| The Yield Hunter Let's make some money and sleep well at night |
| RMK Multi Sector High Income Fund Continued From Front Page |
Copyrights 2006-2007 SGM Publishing |
| Update 3/28/2008 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
Going through the Closed End Bond statistics we find some of the valuations almost unbelievable. An awful lot of
the high yield funds are down from 25-85%. Are these funds really worth this little---or are there huge
opportunities just waiting to be recognized and accumulated?
Let's look at one of these funds and dissect their holdings.
Specifically let's look at RMK Multi-Sector Hi Income Fund (Ticker RHY) (disclosure - we have taken a tiny
position in RHY at 2.95/share)
52 Week High $15.95
52 Week Low $2.89 (Down over 80%)
Current Price $3.02 (March 11, 2008 close)
The portfolio is composed of the following investments (information from 2/28/2008)
Please note that Net Asset percentages are above 100% as they are highly levered.
---Asset Backed Securities -- Investment Grade (7% of Portfolio Net Assets)
These are various products such as mortgage backed securities, corporate loans etc. And supposedly Investment
Grade. RMK carries value of these assets 80%. below cost
---Asset Backed Securities -- Below Investment Grade (20% of Portfolio Net Assets)
These are home mortgages, equipment leases, home equity loans etc. RMK carries the value of these assets
79% below cost
---Corporate Bonds--Investment Grade (11.2% of Portfolio of Net Assets)
As described these are typical corporate bonds. RMK carries the value of these assets by 27%.below cost.
---Corporate Bonds--Below Investment Grade (59.9% of Portfolio Net Assets)
A wide variety of typical corporate bonds. RMK carries the value of these assets 25% below cost.
---Mortgage Backed Securties--Investment Grade (20.4% of Portfolio Net Assets)
Residential mortgages. RMK carries the value of these assets 20% below cost
---Mortgage Backed Securities--Below Investment Grade (11.6% of Portfolio Net Assets)
Sub Prime residential mortgages---RMK carries the values of these assets 70% below cost
---Common Stocks (9.9% of Portfolio Net Assets)
Just common stocks. RMK carries the value of these assets 40% below cost.
In addition to the above there are some minor amounts of euro dollars and preferred stocks in the portfolio.
The leverage of this portfolio and others like it has absolutely caused a blood bath in these issues. But you must
understand one important item----the portfolio values are valued at bids for these securities as of
2/28/2008----because of the credit seize-up there are damn few bids at this time for these securities---thus they are
marked to a market that is totally dysfunctional.
We believe 2 items relative to this Closed End Fund and others like it-----they will either come back and be up
300-500% from present levels within a year----OR --- the U.S. Financial System as we know it will be nonexistant.
You must either believe that the portfolio managers are the most inept managers in the world---OR-- that these
funds have more value than 20 cents on the dollar.
Bill Gross and Pimco have been in the market place buying all kinds of bonds lately at 20-30-40-50 cents on the
dollar and Pimco has a trillion dollars under management. We agree---when blood runs in the street it is time to
buy and we think down 80% is just a bit overdone (although we are not huge speculators we believe the risk/reward
on these funds is very good)
Please do your own research before buying any invesments----and as always diversify.
Link to RMK Form N-Q--Quarterly Schedule of Portfolio Holdings.
the high yield funds are down from 25-85%. Are these funds really worth this little---or are there huge
opportunities just waiting to be recognized and accumulated?
Let's look at one of these funds and dissect their holdings.
Specifically let's look at RMK Multi-Sector Hi Income Fund (Ticker RHY) (disclosure - we have taken a tiny
position in RHY at 2.95/share)
52 Week High $15.95
52 Week Low $2.89 (Down over 80%)
Current Price $3.02 (March 11, 2008 close)
The portfolio is composed of the following investments (information from 2/28/2008)
Please note that Net Asset percentages are above 100% as they are highly levered.
---Asset Backed Securities -- Investment Grade (7% of Portfolio Net Assets)
These are various products such as mortgage backed securities, corporate loans etc. And supposedly Investment
Grade. RMK carries value of these assets 80%. below cost
---Asset Backed Securities -- Below Investment Grade (20% of Portfolio Net Assets)
These are home mortgages, equipment leases, home equity loans etc. RMK carries the value of these assets
79% below cost
---Corporate Bonds--Investment Grade (11.2% of Portfolio of Net Assets)
As described these are typical corporate bonds. RMK carries the value of these assets by 27%.below cost.
---Corporate Bonds--Below Investment Grade (59.9% of Portfolio Net Assets)
A wide variety of typical corporate bonds. RMK carries the value of these assets 25% below cost.
---Mortgage Backed Securties--Investment Grade (20.4% of Portfolio Net Assets)
Residential mortgages. RMK carries the value of these assets 20% below cost
---Mortgage Backed Securities--Below Investment Grade (11.6% of Portfolio Net Assets)
Sub Prime residential mortgages---RMK carries the values of these assets 70% below cost
---Common Stocks (9.9% of Portfolio Net Assets)
Just common stocks. RMK carries the value of these assets 40% below cost.
In addition to the above there are some minor amounts of euro dollars and preferred stocks in the portfolio.
The leverage of this portfolio and others like it has absolutely caused a blood bath in these issues. But you must
understand one important item----the portfolio values are valued at bids for these securities as of
2/28/2008----because of the credit seize-up there are damn few bids at this time for these securities---thus they are
marked to a market that is totally dysfunctional.
We believe 2 items relative to this Closed End Fund and others like it-----they will either come back and be up
300-500% from present levels within a year----OR --- the U.S. Financial System as we know it will be nonexistant.
You must either believe that the portfolio managers are the most inept managers in the world---OR-- that these
funds have more value than 20 cents on the dollar.
Bill Gross and Pimco have been in the market place buying all kinds of bonds lately at 20-30-40-50 cents on the
dollar and Pimco has a trillion dollars under management. We agree---when blood runs in the street it is time to
buy and we think down 80% is just a bit overdone (although we are not huge speculators we believe the risk/reward
on these funds is very good)
Please do your own research before buying any invesments----and as always diversify.
Link to RMK Form N-Q--Quarterly Schedule of Portfolio Holdings.