Members Mailbag: It looks like this 10.3% Yield CEF sets its distribution rate annually on 12/31 as 7% of the NAV at that time. With the market down this year, this fund is down nearly 30%, so a significant distribution cut is likely coming… However, this one does have some attractive qualities like you mentioned (such as discount to NAV and a modest use of leverage), plus it gets you some interesting non-US market exposures… From an equity CEF standpoint, one of my current favorites is…
SoFi (SOFI) Earnings Note
Shares of this fintech +13% today after beating EPS expect and raising guidance. Some argue despite strength across all 3 segments (lending, tech platform, fin services) EPS is still negative (-$0.09 in Q3), but there is a clear path to profitability. The company’s new bank charter is providing flexibility against the challenging macro backdrop and the student loan business seems less handicapped as competing fed loan forgiveness on hold (at least for now). Rapid revenue growth (+51% y/y), very large market opportunity.
Phillips 66 (PSX) Earnings Note
This diversified energy co ($50B mkt cap) announced strong Q3 earnings Tues am (non-GAAP EPS of $6.46 beat by $1.43). Shares up 4% this am. The co generated $3.1B in op cash flow and returned $1.2B through dividends and share repurchases (div yield is 3.7%). Trading at 4.7x EV-to-EBITDA (fwd), the co is special b/c as it continues to expand midstream, it deserves a higher valuation multiple due to the steadier nature of that largely-fee-based business. During Q3, the co increased its economic interest in DCP Midstream. Long.
ServiceNow (NOW) Earnings Note
Business remains strong for this profitable SaaS company despite slowing economic growth. Shares jumped 13% on Thursday following earnings. Revenue grew at an impressive 21.2% y/y, and subscription revenue grew at 28.5%. The magic of this company is two-fold: (1) customers love the solution (98% renewal), and (2) land and expand. Long.