure if a possible large December extra dividend could be paid by these CEF's? How about, in general, other CEF fund families?


One can only guess. If the UNII is positive [it is since inception] and the current NII coverage is good [ > 100%], then extra yearend distribution is possible. Picking 2 examples from the table, may be for PCI, likely not for PHK.

YBB
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Re: PIMCO CEF Aug earnings report

UNII = Undistributed, Net Investment Income. The funds are required to distribute 95% of income, or pay excise tax on what they retain. They usually distribute most of the residual UNII by year end. But, UNII can be moved into or out of swap positions if management changes their views on interest rates. Earlier in the year we saw a big jump in UNII, presumably reflecting money moving out of swaps and into income. Some of the UNII was consumed last month to cover earnings shortfalls for some funds. So, until we get closer to year end we can't know if the current UNII levels will hold go up or go down.

As of the September earnings release, PCI and PDI each have the equivalent of about 3 months distributions stored as UNII. PFN has about 1.4 month equiv and PKO about 0.9 mo eq. I'm optimistic that we may enjoy EOY specials of at least a couple of months extra from PCI and PDI, perhaps a bit less from the other 2. I haven't done the arithmetic on the others. 

PIMCO gives more detailed info than many other fund families on recent earnings. Blackrock and Nuveen were also pretty good with current info, but I haven't checked recently if they still do that. Some other fund families give quarterly earnings info (Flaherty & Crumrine, is one I follow). Others only report income in the AR and SARs (Doubleline etc). Blackstone has started adjusting its distribution on a quarterly basis to match earnings.  Nothing that I watch other than the PIMCO's seems likely to have EOY specials, based on most recent available info. 

 

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Explorer ○○

Re: PIMCO CEF Aug earnings report

Last year I had run a correlation analysis between these year-end specials and UNII numbers, thanks in part to data gotten from you, kepplebay, and my wholly personal conclusion is that although there was a correlation, it was not very strong.

 

(talking about PIMCO only here)

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Re: PIMCO CEF Aug earnings report

Hi JR

Here are some numbers for the ones I follow:

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The correlation isn't perfect by any means, but what seems clear is that they usually distribute most of the excess UNII.  I assume this is the excess on which they would have to pay excise tax - but I haven't tried to verify that.  Looking at PCI, they gave out enough UNII to bring the remaining UNII amount down to 20-30 cents (sometimes less). Same with PDI. Residual UNII after the EOY was lower for PFN and PKO. 

That leads me to estimate that we might see something on the order of 40-50c for PDI and 30-40 c for PCI, based on Sept UNII numbers. But - 2 caveats: (1) under-earning in Oct or Nov could reduce UNII; (2) money can be moved out of UNII into swaps.  So we can make a better guess when we see the Nov UNII data - which (maybe not) coincidentally is around the time they announce the EOYs.

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Re: PIMCO CEF Aug earnings report

Thanks Keppl , I own all those 4 [20 cef's total] alfor more than 10 yrs. about 50% of total port. hardly ever sell, mostly add on dips .Have averaged 13% per yr. for total port. [since 2008] per SCHW after taxes ,all living exp. [been retired since 2003].              TERRY

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Re: PIMCO CEF Aug earnings report

Yo Steve, ok I am looking at my records and my correlation analysis wasn't for last year, but for the 2015 distributions. And also, I included all the taxable income CEFs (Pimco only of course), not only the 4 you monitor. My figures for this year 2015 are consistent with yours for these 4, with the strongest correlation between UNII and year-end-special for PCI and PDI. The others in my opinion, were not super strong. Because of this, I had stopped trying to predict year-end-specials vs UNII.

Now, looking at your more recent summary, and based on these 4 only, the correlation seems pretty decent. So... I am going to be monitoring these UNII numbers again. Thanks for having posted your table. These year-end specials are a tax headache for me...

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