PSEC added to the SMA Portfolio

By on February 25, 2014

In a move that some may see as capitulation, I’ve decided to enable the SMA Portfolio more leeway to capitalize on opportunities provided by the market. The portfolio will no longer strictly follow the signals of the Tactical Timing System (TTS), as it has largely in the past. The SMA Portfolio severely underperformed the indexes last year which will be detailed in a 2013 performance review in the near future.

The first move was to allocate approximately 6% of the portfolio to Prospect Capital Corporation (PSEC). PSEC is a business development company (BDC) specializing in middle market, mature, mezzanine finance, later stage, emerging growth, buyouts, recapitalizations, turnaround, growth capital, development, subordinated debt tranches of collateralized loan obligations, cash flow term loans, and bridge transactions. According to news sources, S&P has decided to remove BDCs from their indexes. This has caused PSEC to drop approximately 3% today. PSEC yields approximately 11% and demonstrated reasonable stability during the financial crisis of 2008-2009 (see chart below).

PSEC was purchased at $11.06 today. The purchase was funded from a partial sale of the Vanguard Short-Term Corporate Bond ETF (VCSH).

PSEC

I also see an opportunity developing in the contract deep sea oil drilling stocks. I may initiate a position there in the near future.

Disclaimer: It is very difficult to outperform a buy and hold strategy. Many investors have found themselves well served over long time horizons by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Future performance may not reflect past performance. Profitable trades are not guaranteed. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

6 Comments

  1. Ronald Wallerst

    February 26, 2014 at 2:46 pm

    I’ve owned this for a few months.

  2. Swayze, Patrick

    March 3, 2014 at 7:27 am

    Damn Ruskies! They can never be placated. Never assuaged. They are a medieval people only focused on conquest. We should have taken them out 30 years ago.

  3. Haywood Jablomi

    March 4, 2014 at 8:11 pm

    Putin takes what he wants. A real man. Our president wags his fingers at a teleprompter. Pathetic.

    The Ukraine is but a stones throw from Sochi. Don’t think this wasn’t planned well in advance. The audacity! The boldness!

    I’ve long held that the U.S.A. should attack Canada. I have nothing against the Canadians per say. A bland people, true; but a peaceful nation and a steady ally. We should attack them nonetheless. These distant wars are sooooo friggin’ expensive. It takes like 12 hours to fly to the Middle East, and for what, to shoot a 5 million dollar missile at a sand hut?

    Well, we’ll bring democracy to the region! Really? These sand-dwellers behead people for listening to Air Supply songs, do you really think they’re interested in the nuances of western democracy? Me thinks not.

    The War Against Canada! would be civilized and cost effective. No crazy ass unmanned drones or transcontinental flights. We cross at well established border check-points in Western Canada during the fall. We seize Whistler Blackcomb before the Mounties can react and immediately sue for peace. We keep Whistler Blackcomb (great skiing) and force the damn Canadians to take Detroit. End of war.

    We walk away with a fantastic resort (sufficiently north to provide good skiing post climate change) and rid our hands of liberalism’s abortion, Detroit. Most importantly, it will be our first military victory since WWII. F.U. Peter Jennings!

  4. Haywood Jablomi

    March 4, 2014 at 8:38 pm

    I wish to retract my comment about Peter Jennings. I’ve come to learn he converted to Americanism in 2003, thus severing relations with the insidious Canadians. Might I suggest Justin Bieber as a substitute? F.U. Justin Bieber!

  5. Magnush

    March 5, 2014 at 7:31 pm

    Didn’t your momma ever teach you the dangers inherent in yield chasing?

  6. Jamies Diamond

    March 22, 2014 at 9:53 am

    Putin also bears his chest without shame and never misses the opportunity to impress young impressionable aparat chicks. Have you ever seen Obama shirtless? Much like the first time Tiger Woods removed his shirt after his weight lifting regimen and the downfall of his game. It is if someone deflated their pectoralis majors.

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